The percentage return on an investment stemming solely from the increase in the investment’s market value is determined by the capital gains yield. As an illustration, if an asset is purchased for $100 and subsequently sold for $110, the capital gain is $10. Dividing this $10 gain by the original $100 investment yields a capital gains yield of 10%.
Understanding this metric is valuable for evaluating investment performance, especially when considered alongside other sources of return, such as dividends or interest. Historically, appreciating assets have provided significant wealth creation opportunities, making the yield calculation crucial for assessing the potential of growth-oriented investments.