Efficiency

Return is the combination of cost, dividend and exchange rate difference and for yourself, of course, that includes tax burden.

Yield: The trade-off between costs, dividends, exchange difference and tax

Investing is done to achieve returns. But what exactly is return? And how do costs, dividends, price difference and tax burden affect your final result? In this article we discuss all the facets that are important in determining your return.

The basics: return defined

Return is the profit you make on your investments, expressed as a percentage. It is calculated by dividing the return on your investment (dividends + price gain) by the deposit.

Return = (Dividend + P/E) / Deposit * 100%.

There are two main components of return:

  • Dividend: The distribution of profits that a company awards to its shareholders.
  • Price gain: The increase in the value of your investments.

In addition to these two components, there are three more factors that affect your returns:

  • Fees: The transaction fees, management fees and other fees you pay for your investments.
  • Tax burden: The tax you pay on your investment returns.
  • Risk/reward ratio: The trade-off between the risk you take and the return you can achieve.

Costs: The silent attacker of your returns

Fees are an important factor that can depress your returns. Transaction fees, management fees and custody fees are just a few examples of fees you may encounter.

Tip: Compare the costs of different investment products before you invest. Choose low-cost investments because they can have a significant impact on your long-term returns.

Dividend: A stable source of income

Dividends are a stable source of income you can get from stocks. Companies that make profits distribute a portion of those profits to their shareholders in the form of dividends. Tip: Invest in companies with consistent dividend policies. This ensures a stable stream of income.

Price difference: the potential hit

Price difference is the gain you make when the value of your investments increases. This can come from a variety of factors, such as good business results, positive market sentiment or economic growth.

Tip: Spread your investments to reduce your risk. Invest in different sectors and regions to take advantage of different price movements.

Tax burden: The inevitable bite

Unfortunately, there is always tax to pay on your investment returns. The amount of the tax burden depends on the type of investment and your tax profile. That's why you take advantage of tax benefits, such as the box 3 investment exemption, as much as possible.

Risk/reward ratio: The golden balance sheet

There is no return without risk. The higher the potential return, the higher the risk. It is important to find a balance between risk and return that fits your investment profile. Risk of a diversified portfolio is lower anyway, but what exactly is risk?

Read more on this page about risk.

Return is a complex concept influenced by several factors. In addition to costs, dividends and price differential, it is important to consider tax burdens and the risk/return ratio. By considering all factors, you can optimize your investment portfolio and maximize your return.

save

The saver is someone who chooses security over returns. Low risk resulting in very low returns. The main goal is capital preservation and having money readily available for unforeseen expenses.

defensive

Defensive investors are cautious and want to minimize risk. They invest mainly in bonds and safe mutual funds. Returns are moderate, but preserving capital is the top priority.

moderately defensive

These investors seek a balance between return and risk. They invest in a mix of bonds, stocks and real estate. Although there may be some volatility, they aim for stable long-term growth.

moderate offensive

Moderately offensive investors accept some risk for potentially higher returns. They invest primarily in stocks and diversify their portfolio to spread risk.

offensive

Offensive investors have a higher risk tolerance level and invest primarily in stocks. They seek significant long-term growth and accept temporary market volatility.

highly offensive

Willing to accept significant fluctuations. They invest in stocks, often with a specific focus, derivatives and volatile sectors for maximum growth, with significant short-term fluctuations.

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