Comments on: How to Annualize a Rate of Return http://allfinancialmatters.com/2008/07/23/how-to-annualize-a-rate-of-return/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Fri, 20 Nov 2009 19:56:44 -0800 http://wordpress.org/?v=abc hourly 1 By: Nia http://allfinancialmatters.com/2008/07/23/how-to-annualize-a-rate-of-return/comment-page-1/#comment-339037 Nia Sun, 27 Jul 2008 03:01:38 +0000 http://allfinancialmatters.com/?p=2702#comment-339037 hey JLP, Do you know anything about sheltering income from tax using federal incentives for investment in natural resources? http://blog.greenwichfinancial.com/2008/05/copyright-2008-greenwich-financial.html hey JLP, Do you know anything about sheltering income from tax using federal incentives for investment in natural resources? http://blog.greenwichfinancial.com/2008/05/copyright-2008-greenwich-financial.html

]]> By: JLP http://allfinancialmatters.com/2008/07/23/how-to-annualize-a-rate-of-return/comment-page-1/#comment-337200 JLP Wed, 23 Jul 2008 19:02:28 +0000 http://allfinancialmatters.com/?p=2702#comment-337200 ebow, An annualized ROR is good for comparing your performance (or your advisor's or mutual fund's performance) with a benchmark. ebow,

An annualized ROR is good for comparing your performance (or your advisor’s or mutual fund’s performance) with a benchmark.

]]> By: ebow http://allfinancialmatters.com/2008/07/23/how-to-annualize-a-rate-of-return/comment-page-1/#comment-337193 ebow Wed, 23 Jul 2008 18:42:20 +0000 http://allfinancialmatters.com/?p=2702#comment-337193 I can follow the formula well enough but don't really see the point. If I've held a security for more than a year, and it's down 12.07% since I bought it, why do I care what the equivalent rate of return over a year would be? I'm still down 12.07%. Another blogger wrote about some kind of stock buy-back he got in on, and expressed his gains in terms of an annualized rate. The transaction's over and he can't make any more money on it, so what is the annualized rate good for? I can follow the formula well enough but don’t really see the point. If I’ve held a security for more than a year, and it’s down 12.07% since I bought it, why do I care what the equivalent rate of return over a year would be? I’m still down 12.07%. Another blogger wrote about some kind of stock buy-back he got in on, and expressed his gains in terms of an annualized rate. The transaction’s over and he can’t make any more money on it, so what is the annualized rate good for?

]]> By: JLP http://allfinancialmatters.com/2008/07/23/how-to-annualize-a-rate-of-return/comment-page-1/#comment-337189 JLP Wed, 23 Jul 2008 18:37:06 +0000 http://allfinancialmatters.com/?p=2702#comment-337189 Wilson, Actually, most financial advisors would be wanting to keep their clients from knowing how to annualize negative returns since it makes the numbers look worse. Wilson,

Actually, most financial advisors would be wanting to keep their clients from knowing how to annualize negative returns since it makes the numbers look worse.

]]> By: Wilson http://allfinancialmatters.com/2008/07/23/how-to-annualize-a-rate-of-return/comment-page-1/#comment-337186 Wilson Wed, 23 Jul 2008 18:20:12 +0000 http://allfinancialmatters.com/?p=2702#comment-337186 First am I:) This makes me scratch my head, despite tons of mathematical formulas in that skull. The rule is just too complicated for joe6packs. My rules are much better: A) do I make money at the end of the day? B) Is my positive return, if any, greater than that of a CD account? That's all I want to know. Just make money, simple. The formulas illustrated hereinabove, I guess, are used by financial advisers to justify the negative or poor return, just like mortgage/financial companies use off-balance-sheets, level-3 assets, etc, to present their nice performance to share holders:) First am I:)
This makes me scratch my head, despite tons of mathematical formulas in that skull. The rule is just too complicated for joe6packs. My rules are much better: A) do I make money at the end of the day? B) Is my positive return, if any, greater than that of a CD account? That’s all I want to know.
Just make money, simple.
The formulas illustrated hereinabove, I guess, are used by financial advisers to justify the negative or poor return, just like mortgage/financial companies use off-balance-sheets, level-3 assets, etc, to present their nice performance to share holders:)

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