Calculator Mathway

Reviewed by David Chen, CFA — Professional Investment Analyst

Use this calculator mathway tool to determine the geometric mean return of an investment over a specific period. This annualized return calculator helps you normalize performance data for easy comparison between different investment options.

calculator mathway

calculator mathway Formula:

R = ((V / P) ^ (1 / T)) – 1

Source: Investopedia – Annualized Return | Wikipedia

Variables:

• $P$ (Initial Investment): The amount of money originally invested.
• $V$ (Final Value): The total value of the investment at the end of the period.
• $T$ (Time): The duration of the investment expressed in years.
• $R$ (Annualized Return): The geometric average return per year.

Related Calculators:

• 🔹 CAGR Calculator – Calculate Compound Annual Growth Rate.
• 🔹 ROI Calculator – Measure total Return on Investment.
• 🔹 Stock Profit Calculator – Calculate gains from equity trading.
• 🔹 Compound Interest Calculator – Project future wealth growth.

What is calculator mathway?

An annualized return is the geometric average amount of money earned by an investment each year over a given time period. It is more accurate than simple average returns because it accounts for the effects of compounding over time.

When using this calculator mathway, you can compare different asset classes (like stocks vs. bonds) that were held for different lengths of time on an equal “apples-to-apples” basis.

How to Calculate calculator mathway (Example):

1. Identify your Initial Investment ($P = \$10,000$).
2. Identify your Final Value ($V = \$15,000$).
3. Determine the holding period in years ($T = 3$).
4. Divide Final Value by Initial Value: $15,000 / 10,000 = 1.5$.
5. Raise the result to the power of $(1 / T)$: $1.5^{0.333} = 1.1447$.
6. Subtract 1 and multiply by 100: $(1.1447 – 1) \times 100 = 14.47\%$.

Frequently Asked Questions (FAQ):

Is annualized return the same as CAGR? Yes, in most investment contexts, the Annualized Return and Compound Annual Growth Rate (CAGR) refer to the same geometric mean calculation.

Can I calculate return for less than one year? Yes, but you must enter $T$ as a decimal (e.g., 6 months = 0.5 years). Note that annualizing short-term returns can be misleading.

What if my final value is lower than initial? The calculator will correctly show a negative annualized return, indicating an annual loss.

Does this include dividends? If you want to include dividends, ensure the “Final Value” ($V$) includes all reinvested dividends or cash payouts received.