# How to optimally calculate return / compound interest

**URL:** https://forum.mustachianpost.com/t/how-to-optimally-calculate-return-compound-interest/5187
**Category:** Investing / Others
**Created:** [January 8, 2021, 3:33pm UTC](https://forum.mustachianpost.com/t/how-to-optimally-calculate-return-compound-interest/5187 "2021-01-08T15:33:01Z")
**Posts on this page:** 1
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### Author: ![nabalzbhf](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/nabalzbhf/32/3277_2.png) [@nabalzbhf](https://forum.mustachianpost.com/u/nabalzbhf)
#### Post date: [January 8, 2021, 4:28pm UTC](https://forum.mustachianpost.com/t/how-to-optimally-calculate-return-compound-interest/5187/2 "2021-01-08T16:28:16Z")

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> [@Leonidasgr](#):
>
> However this is actually not the real case for a share price, right? The company can go up 5% the first year, down 10% the second year, up 20% the third year and so on…  
> Also the shares are not practically paying interests year over year, so how can I actually estimate for example my “average compounded” year over year interest got after 10 or 20 years ? or that is practically of non-sense…? which ratio / factors would be of more sense?

Check CAGR that’s the metric used. But this is a backward looking metric (you can only compute it after the fact), there’s no guarantee for equity investment to have specific returns (you can see historical returns, but they don’t promise anything and have large variations)

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