Total return measures how much an investment made or lost when you count both price movement and cash paid out along the way. For a share, that means the change in the share price plus any dividends you received. Looking only at the price can understate or overstate what you actually earned.
Key takeaways
- Price change alone is not the full story if the investment also pays dividends or interest.
- Total return can be stated as a percentage of what you put in at the start of the period.
- Comparing funds or stocks fairly usually means comparing total return, not just price charts.
- Past total return does not guarantee future results, and costs such as fees reduce what you keep.