Plain-English explainers on the concepts behind the numbers — what dividend yield really measures, how expense ratios compound over time, why cost basis matters when you sell, and more.
Start with the articles below, put your own numbers into our Calculators, or browse the Blog for worked examples. We add new explainers regularly.
-
Nominal Return vs. Real Return: How Inflation Changes Your Investment Gain
By Sang Lee — Founder and Editor of AssetCalculus | Published by AssetCalculus Quick answer: Nominal return is the percentage gain you see before adjusting for inflation. Real return estimates how much your purchasing power actually increased after inflation. If an investment earns 7% while prices rise 3%, the simple approximation is a 4% real…
-
What Is APY (Annual Percentage Yield)?
Reviewed by Sang Lee | Published by AssetCalculus APY (annual percentage yield) is the total interest a savings account, CD, or money market account actually pays you over one year, once compounding is factored in. It’s different from the plain “interest rate,” which only reflects the base rate before compounding is applied. Because U.S. banks…
-
What Is Compound Interest?
Reviewed by Sang Lee | Published by AssetCalculus Compound interest is interest calculated on both the money you originally invested and the interest that money has already earned. Instead of earning a flat amount every year, your gains start generating their own gains, which is why compound growth accelerates over time instead of moving in…
-
What Is Average Cost Basis?
Reviewed by Sang Lee | Published by AssetCalculus Average cost basis is the average price you paid per share when you bought the same stock or ETF at different times and different prices. Instead of tracking each purchase separately, you combine them into one number: the total amount you spent divided by the total number…
-
What Is Dividend Yield?
Reviewed by Sang Lee | Published by AssetCalculus Dividend yield is simply the annual dividend income a stock or ETF pays, expressed as a percentage of its current share price. If a stock trades at $100 and pays $4 per share in dividends over a year, its dividend yield is 4%. It’s a quick way…