Simple & Easy Explanation What It Does Calculates the average return of an investment over multiple periods (years, months, etc.). Helps understand consistent performance. Key Terms Annual Returns (%): Yearly profit/loss percentages (e.g., Year 1: 10%, Year 2: 5%). Number of Years (n): Total investment duration. Average Return (%): The mean return across all years. Formula (Simple Average Return) Average Return (%)=Sum of Annual ReturnsNumber of YearsAverage Return (%)=Number of YearsSum of Annual Returns Example Year 1 Return: 12% Year 2 Return: 8% Year 3 Return: 5% Calculation:Average Return=12+8+53=253=8.33%Average Return=312+8+5=325=8.33%→ Your investment grew by 8.33% per year on average. When to Use It? ✔ Comparing mutual funds, stocks, or SIP performance. ✔ Checking long-term investment consistency.
