GLOSSARY TERM
Yield
Yield is the income an investment produces compared with its price or value. It is usually shown as a percentage.
What does this mean in practice?
Yield helps show how much cash income you may receive from an investment, such as dividends from stocks or interest from bonds. It does not describe the full return on its own, because it focuses on income, not price changes. A higher yield can look attractive, but it is not always better. Sometimes a high yield can also be a sign of higher risk.
Example
If an investment is worth €100 and pays €4 per year in income, its yield is 4%. If the price falls but the income stays the same, the yield rises.
Why it matters
Yield helps you understand the income side of an investment, but it should not be viewed alone. For long-term investors, total return, diversification, costs and risk usually matter more than simply choosing the highest yield.
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