1. What is Mean Annual Return?

Mean Annual Return (MAR) is the simple arithmetic average of a series of annual returns over a specified period. It provides a straightforward measure of investment performance over time.

2. How Does the Calculator Work?

The calculator uses the Mean Annual Return formula:

Where:

• \( MAR \) — Mean Annual Return (%)
• \( \sum \text{Annual returns} \) — Sum of all annual returns (%)
• \( n \) — Number of years

Explanation: The formula calculates the average return by summing all annual returns and dividing by the number of years in the period.

3. Importance of MAR Calculation

Details: Mean Annual Return is essential for evaluating investment performance, comparing different investment options, and making informed financial decisions. It provides a simple benchmark for assessing long-term returns.

4. Using the Calculator

Tips: Enter annual returns as comma-separated percentages (e.g., "5,8,12,-2,15"). Include both positive and negative returns for accurate calculation. The calculator will automatically determine the number of years from your input.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between MAR and CAGR?
A: MAR is arithmetic mean (simple average), while CAGR (Compound Annual Growth Rate) is geometric mean that accounts for compounding effects.

Q2: When should I use MAR vs CAGR?
A: Use MAR for simple performance comparison and CAGR for understanding compound growth over time with reinvestment.

Q3: Can MAR be negative?
A: Yes, if the sum of annual returns is negative, MAR will be negative, indicating overall loss over the period.

Q4: How many years should I include?
A: Include at least 3-5 years for meaningful analysis, though longer periods provide more reliable averages.

Q5: Does MAR account for volatility?
A: No, MAR doesn't measure risk or volatility - it only provides the average return without considering fluctuations.