Yearly averages, the average taken over two or more years, is often used for investment analysis. Knowing the yearly average return on your investments lets you make decisions about making different investments. Combined with other annual averages, such as the average return on different types of investments, you can find out how your investments compare with other investments.
Obtain data for a yearly average. Use investment data for a period of five years for this example. Assume in 2005 your investments returned $1,000, in 2006 they returned $1,500, in 2007 they returned $2,000, in 2008 they returned $1,250 and in 2009 they returned $1,750.
Total the quantities for each year. Conclude that for this example the total dollars, the sum of the quantities, is $7,500 since 1,000 plus 1,500 plus 2,000 plus 1,250 plus 1,750 is 7,500.
Divide the total of the quantities by the number of years used in the average. Conclude that the yearly average for this example is $1,500 since $7,500 divided by the number of years, 5, is $1,500.