1. What is Annual Yield?

Annual Yield is a financial metric that measures the return on an investment relative to the initial amount invested, expressed as a decimal or percentage. It helps investors evaluate the performance of their investments.

2. How Does the Calculator Work?

The calculator uses the Annual Yield equation:

Where:

• \( \text{Total Return} \) — The total gain or loss from the investment (USD)
• \( \text{Initial Investment} \) — The original amount invested (USD)

Explanation: The equation calculates what percentage of the original investment was returned over the period.

3. Importance of Annual Yield Calculation

Details: Annual Yield is crucial for comparing investment performance, assessing profitability, and making informed financial decisions.

4. Using the Calculator

Tips: Enter total return and initial investment in USD. Both values must be positive numbers, with initial investment greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between annual yield and annual return?
A: Annual yield focuses on income generated (like dividends), while annual return includes both income and capital gains.

Q2: What is a good annual yield?
A: This depends on the investment type and risk profile. Generally, higher than inflation and comparable benchmarks is good.

Q3: Can annual yield be negative?
A: Yes, if the total return is negative (investment lost money), the annual yield will be negative.

Q4: Does this account for compounding?
A: No, this is a simple yield calculation. For compounding returns, consider using CAGR (Compound Annual Growth Rate).

Q5: How does this differ from ROI?
A: ROI (Return on Investment) is similar but often expressed as a percentage of the initial investment over a specific period.