# Annualized Rate of Return Calculator

URL: https://speedycalculator.com/calculators/finance/annualized-rate-of-return/
Last updated: 2026-10-25

> The annualized rate of return calculator converts a return earned over a day, week, month, quarter or half-year into the equivalent yearly rate with compounding – and back again.

## Inputs

- Period of the return
- Return for the period (%)

## Results

- Annualized rate of return
- Simple (non-compounded) annual rate

## Formula

```
Annualized return = (1 + periodic return)^(periods per year) − 1
Periodic return = (1 + annual return)^(1 ÷ periods per year) − 1
```

## Explanation

A 2% monthly return is not 24% a year – compounded, it is about 26.8%. Annualizing makes returns over different period lengths comparable. Be careful annualizing very short periods: a lucky week rarely repeats 52 times.

### How to use the Annualized Rate of Return Calculator

- **Period of the return**
- **Return for the period**
- Every result field is editable: type into **Annualized rate of return** and **Return for the period** plus every other field update to match.

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Choose the length of the period and enter the return earned over it.

### Tips

- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.

### Common mistakes to avoid

- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).

### Inputs explained

FieldWhat to enterPeriod of the returnChoose one: Daily, Weekly, Monthly, Quarterly …Return for the periodIn %

### What each result means

- **Annualized rate of return** = ((1 + [Return for the period]÷100)^[Period of the return] - 1)×100
- **Simple (non-compounded) annual rate** = [Return for the period]×[Period of the return]

### Example values

How the main result changes when **Return for the period** changes and everything else stays at the example values above:

Return for the period (%)Annualized rate of return (%)2.510.383.7515.87521.556.2527.447.533.551046.41

## Worked example

Inputs — Period of the return: Quarterly; Return for the period: 5 %.

Results — **Annualized rate of return = 21.55 %**; Simple (non-compounded) annual rate = 20 %.

## FAQ

**How do I annualize a monthly return?**
Raise (1 + monthly return) to the 12th power and subtract 1.

**Why not just multiply by 12?**
That ignores compounding and understates the yearly return.

**Is annualizing short-term returns reliable?**
Not very – short-term returns are volatile and rarely repeat.

**What formula does the Annualized Rate of Return Calculator use?**
Annualized return = (1 + periodic return)^(periods per year) − 1.


## Sources

- [U.S. SEC – Investor.gov compound interest and investing basics](https://www.investor.gov/)