Real Rate of Return Calculator
What did your investment earn after inflation?
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Real Rate of Return Calculator by TheCalcTools
How the Real Rate of Return Calculator works
Enter the nominal return, inflation, an amount and a number of years.
The Fisher equation divides growth in money terms by growth in prices.
The future values show the effect in nominal and today’s dollars.
The formula
Worked example
Using the default values shown in the calculator:
| Nominal return (%) | 7 % |
|---|---|
| Inflation rate (%) | 3 % |
| Amount | $10000 |
| Years | 10 |
- Real return = 1.07 ÷ 1.03 − 1 = 3.88%.
- $10,000 grows to $19,672 nominally in 10 years, worth $14,637 in today’s money.
Result:
| Real return (exact) | 3.88% |
|---|---|
| Approximation (nominal − inflation) | 4.00% |
| Future value (nominal) | $19,672 |
| Future value in today's money | $14,637 |
Frequently asked questions
Why not just subtract inflation?
Subtraction is a good approximation for low rates, but the Fisher equation is exact.
What does real return tell me?
How much your purchasing power grew. A 7% return in a 3% inflation year gives about 3.9% real growth.
Sources and further reading
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This calculator gives estimates for information only. It is not financial advice, and your lender's or provider's figures will govern. Rates, fees and rules vary. See our disclaimer.