Total Return
Total return is the complete return on an investment including capital appreciation, dividends, interest, and distributions — the true measure of investment performance.
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Definition
Total return is the complete return on an investment including capital appreciation, dividends, interest, and distributions — the true measure of investment performance.
Use case
Used in investment strategy workflows, analysis, and technical interviews.
Judgment check
Useful only when the assumptions and inputs behind the metric are understood.
⚡ ROI Calculator
Calculate the total return on your investment as a percentage.
Deep dive
How to think about Total Return
Focusing solely on price appreciation ignores significant income components. For bonds, total return = price change + coupon payments. For stocks, total return = price change + dividends. Reinvested dividends have historically contributed 40%+ of long-term equity returns. Total return investing aims to maximize all sources of return.
Example: S&P 500 price-only return 2013-2023: ~170%. With dividends reinvested: ~230%. The 60 percentage point difference shows dividend contribution. A $10,000 investment grew to $27,000 price-only vs. $33,000 total return.
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Return on Investment is the simplest measure of profitability — what percentage did you gain or lose relative to your initial outlay. While easy to calculate, ROI doesn't account for time or cash flow timing, making it less suitable for multi-year private market investments compared to IRR.