Holding Period Return Calculator - Annualized Return

Holding period return (HPR) measures the total gain or loss on an investment over the exact time it was owned. It combines price change with cash income such as dividends, bond coupons, or distributions. If an asset is purchased for $1,000, sold for $1,200, and pays $50 during ownership, total gain is $250 and HPR is 25%. HPR is useful because it captures both return sources in one percentage. The formula is ending value minus beginning value plus income, divided by beginning value. Capital-gain return is the price change divided by beginning value, while income return is income divided by beginning value. Adding those two components equals HPR when there are no contributions, withdrawals, fees, or taxes. Enter expenses as negative income only if that treatment matches the analysis and does not double-count them in ending value. Returns across different holding periods are easier to compare after annualization. The annualized-return formula treats ending value plus income as final wealth and compounds the total growth factor to one year. Days are converted using 365 days per year, months using 12 months, and years directly. A 10% return over six months annualizes to more than 20% because compounding assumes the six-month growth rate can be repeated. That assumption may be unrealistic. Annualizing a loss or a very short observation can produce an extreme number. The annualized calculation is mathematically defined only when final wealth is positive. It also assumes income can be combined with the ending value at the end of the period; a more precise performance calculation would account for each cash flow's date and reinvestment. Use money-weighted return or time-weighted return for portfolios with deposits and withdrawals. Use HPR to evaluate a completed stock, bond, fund, property, or collectible investment, and compare the result with an appropriate benchmark over the same dates. Add transaction costs, management fees, and taxes if the goal is investor net return. Do not compare a pretax HPR with an after-tax benchmark. Total return is backward-looking and does not measure volatility, drawdown, liquidity, credit risk, or whether the same result is repeatable.