© 2015 Shmoop University, Inc. All rights reserved.

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Annualized Total Return


An annual return is what you make from your investment each year. But what happens if you own your stock or investment for a whole bunch of years? You can figure out the Annualized Total Return, which is the geometric average of your investment's returns.

One problem: this method of evaluating returns misses the volatility of the investment. Did it double and then get cut 80% and then go up a lot at the end of the year? Or was it Milwaukee Ski Slope-flat and nicely boring during the year? Unless you like the taste of Pepto-Bismol and bitter tears, you probably prefer the latter, slightly less dramatic option.