Here’s what we asked ChatGPT to kick off our series: When looking at the returns for my investment portfolio, should I use arithmetic or geometric returns?

In the investment world, it’s common to discuss average rates of return. It’s not sufficient, however, to simply add up historical returns and divide by how many there are.

Investors usually consider the geometric mean a more accurate measure of portfolio performance than the arithmetic mean because it accounts for compounding. Learn more.

The geometric mean is the average of a set of products, the calculation of which is commonly used to determine the performance results of an investment or portfolio.

This includes basic notions such as sets and functions: Properties of sets, definition and properties of functions; logarithms and exponentials: and their properties; basic series summations: ...