What Is APY? What It Is and How It's Calculated

What Is Annual Percentage Yield (APY)?

By Kristi Waterworth – Updated Sep 4, 2025 at 11:32 PM EST

Key Points

APY calculates yearly investment returns, factoring in compounding interest.
APY helps compare investments with different compounding frequencies clearly.
APY does not include fees; deduct these to find net returns.
We’re bullish on these 10 stocks ›

Deciding where to put your money for the best return can be a daunting task. There are so many different factors to consider, and often various terms for various investments are hard to compare. Knowing how to use the annual percentage yield can help.

Loading paragraph...

Loading image...

Loading paragraph...

APY calculations for different compounding frequencies.

Loading table...

Loading paragraph...

Accounts That Earn Compounding Interest

Interest compounds when interest payments also earn interest. Learn how to get compounding interest working for your portfolio.

How to Calculate Total Monthly Net Income as a Percentage of Revenue

Net income as a percentage of revenue is known as the net profit margin, and it can be useful for businesses to know.

What Is the Difference Between Gross Amount and Net Amount?

Confused about the difference between a gross amount of something and the net amount? We've got you covered.

How to Read a Balance Sheet

Understanding a company's financials is crucial to successful investing. Learn about balance sheets and why they're important.

Loading hub_pages...

Loading paragraph...

About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

TMFMaldivesBlue

@MaldivesBlues

The Motley Fool has a disclosure policy.