Put simply, a return is the money made on an investment over a particular period of time, or how much you get back on top of what you put in. An investor will generally put money into an investment because they expect some kind of return; that’s where we get the term ‘return on investment’ from.
But the amount of return, or the timeframe for getting a particular return, depends on the type of investment you make.
For example, an investor providing an early-stage tech startup with ‘angel funding’ will know not to expect a return for several years – until the startup ‘exits’ through a public listing on a stock exchange or is acquired by another company.
If a startup makes it to this stage, the return could be huge – but about 90% don’t. In fact, a high percentage of startups fail before making it anywhere near exit stage. Most angel investors actually invest in these types of companies knowing that there’s a good chance that they may not get anything back. What’s more, they know they’ll lose the capital they first invested, too.
Of course, expectations are different when it comes to super.