How to Calculate the Annualized Holding Period Return

by Mike Keenan ; Updated April 19, 2017
You will need to make calculations based on your personal situation to determine your holding period return on any particular investment.

The holding period return, or HPR, calculates the overall rate of return for the time that you held a particular investment. Since people hold investments for varying periods of time, finding the annual rate of return from the overall holding period return allows you to compare how well various investment performed over a common time period. To figure the annualized holding period return, you need to know the periodic returns on the investment and how long you held the investment.

Step 1

Divide the periodic rates of return on your investment by 100 to convert to decimals. For example, if your portfolio earn 10 percent the first year, lost 9 percent the second year and gained 5 percent the third year, divide 10, -9 and 5 by 100 to get return rates of 0.1, -0.09 and 0.05.

Step 2

Add 1 to each periodic rate of return. In this example, add 1 to 0.1, -0.09 and 0.05 to get 1.1, 0.91 and 1.05.

Step 3

Multiply the sums of the periodic returns plus 1 by each other to calculate the total return for the holding period. In this example, multiply 1.1 by 0.91 by 1.05 to get 1.05105.

Step 4

Divide the total return for the holding period by the number of years in the holding period. In this example, since you held the portfolio for three years, divide 1 by 3 to get 0.3333.

Step 5

Raise the total return for the holding period to the Step 4 result. In this example, raise 1.05105 to the 0.3333 power to get 1.016733355.

Step 6

Subtract 1 to find the annualized holding period return. In this example, subtract 1 from 1.016733355 to find the annualized holding period return equals 0.016733355, or about 1.67 percent per year.

Video of the Day

Brought to you by


About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

Photo Credits

  • Jupiterimages/BananaStock/Getty Images
Cite this Article | A tool to create a citation to reference this article Cite this Article

Related pages

how long does it take to get tsp withdrawalfree medical alert bracelets for kidshow long can you keep a cheque without cashing itcook county tax appealhow do babysitters file taxesirs insolvency form 4681calculate market capitalization ratehow to withdraw from 401kwhere is my state tax refund njhmo vs pplandbank homes lansing mibuying and selling penny stocksmutual funds vs rrspcanned food structure ideaspersonal loan proposal templatemarket capitalization rate formulageorgia compass gov1099 r 1040louisiana statute of limitations on debthow to turn someone in for disability fraudquit claim deed washingtonwhat does evasive action meanpatent amortization expensenovate definitionhome equity loan on a house that is paid offbuy moneypak card onlinefico score of 680exempt w4sin number checkerbuy cashiers check credit cardtimeshare mortgagedo you pay back pell grantsira vs 401k vs rothcompare vanguard fundsstudent loan debt collection statute of limitationsdifference between prepaid and accrued expensescommon stockholders equity401k management feesdhs link cardformula for fv of annuitycar title loans californiausaa glass doorcan minors open a bank accountcredit card issuer identification numbercvp income statement formatroi versus roedisadvantages of stock dividendsthe state of new hampshire judicial branchwhat does bactrim antibiotic treatclaiming exempt on w 4wallet that protects credit cardsbank deposit limit irstenants in common divorcedifference between mortgage insurance and homeowners insurancetaxidermy schools in missouripik financessi 1099consolidations accountinginsuring a salvage title vehiclewhat does veracity mean in ethicshow to calculate pre tax profit marginquit claim deed living trustcan i buy baby formula with food stampswhen do savings bonds maturect statute of limitations on debtnys income tax rateslotto ohiomarried filing separately itemized deductions splithow much stock loss can you write offpension vs 401k differencehow much does it cost to notarize a paper