In this case, divide $18 by 12 months to get $1.50 per month. This formula compounds the monthly return 12 times to annualize it. From January 1, 1970 to December 31 st 2019, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.7% (source: www.standardandpoors.com). This is a conservative estimate based on historical financial data. Annualized Return = ((Ending value of investment / Beginning value of investment) ^ (1 / Number years held)) - 1 In this example, subtract 1 from 1.268 to get 0.268. You can convert from weekly or monthly returns to annual returns in a similar way. A higher return results in greater profit. Monthly Return is the period returns re-scaled to a period of 1 month.