Average Annual Yield

  

Categories: Investing, Metrics

Some investments make money when they rise in value. Most stocks work this way (buy low, sell high). The amount of money you make on these is known as the return. Other investments make money by paying off a set amount of cash. Most bonds work this way...you loan money out and receive regular payments of interest and principal. These types of returns are known as the yield.

The average annual yield is a pretty straightforward way to figure out how much one of these yield-generating investments is paying off over time. Just look at the performance over a number of years and average out the per-year yield during that time. That's it. It's like Average Annual Return (AAR), except with yield-generating investments. These include things like bonds and dividends.

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Finance: What is an Annualized Return?36 Views

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Finance, a la shmoop. What is an annualized return? Alright people, well

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when you invest a dollar you hope or even expect to get more than a dollar [ATM machine]

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back, at some point. And let's say you invested that dollar in Terminators

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Closet -a leading dealer in cybernetic body enhancements. And it went from $1 a

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share to a dollar ten six months later. Alright, nice return.

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You made 10% in just six months but in most investing discussions ,investment [spreadsheet shown]

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returns are discussed in the form of annual returns, not monthly or daily or

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biannual numbers, so you need to convert your six-month return into an annualized [angelic glow]

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one, and you can do the process here of computing that number that is if you made

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10% in six months well then in a year presumably you could notion that you'd

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have made 20%. It's not that you would have guaranteedly made 20% it's just [spreadsheet shown]

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the math saying that well if you had compounded at that rate then you'd have

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made 20%, so what if she made 10% in a month? Well the stock went from a buck a

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share Jan 1 to a buck ten a share by Feb 1 .Well if you impute so that you can [calendar shown]

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compute that month's gain of 10% would carry a compound rate of a hundred

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twenty percent. Right ? You're multiplying 12 months times 10 there, that'd be

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annualizing it meaning, that at that rate you are more than doubling your money on [spreadsheet shown]

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an annualized return basis. And that's more than enough dough to keep

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terminators closet popping out those Wi-Fi enabled contact lenses faster than [woman watches TV]

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