Read on Twitter
YIELD, RETURN, & GAINSI've been getting this question a lot lately.
So let's clear up the difference between "yields", "returns", and "gains".
Definitions included courtesy of Investopedia.
[THREAD TIME]
YIELD - the income returned on an investment
Ex: dividend & interest
If you only hold one share of XYZ in your portfolio and it pays you $3 in dividends, you have a 3% yield.
Your portfolio is one share of XYZ worth $100 and $3 in cash.
Ex: dividend & interest
If you only hold one share of XYZ in your portfolio and it pays you $3 in dividends, you have a 3% yield.
Your portfolio is one share of XYZ worth $100 and $3 in cash.
GAINS - an increase in value of an asset or investment
There are two types of gains to be aware of:
Realized & Unrealized
Realized gains occur after you have sold your shares.
Ex: XYZ increased to $103, you sold, you "realized a $3 gain".
There are two types of gains to be aware of:
Realized & Unrealized
Realized gains occur after you have sold your shares.
Ex: XYZ increased to $103, you sold, you "realized a $3 gain".
Unrealized gains occur while you still own the shares.
Ex: XYZ increases to $103, you still own your share, you have an "unrealized" gain of $3.
These numbers usually show up when you're looking at your portfolio and positions.
Ex: XYZ increases to $103, you still own your share, you have an "unrealized" gain of $3.
These numbers usually show up when you're looking at your portfolio and positions.
RETURN - the money made or lost on an investment over a certain period of time
"Total" return includes increases in the value of your shares, as well as any interest or dividends.
If XYZ goes to $103 and pays a $3 dividend, you have
- 3% gain
- 3% yield
- 6% total return
"Total" return includes increases in the value of your shares, as well as any interest or dividends.
If XYZ goes to $103 and pays a $3 dividend, you have
- 3% gain
- 3% yield
- 6% total return
I hope you found this valuable.
If you're just starting out on your journey in the investing world, it's good to know the terms.
This was a question that's popped up a lot lately so I wanted to do my best to clear it up.
If you're still confused, I'm just a DM away.
If you're just starting out on your journey in the investing world, it's good to know the terms.
This was a question that's popped up a lot lately so I wanted to do my best to clear it up.
If you're still confused, I'm just a DM away.
And finally,
If you're really serious about taking the next steps:
Get "The Investor's Playbook" by @TheeFinanceGuy below!
6.5 hours of videos and slides teaching you how to get started with:
- Research
- Valuation
- Diversifying
(Aff) http://tiny.cc/IPDBS
If you're really serious about taking the next steps:
Get "The Investor's Playbook" by @TheeFinanceGuy below!
6.5 hours of videos and slides teaching you how to get started with:
- Research
- Valuation
- Diversifying
(Aff) http://tiny.cc/IPDBS
