Finance
Real Return Calculator
What you see is rarely what you get. Use this calculator to convert a nominal return into a real (inflation-adjusted) return — the only number that matters for long-term wealth. A 7% FD in a 6% inflation world barely moves the needle.
Real (inflation-adjusted) return
Nominal return
12% / yr
Inflation
6% / yr
Real return uses the Fisher equation: (1 + nominal) / (1 + inflation) − 1. A 7% FD in a 6% inflation world is barely keeping up — a 12% equity return is what actually builds wealth.
Methodology
How we calculate this
(1 + r_real) = (1 + r_nominal) / (1 + i)
The exact form. The shortcut r_real ≈ r_nominal − i works only for small numbers.
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Frequently asked
- Is real return the same as nominal − inflation?
- Close, but not exactly. The exact formula is (1 + nominal) / (1 + inflation) − 1. Subtraction is a good approximation at low rates.
- Why can real return go negative?
- When inflation exceeds your investment return, your purchasing power shrinks. Holding cash in a high-inflation period is a silent capital loss.
Try Inflation Calculator next →
Inflation Calculator