Actual Return

  

You dream. You envision. You hope. You believe that your fidget spinner company will return a million bucks in profit next year, four million the year after that, and ten million the year after that. You honestly expect those financial returns.

Three years go by, during which you visually age forty years, only to look back and realize that your trailing three years actual returns were breakeven year one, a loss of $200,000 year two, and a loss of a million in year three, before you finally threw in the towel and declared bankruptcy.

In wars, actual always defeats expected. Sorry.

Related or Semi-related Video

Finance: What Is a Real Return?67 Views

00:00

finance- a la shmoop. what is a real return? like is there a fake return? you

00:09

know like the news? well kinda .real return refers to an [man frowns talking to camera]

00:13

investment return mapped against inflation. so let's say you invest in a

00:17

bond that pays five percent a year for ten years and then pays you back your

00:21

principal .boring but nice- you know like a good doctor visit. your nominal return

00:27

over that period was 5% but since inflation was 3% a year during that

00:32

period on average your real return was only 2% a year- meaning that the

00:38

performance of your investment only eked out a 2% net gain against the price of [equation]

00:43

milk gas and you know knocked off iPhones. so don't be a chump who thinks

00:48

that they're making more money than they really are, and you know keep on keeping

00:52

it real. [man sitting in chair, talks to camera]

Up Next

Finance: What are Return on Equity and Return on Assets?
145 Views

What are Return on Equity and Return on Assets? Return on equity is a percentage that is found by dividing net income by shareholder’s equity. It...

Finance: What is Return on Sales (ROS)?
3 Views

Return on sales is an investment metric that reflects the profitability of a company.

Finance: How Do You Calculate Rates of Return?
35 Views

How do you calculate rates of return? Calculating rate of return on an investment that pays dividends can be a bit tricky. You need to look at the...

Finance: What is the Difference Between Taxable and Untaxed Returns?
2 Views

What is the difference between taxable and untaxed returns? Not all returns and investments are taxed. Some of these can be considered nontaxable i...

Find other enlightening terms in Shmoop Finance Genius Bar(f)