1. Investors
  2. Deciding how to invest
  3. Understanding return

Understanding return

Return is the money you make on an investment. It’s the reason we invest. When choosing investments, you need to consider whether the return is going to be enough to help you reach your goals.

You’ll need a bigger return if:

  • your goal is a large sum
  • you need to achieve your goal in less than 10 years
  • you don’t have much money to start with and/or you don’t plan to contribute regularly.

3 ways you can make money

  1. Interest paid when you invest in fixed interest investments such as bonds or cash deposits. You usually know how much you’re going to be paid and for how long.
  2. Dividends paid when you invest in a company’s shares. The amount you’ll be paid will depend on how well the company has performed and the type of shares you own. 
  3. Capital gain made when you sell an investment for more than you paid for it. 

See what does good performance looks like?