Return
From ForcaWiki, the simple encyclopedia
| In one sentence | Getting back the money you originally invested, called the principal, plus extra money on top like interest or profit. |
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| Category | Finance |
| Related | Interest, Loan, Financier |
Imagine lending a friend 10 dollars and eventually getting 11 dollars back. The whole 11 dollars, both your original 10 and the extra dollar on top, is your return. It is the total reward for putting your money to work instead of just keeping it in a jar.
A return is exactly this: the repayment of money originally invested, often called the principal, along with Interest or profit earned on top of it. Anyone who lends money through a Loan, or who invests as a Financier, is ultimately hoping for a good return, meaning they get back more than they originally put in.
Fun facts
- A return does not have to be positive. If an investment does poorly, someone might get back less than they originally put in, which is sometimes called a loss instead.
- Comparing the expected return of different investments, like different movies, is one of the main ways financiers decide where to put their money.
- A safer investment, like a straightforward loan, usually offers a smaller but more certain return, while a riskier one, like film equity, offers the chance at a much bigger return with no guarantee at all.