How it works
Nominal return measures change in the currency amount. Real return measures change relative to an entered price level. A positive nominal gain can still leave purchasing power lower when inflation is greater.
The formula
Keep currency, units and time periods consistent. Percentage inputs use percentage points (enter 5 for 5%). Results are rounded only for display; tiny nonzero values may use scientific notation. Undefined ratios are shown as unavailable.
An 8% nominal return and 3% inflation imply a 4.8544% real return. For $100,000 over one year: $108,000 nominal value and $104,854.37 purchasing power in today’s dollars.
Calculation method
The Fisher relationship divides the nominal growth factor by the inflation growth factor. Simply subtracting the percentages is an approximation; it differs more as the rates become larger.
Interpretation
The optional projection treats both inputs as constant effective annual rates over the same period. Its real ending value is expressed in today’s purchasing-power units, not a forecast of future prices.
Limitations
Deflation can be modeled with a negative inflation rate above −100%. Nominal returns down to −100% are supported for long-only value scenarios. No inflation series, market return or exchange rate is fetched automatically.
Method and reference sources
Method and content checked 2026-09-20. These sources provide background, not endorsement or professional certification. The formula and limitations above define this calculator.
- Investor.gov — Compound Interest CalculatorGrowth, contribution and time-horizon context; this site does not forecast investment returns.
- Investor.gov — Understanding FeesInvestment fee and compounding context; enter the terms of your fund or account.
Frequently asked questions
Why not just subtract inflation from nominal return?
Subtraction is an approximation. The multiplicative relationship is (1 + nominal return) divided by (1 + inflation), minus 1, with both rates covering the same period.
What is a worked example for Inflation-Adjusted Return?
An 8% nominal return and 3% inflation imply a 4.8544% real return. For $100,000 over one year: $108,000 nominal value and $104,854.37 purchasing power in today’s dollars.