• Annual rate of return is the process of determining the rate of return on an investment on an annual basis.

  • The rate of return considers the profit or loss on an investment over different periods of time, while the annual rate considers the return on an annual basis.
  • The annual rate of return is expressed as a percentage and is constant over the many years that the investment has been profitable.
  • It differs from the annual return on investment, which can vary significantly from year to year.