# annualize

verb
an·​nu·​al·​ize | \ ˈan-yə(-wə)-ˌlīz , -yü-ə-\
annualized; annualizing

## Definition of annualize

transitive verb

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

## Examples of annualize in a Sentence

Recent Examples on the Web

The rules for calculating the figures don’t allow companies to annualize most pay figures. 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

Keep scrolling for more

Share annualize

Resources for annualize

## Statistics for annualize

Last Updated

23 May 2019

Look-up Popularity

Time Traveler for annualize

## The first known use of annualize was in 1906

See more words from the same year

Keep scrolling for more

More Definitions for annualize

annualize

verb

## Financial Definition of 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.

More from Merriam-Webster on annualize

Rhyming Dictionary: Words that rhyme with annualize

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

#### flounce

to move with exaggerated bouncy motions

Get Word of the Day daily email!

Finance Words Quiz

• The etymology of mortgage is related most closely to which two words?

Test your visual vocabulary with our 10-question challenge!

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