# annualize

verb an·nu·al·ize \ ˈan-yə(-wə)-ˌlīz , -yü-ə- \
Updated on: 8 Apr 2018

## Definition of annualize

annualized; annualizing
: to calculate or adjust to reflect a rate based on a full year
• quarterly returns yielding at an annualized rate of seven percent

## Recent Examples of annualize from the Web

• Companies are allowed, for example, to annualize the pay of a full-time employee who starts midyear.

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'annualize.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

## First Known Use of annualize

1906

in the meaning defined above

See Words from the same year
NEW! Time Traveler

annualize

## What It Is

Annualize means to express a rate in terms of its annual equivalent.

## How It Works

The concept is best illustrated with an example:

Assume a portfolio generates a 1% return in one month. The monthly rate can be annualized by multiplying 1% by 12 (because there are 12 months in one year) to produce a 12% annualized return. Note that this number is just an estimate of what the portfolio's return would be if its performance was exactly the same for 12 months. It is not a measure of the portfolio's actual return.

To calculate an annualized return for an investment that compounds, use the following formula instead: ((1 + R) N – 1), where R is the periodic rate and N is the number of periods in one year.

## Why It Matters

Annualizing returns makes it easier to compare them across time periods or among different companies, portfolios, stocks, etc. If you are trying to choose between two gold funds, one with an annualized return of 10% and one with an annualized return of 11%, all things being equal, you'd likely choose the fund with the higher annualized yield.

## Seen and Heard

What made you want to look up annualize? Please tell us where you read or heard it (including the quote, if possible).

### Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!

#### mollycoddle

play

to treat with excessive attention

Get Word of the Day daily email!

#### BROWSE DICTIONARY

Odd Habits and Quirks Quiz

• Which of the following best describes an easily irritated person?

Test your knowledge - and maybe learn something along the way.

TAKE THE QUIZ

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ

### Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!

#### Words at Play

##### All the Hits

8 obscure words for bodily harm

##### The Fossil Encased in "Case In Point"

"In point" only lives in this phrase.

##### ‘Sleight’ or ‘Slight’ of Hand?

Watch closely and be amazed.

##### 'Complement' vs. 'Compliment'

The distinction is clear (now).

##### 2017 Word of the Year: Behind the Scenes

How we chose 'feminism'

##### Words of the Year: 1066

Or, Why Pig Meat is Called 'Pork' and Cow Meat is Called 'Beef'

##### Literally

How to use a word that (literally) drives some people nuts.

##### Is Singular 'They' a Better Choice?

The awkward case of 'his or her'

#### Word Games

##### Odd Habits and Quirks Quiz

Test your knowledge of strange human behaviors.

Take the quiz
##### More Confusing Words—Quiz

How many of these commonly confused words do you know?

Take the quiz
##### True or False?

Test your knowledge - and maybe learn something along the way.

Take the quiz
##### Word Winder's CrossWinder

A game of winding words.

Play the game