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Determine the initial investment required. Some investments like annuities may require a minimum investment while others, like stocks, usually allow you to invest as much or little as you want.

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Determine the length of the investment in years. An investment of 18 months would be 1.5 years.

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Estimate how much your contribution will be worth at the end of the investment, also known as the maturity. Some investments like an annuity will have a scheduled payout that you can use. Others, like stocks, require you to predict the future value.

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Use the following formula where I is the investment amount, M is the value at maturity and Y is the number of years.

Annualized Rate of Return = (1 + M / I) ^ (1 / Y) - 1 An investment that costs $10,000 and will be worth $15,000 in five years would have an annualized rate of return of just over 20 percent.