Total Return
The complete return on an investment including price appreciation and income (dividends, interest).
What it means
Total return captures the complete return on an investment, including both capital appreciation (price gains) and income (dividends, interest). It represents the actual growth in your investment's value, not just the price change.
The math
Include all dividends, interest, and distributions received during the holding period, plus any change in the investment's market value.
How to read it
- Price Return OnlyMisses income component - understates bond/dividend stock returns
- Total ReturnComplete picture - includes all sources of return
Worked example
A stock bought for $100 ends at $105 and paid $3 in dividends. Price return = 5%. Total return = ($105 - $100 + $3) / $100 = 8%. Ignoring dividends understates return by 37%.
In context
Many indices and charts show price return only, which dramatically understates long-term performance. Over 30 years, dividends contribute roughly 40% of S&P 500 total return.
Keep exploring
Annualized Return
The geometric average return per year, allowing comparison of returns over different time periods.
Risk-Adjusted Return
Return measured relative to the risk taken. Allows fair comparison between investments with different risk levels.
Benchmark
A standard (like S&P 500) used to measure portfolio performance. Enables apples-to-apples comparison.
Time-Weighted Return (TWR)
Measures portfolio performance independent of cash flows. Best for comparing manager performance.
Money-Weighted Return (MWR)
Measures actual investor return including the timing and size of cash flows. Shows your personal performance.
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