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Glossary entry · Money in motion
Annualized return
Definition
A return over several years restated as the compound annual rate that would produce the same result. If an investment grew 50% over 5 years, the annualized return is ≈8.4%/year (not 10%). Almost every chart you see is annualized — without it, comparing different time horizons is meaningless. Sometimes called CAGR (Compound Annual Growth Rate).
Example
A portfolio that doubled over 10 years had an annualized return of about 7.2%/year.
Related
Money in motion
Compound interest
Interest paid not just on what you put in, but on the interest you have already earned.
Read →Inflation
The rate at which the general price of things rises. Same money, less purchasing power.
Read →Interest rate
The percentage something pays — or costs — per year.
Read →Return
The gain (or loss) on an investment, usually expressed as a percentage per year.
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