Real Rate Of Return Calculator
Calculate real return on investment after inflation. Real RoR = ((1 + Nominal RoR) / (1 + Inflation) - 1) × 100.
Formula
Real RoR = ((1 + Nominal RoR) / (1 + Inflation) - 1) × 100
- Real return: actual purchasing power growth after inflation
- Nominal RoR: reported/stated return (ignores inflation)
- Fisher equation: Real = (Nominal - Inflation) / (1 + Inflation)
- During high inflation, nominal return can be misleading
Example
Inputs
- Nominal Return (%): 10
- Inflation Rate (%): 4
Nominal 10%, Inflation 4%: Real = (1.10/1.04 - 1) × 100 ≈ 5.77%
Frequently asked questions
Why is real return important?
It shows actual wealth gain. High nominal with high inflation may mean low real gain.
When does real return go negative?
When inflation exceeds nominal return. Example: 2% return in 3% inflation = -1% real return.