Monitor your Investments (5)

Evaluating performance (2)


When measuring the performance of your asset, use the total return figure, and not the income return figure.

The income return refers only to the income derived from an investment.

In the case of shares, the income is represented by dividend payments;

with debt investments such as bonds, the income is in the form of interest payments.

The total return is the more accurate measure of performance because it also takes into account whether there is a gain (or loss) in the value of the investment over time.

For shares, total return is the sum of dividend income and the capital gain/loss (difference between the sale price and the cost price).

To get the percentage returns, divide the total return by the cost of investment and multiply by 100.