1. What is Capital Gains Yield?

Capital Gains Yield (CGY) measures the price appreciation on an investment relative to its original purchase price. It shows how much an investment has grown in value, excluding any dividends or income.

2. How Does the Calculator Work?

The calculator uses the Capital Gains Yield formula:

Where:

• \( P1 \) — End price of the investment (USD)
• \( P0 \) — Original purchase price (USD)

Explanation: The formula calculates the percentage increase (or decrease) in the price of an investment from purchase to sale.

3. Importance of Capital Gains Yield

Details: CGY is crucial for evaluating investment performance, comparing different investments, and making buy/sell decisions. It helps investors understand price appreciation separate from dividend income.

4. Using the Calculator

Tips: Enter the original purchase price and current/sale price in USD. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a good capital gains yield?
A: This depends on the investment type and time horizon. Generally, higher is better, but should be compared to benchmarks and risk level.

Q2: How is CGY different from total return?
A: Total return includes both capital gains and dividends/income, while CGY only measures price appreciation.

Q3: Can CGY be negative?
A: Yes, if the current price is below the purchase price, indicating a capital loss.

Q4: Does CGY account for time?
A: No, CGY doesn't consider the holding period. For annualized returns, you'd need to calculate CAGR separately.

Q5: How is CGY used in portfolio management?
A: Investors use CGY to assess which assets are appreciating most and to rebalance portfolios accordingly.