What is yield (money)? –
Introduction 👋
Your “yield” is how much money you’re making in income from something over time.
For example, your “monthly yield” could be how much money you’re making from renting out a house each month.
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Yield as a percentage 📈
Yield shows the total amount of money that is being made from an investment in income, and it is usually expressed as a percentage.
For example, if you bought a car for £100 and make £10 every month, your yield is 10%. This does not consider the costs involved in renting out the car.
Yield vs “Return on Investment” ⚖️
You might hear yield being compared to a very similar phrase – “return on investment”.
Whilst they are very similar, there is a slight difference –
Return on investment = how much your money increased from an investment in the past. This is a more detailed way of showing how much money you’ve made because it considers any costs you’ve paid.
Yield = how much income you’re making/likely to be given on an investment, without considering the costs involved.
Yield is more forward-looking whereas return on investment looks more at the past.
Return on investment is a more detailed way of telling you how much money you’re making, whereas yield is less detailed.
Conclusion 👍
So that’s it!
Your “yield” is how much money you’re making in income from something over time.
Hopefully you’re feeling more confident about understanding what yield is.
If you know any friends or family members who might benefit from learning about yield, share this post with them!
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