Return

What is a return

A return represents the total value an investor receives from their investment over a specific period. It can be expressed in absolute terms or as a percentage of the initial investment. A return includes both capital gains and any dividend yield or other forms of income from the investment.

Types of returns

• Capital return – the difference between the purchase price and the sale price of the investment.
• Dividend yield – regular payments to shareholders from a share of the company's profits.
• Interest income – payments from bonds or other interest-bearing instruments.
• Total return – the sum of capital return and all cash flows from the investment.

How return is measured

Return is usually expressed as a percentage of the original invested amount:

• Absolute return – a simple comparison of initial and final value.
• Risk-adjusted return – the return adjusted for the level of risk.
• Annualized return – converted to an annual basis.

Importance for investors

• Helps assess the success of investments.
• Allows comparisons between different investment instruments.
• Serves as the basis for evaluating a portfolio using metrics such as the Sharpe ratio or ROE.

Returns on Stonkee

On Stonkee users can track the return of individual investments and the entire portfolio in real time, including a comparison with benchmarks such as the S&P 500.

Summary

A return is a key indicator of the success of investing. Regularly tracking returns helps investors optimize their portfolio and better manage risk.