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Types of Returns: Understanding Annual and Annualized Returns
While annual and annualized returns are some of the most commonly quoted investment metrics, they are seldom truly understood. Learning to interpret annual and annualized returns, and what their limitations are, equips the investor with the information needed to make sound decisions and avoid hype.
In this guide, you will learn the following:
- How to interpret annual and annualized returns
- How rallies and pullbacks affect annualized returns
- To find the best long-term compounding
- How sectors rarely dominate in tandem
- And much more!
With this information, investors can interpret annual and annualized returns with clarity. While these metrics can be useful, they do not tell the whole story.