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Real return calculator

Real return calculator (inflation-adjusted)

Real return 3,9 % the purchasing power you actually gain

Uses the Fisher equation: (1 + nominal) / (1 + inflation) − 1. A 7% nominal return with 3% inflation is only about ~3.9% real.

This real return calculator applies the Fisher equation to work out how much of your investment’s return actually translates into extra purchasing power, once inflation is stripped out.

Nominal return isn’t what you actually earn

A 7% return sounds solid, but if inflation is running at 3%, you haven’t really gained 7% of purchasing power. The real return — computed with the Fisher equation, (1 + nominal) / (1 + inflation) − 1 — tells you what you actually gained after accounting for rising prices.

Example: 7% nominal, 3% inflation

A 7% nominal return with 3% inflation works out to roughly 3.9% real return — noticeably less than the simple 7% − 3% = 4% shortcut, because the Fisher equation accounts for compounding between the two rates.

FAQ

What's the difference between nominal and real return?
Nominal return is the raw percentage your investment grew by. Real return subtracts the effect of inflation, showing how much your purchasing power actually increased.
Why not just subtract inflation from the nominal return?
Simple subtraction (nominal − inflation) is a close approximation at low rates, but it's not exact because both returns compound. The Fisher equation — (1 + nominal) / (1 + inflation) − 1 — gives the precise figure.
Can real return be negative even with a positive nominal return?
Yes. If inflation is higher than your nominal return, you're losing purchasing power even though the number on your account went up.