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Calculate your true purchasing power growth after accounting for inflation. See if your investments are actually beating inflation or just keeping pace.
Enter your nominal returns and inflation rate
Real return is your actual purchasing power growth after accounting for inflation. If your bond yields 8% but inflation is 6%, your real return is approximately 2% - that's your true wealth growth.
Fill in the details to see your real return
This is the Fisher equation, which accurately accounts for the compounding effect of inflation on returns. A simple subtraction (Nominal - Inflation) is less accurate for higher rates.
Many investors focus solely on nominal returns without considering inflation's impact. A bond yielding 7% might seem attractive, but if inflation is 6%, your real return is only about 1%.
Key Point:
Your investment goal should be to beat inflation consistently. Only returns above inflation represent true wealth creation. Returns below inflation mean you're losing purchasing power despite seeing account balances grow.
Fixed income investments like bonds are particularly vulnerable to inflation since their coupon payments are fixed. Here's what to consider:
Disclaimer: This calculator provides estimates based on assumed inflation rates. Actual inflation may vary. Past inflation rates are not indicative of future rates. This is for educational purposes only and not investment advice.