How to Annualize a Quarterly Return

Step-by-Step Guide

1. 1

   Step 1: Obtain the investment's quarterly report.

   You will receive this in the mail or you can look it up online under your account.
   
   You can also find this information on the company's website.
2. 2

   Step 2: Find the quarterly rate of return.

   There will likely be a number of figures within the report that show how the investment rose or fell during that time.
   
   What you want to annualize is the percentage figure, called the rate of return (ROR), which shows the percentage of growth (or shrinkage) you received during the previous three months.
   
   For example, at the bottom of the page of numbers it may show that your quarterly return is
   1.5 percent.
   
   The annual return would be larger, because your money could be expected to have grown each quarter.
   
   The annualized return would be the percentage of growth if the investment grew at the same rate all year. , In order to annualize, you first consider the time period being featured.
   
   In this case it's three months since it's a quarterly report.
   
   Then calculate how many such periods are contained in a year.
   
   Thus, there are four three-month periods (quarters) in a year.
   
   You would then use the number 4 when called for in the annualizing formula.
   
   If you were trying to annualize a monthly return, you would use the number
   12.
3. 3

   Step 3: Calculate how many time periods there are in a year.

Detailed Guide

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