Annualize a return earned over months or years, with optional income received.
Please do not make financial decisions based on these results.
What is the Annualized Rate of Return Calculator?
Annualize a return earned over months or years, with optional income received. To use the Annualized Rate of Return Calculator, enter beginning value, ending value, dividends and income received, months held; it returns annualized rate of return, total return, and shows them instantly as you type.
Comparing returns
To judge past performance use the average return calculator and the ROI calculator. For projects with several cash flows, the IRR calculator gives a single comparable rate, and the payback period calculator shows how long it takes to recover the cost.
How to use the Annualized Rate of Return Calculator
- Fill in the fields. You will need Beginning value ($), Ending value ($), Dividends and income received ($), Months held. Use a rate of return you consider realistic; small changes compound into large differences. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Annualized rate of return, and the cards below show Total return. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Annualized Rate of Return Calculator using the default values shown in the calculator above:
Inputs
| Beginning value ($) | 20,000 |
|---|---|
| Ending value ($) | 21,800 |
| Dividends and income received ($) | 300 |
| Months held | 10 |
Results
| Annualized rate of return | 12.73% |
|---|---|
| Total return | 10.5% |
With these inputs the calculator returns Annualized rate of return: 12.73%. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Beginning value ($) from 20,000 to 24,000 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Annualized rate of return | 12.73% | -9.42% | -174% |
| Total return | 10.5% | -7.92% | -175.4% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Annualized Rate of Return Calculator reports Annualized rate of return and total return. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. Investment returns are not guaranteed. The result shows what the numbers you enter would produce, not what the market will do. It is for information, not financial, tax or legal advice.
Frequently asked questions
Does annualizing short periods mislead?
Yes. A strong three-month return annualized can look far better than a year can deliver.
What rate of return should I assume?
There is no guaranteed rate. Test a range of conservative and optimistic rates, and remember that fees and inflation reduce your real return.
Are investment returns guaranteed?
No. Real returns vary. Use these tools to compare scenarios, not to predict results.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
Related investment calculators
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- Expected Return Calculator
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- Return on Capital Employed Calculator (ROCE)
- Simple Interest Calculator
- Investment Calculator
- Interest Rate Calculator
- Average Return Calculator
- IRR Calculator