I just recently gained a better understanding of Yield, and I feel like sharing it with everyone because this topic is really very important if we want to invest mindfully.

What exactly is yield? Simply put, it is the return we will receive from investing in various assets, whether stocks, bonds, or real estate, expressed as a percentage per year. Therefore, yield is an indicator of how much our money will 'work' to generate profit.

The calculation method is not as difficult as you might think. For bonds, we use the formula (current price – purchase price) / purchase price × 100%. For example, if we buy a bond at 1,000 baht and earn 50 baht in interest per year, the yield is 5%.

But what’s interesting is that there are many types of yield. When investing in stocks, we look at the dividend yield, which is calculated by dividing the dividends received by the current stock price. For example, if a company pays 10 baht per share in dividends and the stock price is 100 baht, the dividend yield is 10% per year.

And for mutual funds, yield is the total income divided by the net asset value of the fund, which comes from dividends and interest earned from investments.

What makes yield high or low? The type of investment plays a significant role. Stocks tend to offer higher yields than bonds, but they also carry higher risks. Market conditions also have a major impact, such as interest rates, economic conditions, and political risks. It also depends on the investment horizon; the longer the period, the higher the expected yield tends to be.

Another thing to remember is that yield often goes hand in hand with risk. Investments with higher risks need to offer higher yields to compensate for that risk. A company's policy on dividend payments or investment also affects the expected yield.

It’s important to distinguish between yield and return. Yield is the expected return without including price changes, while return is the actual profit or loss, including capital gains or losses. So, return = dividends + (selling price – purchase price).

If asked which type of yield provides the highest return, it depends on each person’s goals. Stocks can offer high returns over the long term but come with high risk. Real estate also provides good returns but requires a large amount of capital. Bonds are safer but offer lower returns. The choice depends on how much risk you’re willing to take, how much money you have, and whether you want current income or future growth.

Personally, I see yield as a tool that helps us make better investment decisions because it shows how our money will work. But we must be cautious: high yield ≠ good investment. We also need to consider the risks involved.