A rising investment price can feel like a clear measure of success, but it is only one part of the picture. Understanding total return can help you compare results with more context.
Price and income
An investment’s total return can include changes in its value as well as income, such as dividends or interest. A price fall can offset income, so receiving a dividend does not ensure a positive return.
Make room for costs
Trading commissions, fund expenses, account fees and taxes can reduce what you keep. Fee structures differ, so check the relevant documents and consider costs over the period you hold an investment.
Pay attention to timing
The period measured and the timing of contributions or withdrawals can affect the return you see. When comparing figures, check whether they cover the same dates and use the same calculation method.
Keep perspective
Past performance is not a reliable prediction of future results. Returns are one useful signal alongside your objectives, risk exposure and the reasons you invested in the first place.
This article is for general education only and is not personalised financial advice. Investments can lose value. Consider your circumstances and seek professional advice if appropriate.
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