How Can I Calculate The Total Return on My Investments?

When calculating the total return from your investment, you need to consider both the change in investment value, which is simply the change in the unit price, and also any distributions that were made to you. This is because the unit price falls when a distribution is made, just like a share price falls when a dividend is paid by a company.

If your investment appeared to drop in value in your last statement, you may not have taken into account the distributions that the fund made during the year. Share prices have risen strongly over the year and some capital gains were realised when shares were sold to take some profits and these gains then needed to be distributed to investors in the fund. It is always important to look at both the unit price change and also the distributions you have received.

When a fund makes a distribution, it is either paid into your bank account or it is used to buy more units in the fund.

If you are not reinvesting your distributions now, it may be worthwhile to consider doing this because your investment is likely to grow more quickly if you do, due to the power of compounding.

Getting a sound financial grip on your returns is vital. This is all part of our game plan at Advantage One.

Grant Hodgins - Director Advantage One
Strategic Financial Coach