Yield

The yield is the result achieved on various investments, more precisely the increase of the invested capital.

The return is the result of the investment, more precisely defined, the return is the invested capital increment. Since capital also has several forms of appearance, it can also yield a variety of goods, not just money. Most often a on shares, sale and purchase of real estate, operation, a on bonds we meet in the news with an examination of the yield achieved. However, a business can realize a return a tangible assets or even intangible assets also through

Yield is not to be confused with interest. Even in the case of financial investments such as corporate bonds or that, you have to expect a return government securities, even though they also have interest. However, the bonds can be bought and sold during the term, and their price changes depending on the interest rate environment. The interest, however, is always a nominal value is paid after, which due to the above, in relatively rare cases matches the exchange rate at which we obtained the bond. Therefore, the relationship between the investment - i.e. the purchased bond - and the price received at the time of sale or the money received at maturity (face value + interest) is well described by the concept of yield.

An important part of the yield calculation is the time factor. We almost always talk about the return as an annual return, but in many cases we can also come across a medium or long-term investment spanning several years. In this case, the compound interest principle: if we say that a HUF 100 investment yields 10 percent, we will have HUF 110 at the end of the first year. However, at the end of the second year, it is not 120, because 10 percent of the second year already corresponds to HUF 110 reached in the first year. Thus, at the end of the second year, we will have HUF 121, and - with such a fixed interest rate - we will double our money by the 8th year. 

Distinguishable gross and net yield. By net return we mean the pure return, i.e. the fees, taxes, the remaining yield after deducting commissions and management costs. The gross return also includes these liabilities, so it is not really suitable for comparing the actual performance of individual investments. 

It is an important parameter of every investment expected return, that is, our own expectation of how much return we hope for from the given investment. By default, it is true that the higher the yield we want to achieve, the riskier the investment we must choose, but if we are satisfied with the low yield, then we do not have to take such a risk. 

Another important form of expected return is a payback time. This shows how long it takes for the invested capital to be recouped from the returns obtained from the investment.