There are two ways to earn money by investing. One is capital appreciation. That method involves the value of an asset (like a stock) going up. Buy low, sell high.
The other method of earning money comes from income. Dividends from stocks, or coupon payments from bonds. These investments generate what's called yield. It's usually given as a percentage of a purchase price. So...if a stock valued at $10 pays $1 in annual dividends, it would have a dividend yield of 1%.
A running yield does that calculation for your entire portfolio. Add up the value of everything. Add up the total income you receive from the portfolio. Divide income by portfolio value. That gives you the annual running yield.
If you have a $1 million portfolio that generates $50,000 in income for the year, your running yield would be 5%.
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Finance: What is Capital Appreciation (M...10411 Views
Finance a la shmoop what is capital appreciation as in the sense of an
investment fund or a mutual fund you know that is like what does it mean to
have a mutual fund with a focus on capital appreciation all right people
think more, more assets all right you have capital and yes you [Woman with a vault full of money]
appreciate having that capital but you'd appreciate it more if there was more of
it like it appreciated so a capital appreciation fund is one which focuses
on just growing the assets bigger and bigger don't really care how the capital
gets grown don't necessarily need dividends don't necessarily need minimum
p/e ratios don't necessarily need balance sheet covenants on the
investments you make don't care if it's exposed to the Venezuelan oil companies [Venezuela city landscape]
or the Australian dollar in a cap app fund well you just want the dough to [Money falls into flower pot]
grow and this ethos is in contrast to other flavors of funds which for example
need to throw off cash in the form of dividends like in a growth and income
fund or interest like in a bond fund like you know it's cash people need to
live on right so those have to do a capital appreciation does not so what's
a typical investment in a capital appreciation fund well usually be
something like a mega trend tech stock that just grows or appreciates with time [Man typing on laptop]
and really doesn't throw off much if any of a dividend like Amazon, Netflix
Facebook, Google those guys so think of a capital appreciation fund is the body [Man wearing underpants in a locker room]
builder of the mutual fund world it just wants to grow everywhere
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