Investment returns explained

A return is what an investment earned you over a period, as a percentage of what you put in. The trick is comparing like with like. IncomeGrid helps you discover higher-yield income opportunities you may not have looked at, so you can earn more on the same money. It has 40,000+ investment options screened, each with its yield, after-tax yield and a risk level from 1 to 5.

The ways returns are quoted

Measure	What it includes
Yield / income return	Interest, dividends or distributions only
Price return	Change in price only
Total return	Income plus price change, usually with income reinvested
Annualized return	Average yearly rate that would produce the total
Real return	Return minus inflation
After-tax return	Return after the taxes you actually pay

Real and after-tax returns

A savings account paying slightly above inflation can lose purchasing power once tax is subtracted. To compare what you really keep, subtract tax first, then inflation (CPI from the BLS). For income investments, tax depends on the type: Treasury interest skips state tax, most muni interest skips federal tax. IncomeGrid ranks every item by yield after tax for where you live: after federal, state and each investment type tax (Treasuries, municipal bonds, corporate bonds, funds, REITs and filed offerings are each taxed differently).

Expected vs past returns

Past returns don't guarantee future ones. For bonds, today's yield to maturity is a reasonable starting estimate of return if held to maturity; for stocks, outcomes vary widely. See historical returns for where to find long-run data.

Measure your own

Use the ROI calculator to work out total and annualized return on something you own, including income received.

Comparing returns across investments

To compare a bond fund, a CD and a stock fairly, use the same period, the same measure (total return, annualized), and the same basis (after fees and tax). A CD's APY is close to its total return if held to maturity; a bond fund's total return depends on rate moves; a stock's depends on price. Risk matters too: two investments with the same average return can differ greatly in their worst year.

Fees

Fund expense ratios are deducted from returns every year. Over long periods even small differences compound. Check the fund's prospectus for the expense ratio before comparing returns.

How IncomeGrid helps you earn more

IncomeGrid helps you discover higher-yield income opportunities you may not have looked at, so you can earn more on the same money. It has 40,000+ investment options screened, each with its yield, after-tax yield and a risk level from 1 to 5. Choose where you live and every yield is shown after federal, state and each investment type tax, so you can see which options pay you more.

Compare what you keep → or browse example income portfolios

Frequently asked questions

What is a good return on investment?

Compare with a risk-free benchmark such as Treasury yields; extra return should pay for extra risk.

What is the difference between yield and return?

Yield is income only; total return adds price changes.

Are investment returns taxed?

Yes, in taxable accounts – interest, dividends and realized gains each by their own rules.

Not investment advice. General information only; yields change, check the source before acting.