Annualised return
The constant yearly rate that would produce the same total change over several years.
Definition
The constant yearly rate that would produce the same total change over several years.
Why this concept matters
It helps compare investments measured over different periods.
How it works
The total return is converted into an identical compounded rate for each year in the period.
Calculation guide : Annualised rate = (ending value ÷ starting value) ^ (1 ÷ years) − 1
What to watch
A simple average of yearly returns can be misleading.
Simple example
Growing from £10,000 to £12,100 in two years is about 10% annualised.
Example currency : United Kingdom (GBP). The reference country controls the example currency.
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