Return of capital

Return of capital means getting back some of the money you invested in something. Imagine you have 10 dollars and you want to buy a toy. You give the store owner the 10 dollars and he gives you the toy. Later on, if you decide you don't want the toy anymore, you could return it to the store and get some of your money back, maybe 5 dollars. That 5 dollars is a return of your capital.

Now let's talk about it in terms of grown-up money investments. If you invest your money in a company, they might pay you back some of your initial investment (or capital) if they decide they don't need it anymore. This could be because they became more efficient at their business, so they don't need all that money sitting around. In this case, they could give some of it back to you, which is called a return of capital. It's like they are returning the toy you bought back to you for some of the money you paid for it.

Return of capital is different from getting paid dividends or interest on your investment. Those payments are actually earnings that the company is making and splitting with you as a shareholder. Return of capital is basically just getting back some of the money you put in at the beginning.