Real Rate of Return Calculator

The real return is your investment gain after adjusting for inflation — the increase in what your money can actually buy. If you earn 7% while prices rise 3%, your real return is about 3.9%, not 7%. It's the number that matters for long-term planning, because it reflects true purchasing power.

The exact formula (the Fisher equation) is (1 + nominal return) ÷ (1 + inflation) − 1. A common shortcut is simply nominal minus inflation, which is close but slightly overstates the real return — the gap widens at higher rates. This calculator shows both.

Subtraction is a fine quick estimate, but it's not exact because inflation compounds against the whole balance, not just the original amount. At low rates the difference is tiny; at high rates it grows. For example, 10% nominal at 5% inflation is a 4.76% real return, not 5%.

Yes — whenever inflation is higher than your nominal return. Money in a checking account earning near 0% has a deeply negative real return when inflation runs 3–8%, quietly losing purchasing power each year. This is the core reason long-term savings are usually invested rather than held as cash.