Calculate your real (inflation-adjusted) rate of return. Nominal returns look impressive — but what matters is purchasing power. This calculator shows what you actually earned in real terms.
Investment Returns
Nominal vs Real (inflation-adjusted)
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US average: ~3.4% (2000-2023). Historical long-term: ~2-3%
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💡 Quick Reference — Common Scenarios
Real Rate of Return
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Purchasing Power Loss
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Nominal Return
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Inflation Rate
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Real Return
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Real Portfolio Value
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Nominal Rate
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Inflation Rate
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Real Rate (Fisher Equation)
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Nominal Portfolio Value
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Real Portfolio Value
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Inflation Erosion
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Total Contributions
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Real Gain (after inflation)
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FAQ
What is the real rate of return?
Real return = (1 + Nominal Rate) / (1 + Inflation Rate) - 1 (Fisher Equation). Simplified: Real ≈ Nominal - Inflation. A 10% nominal return during 3% inflation gives a ~6.8% real return — what you actually gained in purchasing power.
Why does inflation erode returns?
Over 20 years at 3% inflation, $1 today is worth only $0.55 in purchasing power. If your investments only match inflation, you're running in place. An investment returning less than inflation (e.g., a savings account at 0.5% during 3% inflation) is losing real money.
What is a good real rate of return?
Historically, US stocks have returned ~7% real (inflation-adjusted) over long periods. Bonds: ~2-3% real. Real estate: ~1-3% (excluding leverage). Cash: negative real returns in most inflationary environments. Target beating inflation by at least 4-5%.
How can I protect against inflation?
Invest in: TIPS (Treasury Inflation-Protected Securities), stocks (equities historically beat inflation long-term), REITs (commercial real estate passes through inflation), commodities, and I-bonds (inflation-linked government bonds in the US).