Learn About Investing

Learn About Investing

Are my investments working?

There's no way to know if you're doing the right thing if you don't track the performance of investments.

Investment success can be measured by calculating the return (profit) on the investment, both in absolute and relative terms.

The absolute return is the total amount you get back on top of your original investment. Saving a set amount to achieve a personal goal, such as a house deposit or new car, would be an ‘absolute’ target.

The relative return is the return relative to something else – like the rate of inflation. Experienced investors often measure their investments against an appropriate benchmark. Typically, benchmarks are stock indices like the FTSE All-Share Index.

One final thing you need to take into account when calculating the rate of return is the impact that fees could have on the overall value of your investments.