Geometric Mean Return
A way of calculating compound returns on an investment or savings over a set period of time.
‘Arithmetic mean’ is a fancy way of saying ‘mean’ or ‘average.’
To find the arithmetic mean, you add together a set of numbers and then divide your answer by the amount of numbers you had in that original set.
This may sound wordy - especially for math-o-phobes - but it’s really simple.
Take 1,2,3,4,5 as a set of numbers.
1+2+3+4+5 =15
In our original set, there were 5 numbers. So to get the average we just do….
15 ÷ 5 = 3
Simples.
