Glossary · Valuation · Beginner-friendly
Total return
In plain English
Total return is the full result: price change plus any dividends or interest. Looking only at the price chart can miss the income piece.
Everyday analogy: A job’s raise plus bonus - both count toward what you earned.
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Why it matters
Total return is the fair scorecard - price plus income. Price charts alone can mis-rank income-heavy assets.
A bit more detail (optional)
Why price alone misleads
A flat stock that paid large dividends can beat a rising stock with no income. Always check total return for fair comparisons.
Reinvestment assumption
Reported total-return charts often assume dividends are reinvested. Your real results depend on whether you actually reinvested.
Simple examples
Income stock
Price +2% with a 4% dividend can beat price +5% with no dividend over the same year - before taxes.
Income wins quietly
Stock A: +3% price, 4% dividend. Stock B: +6% price, 0% dividend. Before taxes, A’s total return can win.
Easy mistakes to avoid
- Comparing funds on price charts only
- Assuming reported total return matches your cash withdrawals
- Forgetting taxes on dividends
Remember: Score investments on total return, not price charts alone.