Page 12 - PMD Financial Advisers_An introduction to investing

Returns on investments
Generally speaking, returns on your investments come in the form of either income or capital growth.
Income assets
or save. In some instances, such as with some shares, they can be reinvested to grow your portfolio. However, the income will likely be taxed, while the returns may be subject
form of income, whether reinvested or not, is known as the yield. Income includes:
• rentalincomeonproperties • dividendsonshares
•
Growth assets
Growth assets are those that can be expected to increase
in value – such as property or shares. As growth assets are intended to generate a rise in the underlying value of the asset, they are popular for general wealth accumulation. However they can be more volatile than income assets and face the risk
while the asset is in your possession, capital gains tax may be payable on disposal of the asset.
In reality, many investments have both capital growth and income attributes, and your total investment returns are often a combination of both:
Capital growth + =
Yield (dividends, rent, interest etc)
Total return on investment
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