Explore commonly used personal finance terms.
Annualized yield provides a standardized view of an investment’s yield, indicating what the return would be if held for a full year. It allows investors to compare performance across investments with different durations. Annualized yield accounts for compounding, providing a more accurate reflection of expected returns than simple interest. It is particularly useful for bonds, fixed-income securities, and savings accounts where interest accrues over time, allowing investors to better assess the earning potential across options.
