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Annualized Return Calculator
Turn a total gain over any holding period into a yearly compound rate so you can compare investments fairly. Enter your values and press Calculate.
Written by TopicDrill Editorial Team·Updated June 2026
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How annualized return works
Annualized return answers a simple question: if your investment had grown by the same percentage every single year, what would that rate be? It smooths out the bumps of real performance into one clean compounding number, which is why professionals lean on it when they compare funds, stocks or portfolios.
The math uses the compound annual growth rate formula, CAGR = (ending / beginning)^(1 / years) − 1. Because it compounds, a longer holding period spreads the same total gain into a lower yearly rate, while a shorter period concentrates it into a higher one.
A quick example
Suppose you invested $10,000 and it grew to $18,000 after 5 years. The total return is 80%, but the annualized return is about 12.5% per year. That yearly figure is far more useful when you want to line it up against another investment you held for, say, 3 years or 10 years.
Things to keep in mind
Annualized return assumes one lump sum with no money added or taken out along the way. If you made ongoing contributions, an internal rate of return gives a truer picture. To project future growth instead of measuring the past, try our compound interest calculator or browse all of our free calculators.
Frequently asked questions
What is annualized return?
Annualized return is the constant yearly rate that would grow your starting value into your ending value over the holding period. It is also called the compound annual growth rate, or CAGR. It lets you compare investments held for different lengths of time on equal footing.
What is the annualized return formula?
The formula is CAGR = (ending value / beginning value)^(1 / years) − 1. For example, growing $10,000 into $18,000 over 5 years gives (18000 / 10000)^(1/5) − 1, which is about 12.5% per year.
How is annualized return different from total return?
Total return is the overall percentage change across the whole period, while annualized return spreads that growth evenly across each year on a compounding basis. A 80% total return over 5 years is roughly 12.5% per year annualized.
Does annualized return account for cash added or withdrawn?
No. This calculator assumes a single beginning value and a single ending value with no deposits or withdrawals in between. If you added or withdrew cash along the way, a money weighted measure such as IRR is more accurate.
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