Real Rate of Return Calculator

Your details

Pick which quantity to calculate. The other two become your inputs.
The stated or expected annual return before adjusting for inflation.
%
Annual inflation rate, often measured by CPI. Use a negative value for deflation.
%
Your marginal tax rate applied to investment returns. Set to 0 to compare pre-tax and after-tax results. A 22% federal rate is common in the U.S.
%
Used only to project the growth of your portfolio and purchasing power over the holding period.
USD
Number of years over which to project nominal value, real value, and purchasing power.
years
Currency
Real rate of returnModerate real return
4.85%

Annual return after stripping out inflation (Fisher equation)

Real rate (after tax)4.85%
Simple approximation5%
Nominal portfolio value46,610USD
Real portfolio value25,807USD
Purchasing power retained55.4%
4.85% %
Negative real return<0Near-zero0-1Low1-3Moderate3-6Strong6+

Real return: 4.85% per year.

  • At 4.85% real per year, your purchasing power genuinely grows after accounting for inflation.
  • The simple approximation (nominal minus inflation) gives 5.00%, which differs by 0.15 percentage points from the exact Fisher result. The gap widens at high rates.
  • Over 20 years, $10,000 grows to $46,610 in nominal terms but only $25,807 in today's purchasing power.
  • Inflation alone erodes purchasing power so that $1 today is worth only 55.4 cents after 20 years at this inflation rate.

Next stepA real return above 2% beats long-run inflation comfortably. Review periodically as both inflation and nominal returns change over time.

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