Effective Annual Yield Calculator — Annualised Investment Return
Enter the beginning value, ending value, any income received, and the number of days held to get the Effective Annual Yield — the compounding-equivalent annual return that lets you compare investments held for different periods.
days
Annualised return using compounding — accounts for reinvestment of gains
- 1
Holding period return (HPR)
(10,480 − 10,000 + 0) ÷ 10,000 = 4.8 % - 2
Annualisation exponent
365 ÷ 180 = 2.0278Scales the holding-period return to an equivalent annual rate using compounding. - 3
Effective Annual Yield (EAY)
(1 + 0.048)^2.0278 − 1 = 9.9735 %
How does this calculator work?
EAY annualises an investment return by compounding: first compute HPR = (EV − BV + Income) / BV, then EAY = (1 + HPR)^(365/days) − 1. This gives the equivalent annual rate assuming reinvestment, enabling fair comparison of investments held for different durations.
Formula
How this is calculated
The holding period return (HPR) is the raw percentage gain or loss on an investment over the period it was held: HPR = (Ending Value − Beginning Value + Income) / Beginning Value. It does not depend on how long you held the asset. To compare investments held for different lengths of time you need to annualise, and the right way to do that is with compounding rather than simple scaling.
The Effective Annual Yield (EAY) raises (1 + HPR) to the power of 365 divided by the number of days held: EAY = (1 + HPR)^(365/days) − 1. This treats the holding-period return as if it were reinvested repeatedly over a full year. A 5% return in 180 days compounds to a higher EAY than 5% held for 365 days, because you could reinvest the gain more often. For investments held exactly one year, EAY = HPR.
For comparison, the simple (non-compounding) annualised return is HPR × 365/days. At low returns and short periods the two are close, but they diverge for high returns or very short holding periods. EAY is a stricter, more realistic measure and is especially relevant for money-market instruments, T-bills, and bond-equivalent yield comparisons. No adjustments are made for taxes or currency exchange; enter values in the same currency.
Frequently asked questions
APY (Annual Percentage Yield) typically refers to the effective annual rate earned on a deposit account with a known nominal rate and compounding schedule. EAY is the same concept applied to any investment: you observe the actual beginning and ending values (plus income) and back-calculate the equivalent annual compounding rate. Numerically they are the same type of figure.
Yes — total return includes both capital appreciation and any income distributed during the holding period. If you only compare ending vs beginning values and exclude dividends, you understate the actual return. Enter the sum of all distributions (dividends, coupons, rental income) in the 'Income received' field.
Simple annualisation multiplies the holding-period return by 365/days — it assumes no reinvestment. EAY uses compounding: it assumes the gain is reinvested and earns the same rate for each sub-period. The difference is small for short periods and low returns, but grows larger for high HPRs or multi-year holdings. EAY is the more appropriate figure for investment comparison.
Also known as
TG we-Calculate Editorial Team. (2026). Effective Annual Yield Calculator — Annualised Investment Return [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/effective-annual-yield-calculator
TG we-Calculate Editorial Team. "Effective Annual Yield Calculator — Annualised Investment Return." TG we-Calculate. 2026. https://we-calculate.com/calculator/effective-annual-yield-calculator.
TG we-Calculate Editorial Team, "Effective Annual Yield Calculator — Annualised Investment Return," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/effective-annual-yield-calculator
@misc{wecalculate_effective_annual_yield_calculator, title = {Effective Annual Yield Calculator — Annualised Investment Return}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/effective-annual-yield-calculator}}, year = {2026}, note = {TG we-Calculate} }
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