Real Return Calculator
Returns you can actually spend.
Turn a nominal return into an inflation-adjusted one. See what your money could be worth in today’s purchasing power after years of growth and rising prices.
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- Runs in your browser
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- Educational only
Return and inflation.
Before inflation.
Average yearly rise in prices.
Return and inflation are assumed to be steady. These are hypothetical assumptions for learning, not forecasts or expected results for any investment.
Result
Nominal value against purchasing power.
View the year-by-year table
What the numbers mean.
Nominal is not real.
A nominal return is the headline number. A real return subtracts the loss of purchasing power from rising prices, and it is what you can actually spend.
The exact formula.
The real return is (1 + nominal) ÷ (1 + inflation) − 1. Subtracting inflation is a good shortcut at low rates and less accurate at high ones.
Cash loses quietly.
Money that earns nothing keeps its face value but loses purchasing power every year inflation is positive.
About this real return calculator.
A real return calculator shows how much your investment grows after inflation. A nominal return is the headline figure, such as 7% a year. The real return is what is left once rising prices have taken their share, so it tells you how much more you can actually buy. Enter a starting amount, a nominal return, an inflation rate and the number of years.
Inflation quietly reduces what a sum of money can buy, which is why long-term plans should be judged in today’s money. Learn more in our article on inflation and investing and the glossary entry on inflation. To project growth with and without inflation side by side, try the investment growth calculator.
How the real return calculator works in practice.
Start with $10,000, a 7% nominal return, 3% inflation and 20 years.
Ending value, nominal: $38,697
Ending value in today’s money: $21,426
Purchasing power lost to inflation: $17,271
Real gain over the period: $11,426
The real return is found with (1 + nominal) ÷ (1 + inflation) − 1, which is slightly below the simple difference of 4%. At 6% inflation the real return falls to 0.94% a year, and the same $38,697 buys what only $12,066 buys today. Held as idle cash for 20 years at 3% inflation, $10,000 would buy what $5,537 buys today.
How to choose your inputs.
Starting amount. The sum you start with, in today’s money.
Nominal annual return. The yearly return before inflation, ideally after fees.
Annual inflation. Use a long-run estimate. Many central banks aim near 2%, but actual rates vary by country and period, so test a few.
Years. The time horizon. The longer it is, the more inflation matters.
How the real return calculator works.
The model grows your amount at the nominal rate, then divides by the cumulative price level to express the result in today’s money.
Nominal value = amount × (1 + nominal return)^years
Value in today’s money = nominal value ÷ (1 + inflation)^years
Inflation and returns are steady in this model. Taxes and fees are excluded, and your own inflation rate may differ from the average.
Limits of this real return calculator.
The calculator assumes the same return and inflation rate every year, which real markets do not deliver. It ignores taxes and fees unless you build them into the return, and it uses one inflation rate, while your own costs may rise faster or slower than the average. Treat the result as an illustration, not a forecast.
Common questions about the real return calculator.
Why not just subtract inflation from the return?
It is a decent approximation when rates are low. The exact calculation divides, and the gap grows as inflation rises.
Which inflation rate should I use?
Use a long-run average for your country, or test a range. Your personal inflation can differ from the headline index.
Is a negative real return always bad?
It means your purchasing power fell. Some savers accept it for safety or liquidity, but it is worth knowing.
Does it include taxes?
No. Taxes on gains and interest reduce real returns further.
What is real return?
Real return is the growth of an investment after removing inflation. It shows the change in what your money can buy, not just the change in its amount.
How do I calculate real return?
Divide one plus the nominal return by one plus the inflation rate, then subtract one. For 7% and 3% that gives about 3.88%.
More calculators.
Educational illustration only, not a forecast or personal investment recommendation. Returns and inflation are assumed steady, and taxes and fees are excluded.
Further learning: Inflation and investing · Glossary: Inflation · Investment Growth Calculator · Investor.gov: Financial tools and calculators · Research methodology · Financial disclaimer