Growth & returns
Annualize the return, so different holding periods compare fairly
An annual rate of return calculator: clients enter a starting value, an ending value and years held, and see the total return, the gain and the compound annual rate.
Included on every plan, even the free Practitioner plan. No card needed.
How do you calculate an annualized rate of return?
Divide the ending value by the starting value, raise the result to the power of one divided by the years held, and subtract one. Doubling $10,000 to $20,000 over 10 years is a 100% total return but about 7.18% a year compounded, not 10%. Deposits, withdrawals, fees and taxes require other methods.
When annual statements arrive
Year-end statements, a property sale or a neighbor's claim about their returns prompt clients to measure their own. Many divide total gain by years, which overstates the annual rate. They want an honest figure to compare with alternatives.
What the client types into a search box
“what was my average annual return”
How a client works through it
Enter the starting value
What the investment was worth or cost at the start.
Enter the ending value
What it's worth now or sold for.
Enter years held
The holding period.
Read the returns
Annual return, total return and total gain.
What lands in your inbox
When a client asks your firm to review the result, the request arrives as a contact record with their inputs and results attached, by email and, on paid plans, by webhook to your CRM.
Received
Starting value, ending value and years show the scale of an investment and its result. Strong annualized returns over short periods may reflect concentration risk; weak returns over long periods suggest a portfolio review.
Total return or annual return?
Total Return is the whole gain as a percentage; Total Gain is the dollar amount. Annual Return is the compound annual growth rate, the only fair basis for comparing investments held for different periods.
A 100% total return over 3 years and over 10 years are very different results; annualizing makes the difference obvious.
Results shown: Annual Return · Total Return · Total Gain.
Doubling in ten years
$10,000 grows to $20,000 in 10 years. Total return is 100%. Annual return is 2^(1/10) − 1 ≈ 7.18%, because each year's growth compounds on the last. Dividing 100% by 10 years would overstate it at 10%.
Why would an adviser publish a return calculator?
Because clients compare returns badly, and a firm that teaches them to annualize earns trust. It also helps prospects evaluate what they have now, which can open a review of their current portfolio.
CPA firms use it for property and business sale conversations, where holding period matters for both return and tax.
Follow-ups this request opens
- Review the client's portfolio performance properly, net of fees
- Compare with appropriate benchmarks
- Plan taxes on a sale with a large gain
- Discuss concentration and diversification
What this calculator leaves out
- No deposits or withdrawals during the period.
- Fees and taxes are not deducted unless already in the values.
- Dividends must be included in the ending value.
- Not a time-weighted or money-weighted performance report.
Platform disclaimer shown under the calculator: Estimates only. The annualized return assumes steady compounding over the period; it does not account for additional deposits, withdrawals, fees or taxes.
Compliance note for firms
Advisers should not use the calculator to present their own performance; the SEC Marketing Rule has specific requirements for performance advertising, including net-of-fee presentation and prescribed periods. As a client tool, it calculates the client's own figures.
Not legal advice. See our disclaimer and the guide to compliance for client calculators.
Terms your client sees in the calculator
These definitions appear in the calculator's collapsible Definitions block, so clients don't have to call to ask what a label means.
- Annualized return
- The steady yearly rate that would turn the starting value into the ending value over the years held, also called the compound annual growth rate (CAGR). Doubling $10,000 to $20,000 over 10 years is about 7.18% a year. It smooths out the actual ups and downs, so it describes the result, not the path.
- Total return
- The overall percentage change from starting to ending value, regardless of how long it took: ending divided by starting, minus one. A 100% total return over 10 years and over 3 years are very different results, which is why the annualized figure is the better basis for comparing investments held for different periods.
- Total gain
- The ending value minus the starting value, in dollars. It is the simplest measure of how much the investment made or lost, but it says nothing about time or the size of the investment. A negative figure is a loss. If you added money along the way, it will overstate the actual investment gain.
- Compounding
- Earning returns on earlier returns as well as on the original amount. Because of compounding, the annualized return is lower than the total return divided by the number of years: a 100% gain over 10 years is about 7.18% a year compounded, not 10%.
- Holding period
- The length of time the investment was owned, entered here in years; fractions are allowed. The annualized return is sensitive to it, especially for short periods: a strong result over a few months can annualize to an implausibly high rate that is unlikely to persist.
- Real return
- The return after subtracting inflation, which shows the change in purchasing power. The figures in this calculator are nominal, in dollars not adjusted for inflation. A 7% annual return during a period of 3% inflation is roughly a 4% real return.
In our glossary: Compound annual growth rate · Real return
Annual Rate of Return calculator: questions from firms and clients
Is annualized return the same as average return?
No. Average (arithmetic) return overstates compound growth when returns vary. Annualized is the compound rate.
What if I added money during the period?
Then use a money-weighted method such as IRR. See the IRR calculator.
Should dividends be included?
Yes, in the ending value, for a total return.
Can I use it for real estate?
Yes, with purchase price and sale value, though costs and rental income need IRR for accuracy.
Are taxes included?
Only if the values are after tax.
How do I compare with inflation?
Subtract inflation roughly, or use the inflation calculator.
Can advisers use it for marketing?
Not for advertising their own performance without meeting SEC rules.
Which plan includes it?
Every plan, including the free Practitioner plan, which runs up to 5 calculators at once alongside the other investment tools. Firm (up to 50) and Network (no cap) add webhooks and white-label. See pricing.
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