Aww, those poor dividends. They get ignored all the time.
See the word "total" in there? Why is it even needed? Well, you'll note that financial journalists seem to quote a stock market return of 7.3% of whatever the number is, in a given year, ignoring the fact that the market, on average, also paid a 2.6% dividend. So the return was not 7.3%; the total return from the market that year was, in fact, 9.9%. Do this for over a decade, and the total returns, especially if those dividends are reinvested to buy more stock...is massive.
It's a little bit like compensation. If you make a $57,000 salary but also get a bonus of $12,000 for A, B, and C going right, and then you get $4,200 worth of healthcare and other benefits, and you then also get $3,100 in 401(k) matching contributions, and then you report that your compensation was $57,000...you've totally made your company look like misers when, in fact, they were hugely generous in your total compensation. And that doesn't even count the 5,000 stock options you were granted as well.
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Finance: What Is a Real Return?67 Views
finance- a la shmoop. what is a real return? like is there a fake return? you
know like the news? well kinda .real return refers to an [man frowns talking to camera]
investment return mapped against inflation. so let's say you invest in a
bond that pays five percent a year for ten years and then pays you back your
principal .boring but nice- you know like a good doctor visit. your nominal return
over that period was 5% but since inflation was 3% a year during that
period on average your real return was only 2% a year- meaning that the
performance of your investment only eked out a 2% net gain against the price of [equation]
milk gas and you know knocked off iPhones. so don't be a chump who thinks
that they're making more money than they really are, and you know keep on keeping
it real. [man sitting in chair, talks to camera]
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