Total Return.

In plain English

Total return measures everything an investment paid you, combining the change in its price with any dividends, interest, or distributions you received along the way. Price-only thinking misses the cash an investment hands you, which can be a large share of the gain over time. Total return is usually shown as a percentage of what you originally put in, and it assumes you reinvested any payouts unless stated otherwise. It is the honest number for comparing two investments, because one might look flat on price but pay you steadily in dividends.

01Why it matters

If you judge an investment by price alone, you can badly understate what it actually earned you, especially for dividend payers and bonds.

02The math, step by step

You buy a stock at $100. A year later it trades at $103, and it paid $2 in dividends during the year. Your price return is 3 percent, but your total return is $5 on $100, or 5 percent.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT