How to Calculate the Average Yield on Investments
- 1). Divide the yield by the investment amount to find the total yield. For example, if your $27,000 investment yielded $6,000 over five years, divide $6,000 by $27,000 to get 0.222222222.
- 2). Add 1 to the result to find the ratio between the beginning valance and the ending balance. In this example, add 1 to 0.222222222 to get 1.222222222.
- 3). Divide 1 by the time, measured in years, of the investment. In this example, divide 1 by 5 because the return accrued over 5 years, to get 0.2.
- 4). Raise the ratio from Step 2 to the power of the Step 3 result. Use a scientific calculator or a computer calculator. In this example, raise 1.222222222 to the 0.2 power to get 1.040950397.
- 5). Subtract 1 from the result to find the average annual yield on the investment as a decimal. If you prefer it as a percentage, multiply the result by 100. in this example, subtract 1 from 1.040950397 to get 0.040950397, meaning you have an average annual return of about 4.10 percent.
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