YTD: How to Calculate YTD Annualization | Sapling

YTD: How to Calculate YTD Annualization

YTD: How to Calculate YTD Annualization
Written By
Mark Kennan
Mark Kennan
Feb 11, 2010
1 minute read
Stock Market Chart on Blue Background
Annualizing YTD results allows you to compare data from different time periods. Image Credit: AUDINDesign/iStock/Getty Images

Annualizing year-to-date (YTD) data allows you to compare current performance over different time periods. For example, if your portfolio is up 4 percent in the first five months of the year, it's hard to tell whether it's on track to beat the 10 percent return you achieved the previous year. Converting performance measures to an annual percentage lets you make a more meaningful overall comparison.

Follow the Formula

To annualize data, divide the current value by the initial investment value. Then, raise the result to 12 divided by the number of months that have passed. Third, subtract 1. Fourth, multiply by 100. For example, say that your portfolio was worth $1,000 at the start of the year and it's worth $1,040 five months later at the end of May. Divide $1,040 by $1,000 to get 1.04. Then, raise 1.04 to the 12/5, or 2.4th, power to get 1.0987. Third, subtract 1 from 1.0987 to get 0.0987. Fourth, multiply by 100 to find your annualized return would be 9.87 percent.

Mark Kennan

Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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