Hong Life CalculatorsUnderstanding the holding period return calculator — concept and principle
This calculator finds the holding period return (HPR) of an investment, the total return over however long you held it, split into the price part and the income part, and annualizes it by the number of days held. It can also link several sub-period returns by compounding. It shows the growth of 10,000 as well. Use it to evaluate a past investment and compare holdings of different lengths.
How it is calculated
- HPR = (ending value − starting value + income) ÷ starting value.
- Price part = (ending − starting) ÷ starting; income part = income ÷ starting.
- Linked sub-periods: HPR = (1 + R₁)(1 + R₂)…(1 + Rₙ) − 1.
- Annualized return = (1 + HPR)^(365/days) − 1.
- Growth of 10,000 = 10,000 × (1 + HPR).
Income is not assumed to be reinvested.
The principle
The holding period return measures what you gained relative to what you invested, whatever the length of time. Returns from separate sub-periods must be multiplied, not added, because each period's return applies to a balance that already includes earlier gains. Annualizing converts the HPR into a yearly rate, so a 10% gain over 200 days can be compared with a 10% gain over two years. For holdings shorter than a year, annualizing assumes the same pace continues, which can exaggerate.
Worked example
Default inputs: bought at 50, now 54, income 1.20, held 200 days.
- Price part = (54 − 50) ÷ 50 = 8%.
- Income part = 1.20 ÷ 50 = 2.4%.
- HPR = 8% + 2.4% = 10.4%.
- Annualized = 1.104^(365/200) − 1 ≈ 19.79%.
- Growth of 10,000 = 11,040.
| Value at the start (price paid) | Holding period return |
|---|---|
| 12.5 | 341.6% |
| 25 | 120.8% |
| 37.5 | 47.2% |
| 50 | 10.4% |
| 62.5 | -11.68% |
| 75 | -26.4% |
| 100 | -44.8% |
How to read the result
The HPR is the actual result of this holding. The annualized figure is useful for comparisons but can be misleading for short periods: a lucky 200 days does not mean 19.79% a year is likely. For multi-period data, the linked HPR is the correct total, not the sum of the returns.
Common mistakes
- Adding sub-period returns instead of compounding them.
- Forgetting dividends or interest received.
- Annualizing very short holdings and treating the result as expected.
- Using the current price as the base instead of the price paid.
Frequently asked questions
What is the difference between HPR and annualized return?
HPR is the total return over the holding period; the annualized return converts it to a yearly rate.
How do I combine monthly returns?
Multiply (1 + each return) and subtract 1.
Does HPR include dividends?
Yes, income received during the holding is included.
Sources: Holding period return, geometric linking and annualization (standard formulas)