Annualized Return Calculator

About this calculator

An annualized return converts a total return earned over any holding period — six months, three years, whatever the actual span was — into the equivalent compound annual growth rate, so returns from investments held for different lengths of time can be fairly compared. The formula is (Ending Value ÷ Beginning Value)^(1 ÷ Years) − 1, sometimes called the Compound Annual Growth Rate (CAGR) when applied to a single lump-sum investment.

Without annualizing, a 30% return sounds identical whether it happened in one year or five, but those outcomes represent very different rates of growth — the five-year version compounds to roughly 5.4% per year, far less impressive. Fund managers, analysts, and individual investors rely on annualized return to benchmark performance against indexes, other funds, or a required rate of return on a like-for-like, per-year basis.