Annualized Return Calculator

Convert a total return over several years into an equivalent yearly rate.

Total return	60 %
Over	5 years

Total return

Over

years

Annualised return

9.856%

A 60% total return over 5 years is 9.856% a year compounded, not 12% (the simple average).

100 growing to the same end point

Year 5Compounding 9.86% a year 160Adding 12 a year (simple) 160Point at the chart, or Tab to it and use ← →

Compounding 9.86% a yearAdding 12 a year (simple)

About the Annualized Return Calculator

Enter the total percentage return and the number of years it took. The calculator gives the steady yearly rate that would produce the same total, and shows how far it is from the simple average.

Dividing a total return by the number of years overstates the yearly rate, because it ignores compounding: each year's gain also earns returns in later years.

The formula

Annualised = (1 + total)^(1/years) − 1

Worked example

A 60% total return over 5 years

1.60^(1/5) = 1.09856
Annualised return = 9.856% a year
Not 60 ÷ 5 = 12%: 12% compounded for 5 years would be 76%

Things to keep in mind

Assumes one investment held throughout. With money added or withdrawn along the way, use the XIRR Calculator.

Questions people ask

Why isn't 60% over 5 years 12% a year?

Because 12% compounded for 5 years is 76%; the true rate is 9.86%.

Is this the same as CAGR?

Yes.

Can I use months?

Yes, enter fractions of a year: 18 months is 1.5 years.