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Personal finance

Return

The gain or loss an investment generates relative to the capital invested, usually expressed as a percentage.

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Return measures how much an investment has gained or lost relative to what was initially invested, and it's the basic metric for evaluating any financial product.

Nominal vs. real return

Nominal return is the gross percentage obtained; real return subtracts the effect of inflation. A deposit paying 3% with 3% inflation has a real return close to zero: you preserve your purchasing power, but you don't increase it.

Realized vs. unrealized return

It's only considered "realized" once you sell the asset and lock in the gain or loss. Until you sell, we call it unrealized return: a number on screen that can still change until the moment of sale.

Past returns don't guarantee future returns

This is the mandatory warning on any investment product, and it's not just a legal formality: an asset's historical performance doesn't predict its future behavior.