 For example, a return over one month of 1% converts to an annualized rate of return of 12.7% = ((1+0.01)12 - 1).This means if reinvested, earning 1% return every month, the return over 12 months would compound to give a return of 12.7%.As another example, a two-year return of 10% converts to an annualized rate of return of 4.88% = ((1+0.1)(12/24) - 1), assuming reinvestment at the end of the first year.