What you'll see when checking performance
Points to know
- Your personal performance results can differ from the reported performance of your investments if you make changes during the period being reported.
- Your "total" return includes both increases in share price and any income payments.
Total return, income, yield—what does it all mean?
Once you get used to checking your investment performance, you'll be able to focus specifically on the numbers that are important for your situation. Here are some of the most common questions we get about performance.
My investment company says my fund returned 10% last year. But I didn't make nearly that much. What's going on?
Investment companies report performance assuming someone made a lump-sum investment on the first day of the reporting period and then did nothing until the end of the period. But that might not match with your experience.
First, you may have started investing in the fund at some point during the period. Or you may have made multiple small investments.
On the other hand, you may have withdrawn money during the period. Even if you put it back later, your return won't match the fund's return anymore.
Fund performance numbers also assume that all of the dividend and interest payments distributed during the period were immediately reinvested in the fund. If you took the cash instead, that will also affect your personal performance.
What is "30-day yield"?
The Securities and Exchange Commission (SEC) requires stock and bond mutual funds and ETFs (exchange-traded funds) to publish a yield figure that gauges how much income you might receive from the fund each year. The figure is based on income payments during the previous 30 days.
For example, if you had $50,000 to invest, then a fund with a 30-day yield of 2% could potentially give you $1,000 a year in income payments.
Keep in mind, though, that this calculation is based on the previous month—so it won't perfectly represent what will happen in the future.
You may see other yield measures reported for your investments. But the 30-day yield is the best one for estimating future income. Just remember that in most cases, an investment's yield is useful only if you're currently counting on your investments for income.
What is "total return"?
Total return figures take into account not only the increases (and decreases) in the prices of the shares you own but also the value of any payouts you received. (It also assumes these payouts are reinvested and continue to grow.)
For instance, your stock fund's share price may have gone from $50 to $60 during the reporting period, which would be a 20% increase. If the fund also paid a dividend of $5 per share, your total return is 30%.
GOOD TO KNOW
People often confuse their cost basis with their account's performance. But cost basis is intended to help you figure out the taxes you owe, not how well your investments are doing.
See why cost basis doesn't equal performance
I see my fund's "after-tax return," but how do you know how much I pay in taxes?
If you do own the fund in a taxable account, the after-tax return is simply an approximation of how much of the return will be left after taxes are taken out, for the average investor. It may not (and probably won't) match your specific situation.
But if you're comparing 2 similar funds, the after-tax return can be helpful. Depending on the funds' investment and trading strategies, 1 fund may be subject to more taxes than the other.
*When taking withdrawals from an IRA before age 59½, you may have to pay ordinary income tax plus a 10% federal penalty tax.
All investing is subject to risk, including possible loss of principal. Past performance is no guarantee of future results.