APY

Definition of APY

APY, or Annual Percentage Yield, represents the annual return on an investment, factoring in the rate at which earnings (interest or dividends) are paid and reinvested.

Context

In real estate investments, APY is used to assess the overall profitability of investment vehicles like property funds or rental income. It captures the growth potential, helping investors understand how much they could earn over a year, even if the investment doesn't compound.

Example

If you invest $10,000 in a real estate fund with an APY of 6%, you can expect to earn $600 in one year, reflecting the total return of your investment.