Finance
Convert total growth over a holding period into a compound annual growth rate.
Results update as you type. No calculate button. All calculations run locally in your browser.
—
—
| Amount | |
|---|---|
| Total gain | — |
| Total return | — |
| Ending value | — |
Bars are scaled to the larger of the two values. A single growth rate hides the path: a steady climb and a volatile ride can share the same annualized figure.
| Year | Value |
|---|
The path applies the annualized rate evenly each year. It is a smoothed view, not a record of what actually happened year by year.
Annualized return = (final value ÷ initial value)1 ÷ years − 1. Total return = (final value − initial value) ÷ initial value.
Initial value $10,000 growing to $15,000 over 4 years: total gain $5,000, total return 50.00%, and annualized return (15,000 ÷ 10,000)1/4 − 1 = 10.67%. That is the steady yearly rate that would carry $10,000 to $15,000 in 4 years.
This is a smoothed, backward-looking rate: it assumes growth compounds evenly and says nothing about volatility, fees, taxes, inflation, or cash added or withdrawn during the period. It cannot be compared directly with a simple average yearly return, and it is not a forecast.
No. A simple average of yearly returns ignores compounding. The annualized (compound) rate is the single steady rate that reproduces the total growth over the period.
The result is negative, which is correct: a negative annualized rate means the value shrank at that steady yearly pace.
Yes, with years as a fraction (for example 0.5 for six months), but annualizing a short period magnifies short-term moves, so treat the result with caution.
Only if they are already reflected in the final value you enter. Dividends reinvested raise the final value; fees paid out lower it.
Because compounding does part of the work: 50% over 4 years is 10.67% compounded, not 12.50% a year, since each year's growth also earns growth in later years.
Results are estimates only and do not constitute professional advice.