Yield vs Return

Yield and return look similar but they are different. Most of the people think the two terms to be one and the same.

When talking of return, it is what an investor has earned on his investment during a certain period of time during the past. Return generally takes into account interest, capital gain, increase of share price and dividends. Return can be called as retrospective or what one has earned in the past.

In contrast to Return, Yield is prospective or advanced looking. Yield measures
income like interest and dividends that is earned through an investment ignoring capital gain. In Yield, the income is taken in the perspective of a certain period of time and then and annualized, with the supposition that the dividends and interests will continue to be got at the same rate.
When yield ca be called as percentage increase on investments, return can be called as absolute dollar amount. Yield usually refers to annualized number where as return refers to any period of investment, may be one year or two years.

Return can also be said to be the overall change in value with the assumption that the fund’s dividends and capital gains are reinvested. On the other hand, yield depicts the income and earnings of funds on its investments. Unlike return, yield is the measure of income and not capital gains.

When talking of bonds, return is an interest payment on principle. Yield denotes the price of the bond.

Summary

1. When talking of return, it is what an investor has earned on his investment during a certain period of time during the past.

2. In Yield, the income is taken in the perspective of a certain period of time and then and annualized, with the supposition that the dividends and interests will continue to be got at the same rate.

3. Return can be called as retrospective or what one has earned in the past.

4. In contrast to Return, Yield is prospective or advanced looking.

5. When yield ca be called as percentage increase on investments, return can be called as absolute dollar amount.

6. Yield usually refers to annualized number where as return refers to any period of investment, may be one year or two years.

7. Unlike return, yield is the measure of income and not capital gains.

8. Return can also be said to be the overall change in value with the assumption that the fund’s dividends and capital gains are reinvested. On the other hand, yield depicts the income and earnings of funds on its investments.

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