A simple understanding is that the greater the net growth value per unit time of net worth wealth management products, the greater the income;
If the 7-day cumulative net value of a net-worth wealth management product is1.1kloc-0/,then its annualized rate of return is: (1.10/) ÷1÷.
The calculation method of annualized rate of return is to convert the current rate of return (daily rate of return, weekly rate of return, monthly rate of return) into annual rate of return, which is a theoretical rate of return, not an actual rate of return.
Annualized rate of return The annual rate of return converted from the net income per 10,000 fund shares of the Monetary Fund in the past seven days. There are two ways to carry forward money market funds: 1. "Daily dividends are carried forward on a monthly basis", which is equivalent to daily simple interest and monthly compound interest; 2. "Daily dividends are carried forward daily", which is equivalent to daily compound interest.
The annualized rate of return refers to the rate of return obtained by investing for one year.
Annualized rate of return = [(return on investment/principal)/investment days] *365 × 100%
Annualized income = principal × annualized rate of return
Actual income = principal × annualized rate of return × investment days /365
The annual rate of return is the ratio of the actual return of an investment within one year.
The annualized rate of return is the return of investment (commonly used by money funds) within a period of time (such as 7 days). Assuming that the year was at this level, the annual rate of return was converted. Because annualized rate of return is variable, annualized rate of return is not necessarily the same as annualized rate of return.
For long-term wealth management products, the subscription period and liquidation period may be negligible, but for short-term wealth management products within 7 days or 1 month, this time has a great impact.
For example, a bank's 7-day wealth management product is called annualized rate of return 1.7%, but it needs at least 8 days of funds, 1.7% * 7/8 = 1.48%, which is almost the same as the bank's 7-day notice deposit, and the bank's notice deposit is much more convenient and stable than the general risky wealth management products. Therefore, to look at the annualized rate of return, we should not only look at the declared figures, but also look at the actual income figures.
Under different income carry-over methods, the calculation formula of seven-day annualized rate of return should also be different. There are two ways to carry forward money market funds. One is to pay dividends on a daily basis and carry them forward on a monthly basis, which is equivalent to daily simple interest and monthly compound interest.
The other is daily dividend, which is carried forward on a daily basis, equivalent to daily compound interest, in which the formula for calculating simple interest is: (∑ ri/7) × 365/10000 ×100%, and the formula for calculating compound interest is: (∏ (1+ri/650).