Real Rate of Return Calculator
Calculate your investment's true growth potential! Compare Nominal Rate of Return against Real Rate of Return with a handy chart. Link to Inflation Calculator included.
Real Rate of Return Formula
The real rate of return formula adjusts the nominal rate of return for the effects of inflation to determine the true increase in purchasing power:
Real Rate of Return = ((1 + Nominal Rate of Return) / (1 + Inflation Rate))  1
Where:
 Real Rate of Return: The true increase in purchasing power after accounting for inflation.
 Nominal Rate of Return: The stated annual percentage return on an investment before adjusting for inflation or taxes.
 Inflation Rate: The annual rate at which the general level of prices for goods and services rises, eroding purchasing power.
Example
Let's say you have an investment with a nominal rate of return of 8% and an inflation rate of 3%. Plugging these values into the formula:
Real Rate of Return = ((1 + 0.08) / (1 + 0.03))  1
Real Rate of Return ≈ 0.0486, or 4.86%
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