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Expected Return
An estimate of what a choice might earn across many possible outcomes, not a promised result.
Example
A calculator tests ten possible futures for Sam's $100. Some finish at $80 and some at $140. Their weighted average is $108, so the estimated gain is $8.
How it fits in
Expected return combines possible results with assumptions about how likely they are. Change those assumptions and the estimate changes. It does not say which result will happen next year or on a goal date. Compare the estimate with the downside, fees, inflation, access needs, and goal shortfall risk. A risky choice can still have a poor expected return, so risk alone does not earn a reward.
Where this is taught
Related terms
When the money you earn from saving starts earning its own money on top.
Interest paid only on the original amount, never on the interest you have already earned.
Needs are the things that keep you safe and well. Wants make life nicer. Mixing them up is what empties most budgets.