Real Rate of Return Calculator: Adjust Investment Returns for Inflation
The tool converts a nominal return to a “real” return by removing inflation with the Fisher equation. For example, a 12 % nominal gain during 6 % inflation equals a 5.66 % real gain. Average U.S. inflation has been 3.2 % since 1914 (BLS, https://www.bls.gov).
Real Rate of Return Calculator
Result:
★ Add to Home Screen
×
Follow these steps:
Tap the Share button at the bottom of the browser
Scroll down and tap “Add to Home Screen”
Tap “Add” to confirm
Follow these steps:
Tap the menu icon (⋮) in the top right
Tap “Add to Home screen”
Tap “Add” to confirm
Follow these steps:
Click the menu icon (⋮) in the top right
Click “Bookmarks”
Click “Bookmark this tab” or press Ctrl+D (Cmd+D on Mac)
Is this tool helpful?
Thanks for your feedback!
How to use the tool
Fill “Nominal Rate (%)” – type the annual percentage your investment earned. Example 1: 7.30. Example 2: 12.
Fill “Inflation Rate (%)” – enter the inflation for the same period. Example 1: 2.40. Example 2: 6.
Press “Calculate” – the tool instantly shows the inflation-adjusted (real) return.
“The real rate equals the nominal rate less expected inflation” (Fisher, 1896).
Retirees often target a 3-4 % real withdrawal rate (Trinity Study, 1998).
FAQ
What is a real rate of return?
A real rate of return shows how your buying power changes after inflation is stripped out of the nominal gain (Fisher, 1896).
Why should you care about real returns?
Real returns reveal whether an investment actually grows purchasing power; nominal gains during high inflation can mask losses (Morningstar, 2024).
Can the real return be negative even when nominal is positive?
Yes. If inflation exceeds the nominal rate—e.g., 4 % gain with 6 % inflation—the real return is −1.89 % (BLS CPI tables, 2024).
How often should you calculate real returns?
Update annually or whenever reviewing your portfolio so strategy aligns with current inflation data (Vanguard Guidance, 2023).
Does the calculator include taxes or fees?
No. Enter post-fee, post-tax nominal rates if you want the real figure to reflect actual take-home growth (IRS Publication 550, 2023).
What inflation measure should you use?
The Consumer Price Index (CPI-U) is the most cited U.S. gauge and updates monthly (BLS, https://www.bls.gov/cpi/).
How do real returns affect retirement planning?
Planners base sustainable withdrawals on expected real growth; a 4 % real return supports a classic 4 % withdrawal rule (Trinity Study, 1998).
Does compounding change the formula?
No. The Fisher equation already accounts for one-period compounding; apply it to each period before chaining results (Fisher, 1896).
Important Disclaimer
The calculations, results, and content provided by our tools are not guaranteed to be accurate, complete, or reliable. Users are responsible for verifying and interpreting the results. Our content and tools may contain errors, biases, or inconsistencies. We reserve the right to save inputs and outputs from our tools for the purposes of error debugging, bias identification, and performance improvement. External companies providing AI models used in our tools may also save and process data in accordance with their own policies. By using our tools, you consent to this data collection and processing. We reserve the right to limit the usage of our tools based on current usability factors. By using our tools, you acknowledge that you have read, understood, and agreed to this disclaimer. You accept the inherent risks and limitations associated with the use of our tools and services.
