What is a yield?

The yield on an investment is a way of measuring how much you can expect to earn from it over a certain period of time. In this way, it is similar to figuring out the return but with one key difference: perspective.

A return compares the difference between the value of an investment at two different periods of time e.g. 2020 and 2021. The yield is more forward-looking, focusing instead on the total value (net) earned by the investment after a period of time. For example, at the end of year, and is reflected as a percentage. 

In this way, a yield is an invaluable tool to help you understand the potential value of an investment and how it may perform in the future.

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