My Short & Simple Investment lesson this week is about investment performance measurement terms. Blah, blah, blah, I know; it sounds pretty dry, BUT what can be better than seeing how much money your investments are making for you, and knowing how to do that well? The best part is that this is happening while you are spending only a tiny bit of time overseeing your wealth management! Your money works for free with successful investing.
Now that you see how fun and important investment performance measurement terms really are, let’s just look at exactly what the term means. An investment performance measurement term is just the lingo for the ways that your money can work for you. These terms are used to actually measure the results of your investments, particularly in relation to the investment objectives that I have written about in recent Financial Woman blogs, such as capital appreciation and income or cash flow.
The most investment performance common terms you’ll hear are:
- Return On Investment, or ROI
- Realized Gain or Loss
- Unrealized Gain or Loss
- Capital Gain or Loss
Admittedly, the sound of these terms is not real enticing, but a 20% return on equity, or a 12% yield is certainly appealing. These terms are covered in more detail in my 7 Steps to Deliberate Investing course. Only by taking the time to know your investment objectives and learn the terms to measure those objectives can you then know what you want your money to do for you. Then you can measure whether or not you are on the right path to reach your financial goals. Isn’t that what successful investing and being a financial woman is all about?