Your annual return is something that is important to be able to calculate if you are going to get involved in investments. Many investors use annual returns to compare investments and to determine performance. Here are the basics of your annual return and how to calculate it.

Annual Return

Your annual return is the amount of money that you earn from a particular investment over the course of a year. This is sometimes referred to as APR or annualized return. By converting a return into an annual return, it will make for a simple comparison among different investment choices.

Calculation

Calculating your annual return is fairly simple. If you know what your daily or monthly return is, you can simply multiply it out in order to determine the annual return. For example, if you know that you are earning .5 percent per month, you would multiply that number by 12 in order to come up with 6 percent annually.

You can also calculate your annual return by dividing the amount of profit by the amount of money that you have invested. For example, if you invest \$1000 and at the end of the year, you are paid \$50, you would take \$50 and divide it by \$1000 to determine that you made five percent.