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Average Return Calculator

Calculate the average annual return (IRR) of your investment based on cash flows (deposits and withdrawals) over time.

Cash Flow Inputs

Results

Average Annual Return (IRR)
0.00%
Total Holding Period
Net Profit / Loss

Deposits and Withdrawals

Average Return Calculator Guide

What is Average Annual Return (IRR)?

The Average Annual Return, often calculated as the Internal Rate of Return (IRR), represents the annualized rate of return that an investment has earned over a specific period, taking into account the timing and amount of all cash flows (deposits and withdrawals).

How This Calculator Works

This calculator uses the concept of IRR to find the constant annual rate of return that would make the net present value (NPV) of all cash flows equal to zero.

Key Formula (Conceptual):
We solve for r in:
NPV = Σ [CashFlow_t / (1 + r)^t] = 0

Where t is the time period in years from the starting date.

Why Timing Matters

Unlike simple average return, IRR considers when money was invested or withdrawn. A large deposit made early in the period has more impact on the overall return than the same deposit made later.

Important Notes

  • This is an approximation. Real IRR calculations use numerical methods (Newton-Raphson).
  • Multiple sign changes in cash flows can lead to multiple possible IRR solutions.
  • This calculator assumes daily compounding for simplicity.