65-Day Academy · Day 19 · Fundamentals
Total Return — the Only Scoreboard
Price + income
Total return = price change + dividends reinvested. Over long periods reinvested dividends have contributed roughly a THIRD of stock market total return — ignoring them understates every long-term comparison. A 6% price return + 2% yield, reinvested, compounds to more than an 8% price-only return over decades (the reinvested dollars buy more shares, which earn their own returns — compounding on compounding).
The comparison rule
Always compare total return to total return: your fund vs its benchmark vs an index ETF, all with dividends reinvested, over the same window. "Price return" comparisons systematically flatter high-growth/no-dividend holdings and slander income holdings — the opposite error happens in income products' marketing. One frame, fairly applied.
What you'll practise
Which statements about total return are TRUE? (Select all that apply)
15 XP in the app · intermediate
Sources
- Total ReturnInvestopedia
- SBBI Long-Run DataIbbotson Associates
Take this lesson graded in the app →
All lessons are for educational purposes only and are not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk and are not suitable for every investor.