Total return — complete investment return

Definition

Total return is a complete measure of profit from an investment, taking into account both price growth (capital gain) and income — dividends, interest, coupons. It's the only fair way to assess how much you actually earned.

Formula

Total return = (Final value - Initial value + Income) / Initial value × 100%

Example

You bought an ETF for 10,000 PLN. After a year it's worth 10,800 PLN and paid 200 PLN in dividends.

• Price growth: 800 PLN (8%)
• Dividends: 200 PLN (2%)
• Total return: 1,000 PLN = 10%

If you only looked at price, you'd see 8%. The missing 2% is dividends — real money that also goes to your pocket.

Why is total return more important than price return alone?

Many indices and ETFs pay dividends. The S&P 500 index in "price return" (without dividends) version shows different results than in "total return" version. Historically, 30–40% of long-term stock returns come from dividends.

The 2.7 percentage point difference annually — that's huge money over 20–30 years.

Accumulating vs. Distributing ETF

• Accumulating (ACC) — ETF automatically reinvests dividends. Total return visible directly in unit price
• Distributing (DIST) — ETF pays dividends to your account. You must manually reinvest them to achieve the same total return

In the context of Polish Belka tax (19%), accumulating ETFs are usually more tax-efficient — you defer tax on dividends.

Total return vs inflation

Real total return = nominal total return - inflation. If you earned 10% but inflation was 5%, your real return is ~5%. When planning financial goals, always think in real terms.

How can Freenance help

Freenance automatically calculates the total return of your portfolio — taking into account both valuation changes and received dividends and interest. You see the complete picture, not just half the truth.

👉 Check your portfolio's total return in Freenance — freenance.io