Returns from Investing

Investment Returns
When you make an investment there are 2 main things you look for from that investment.

These are:

  • A return of income.
  • A capital gain (rather than a capital loss).

The return from your investment will therefore be the total of the income received plus any capital gain made on it. You can have a negative return if you make a loss on the disposal of a particular investment.

When calculating your return take into account the costs involved, such as brokerage fees and any other expenses. If you invest in shares the income return will be the dividends, which are paid on those shares. Most companies pay these in two lots, made up of an interim half-yearly dividend and a final dividend at the end of the financial year. The capital return is the difference between the cost of purchasing the shares and the amount received on the sale.

If investments are other than shares the same principle applies. The return on any investment should be weighed up with other factors, such as the risks involved and the tax situation if it applies to that particular type of investm...

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