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Understanding the simple maths of share ownership

Knowing the drivers of a share's total returns can help you make better investment decisions
Understanding the simple maths of share ownership

The concept of total return and how it is achieved is of great benefit to investors in individual shares. By understanding the make-up of past returns, investors can gain an insight into likely future returns and make better investment decisions.

In bull markets it often seems that the price you pay for shares does not matter. But the price you pay ultimately determines the return you get from your period of ownership. As paying too much increases the risk of losing money. By knowing the drivers of past returns, investors can better weigh up the potential future returns and risks of share ownership.

Here, we look into the drivers of total returns from owning shares, how to calculate them and how to use the information from them.

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