7.2.1 Investment characteristics: return

You need to know at least three key factors about every investment: its return, risk and liquidity. Click on each key factor for more information.

Return is the profit that an investor makes on an investment. The return can come in two different forms:


Some investments receive a return that is based on the return on other investments. For example, some term deposits receive interest that is based in part on whether the average stock market price rises. These investments are called derivatives, since their return is derived from another factor. Before investing, be sure you understand how your investment will earn a return.

Some factors may also reduce the return you receive from the actual earnings that your investment makes:

Of course, the return you expect when you buy an investment may not be the actual return you receive. Investments can lose money.

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