A strong nominal return can look a lot less impressive once inflation eats into your purchasing power. Enter your investment, nominal return, and expected inflation rate to see your real, inflation-adjusted return.
How It’s Calculated
Real Return = ((1 + Nominal Return) ÷ (1 + Inflation Rate)) − 1, expressed as a percentage. Nominal Future Value grows your investment at the stated return; Real Future Value applies the same growth but expressed in today’s purchasing power, so you can compare it directly to what your money is worth right now.
A Note on Assumptions
This calculator assumes a constant annual inflation rate and a constant nominal return, neither of which holds exactly in the real world. It also doesn’t account for taxes, which are typically owed on nominal gains rather than real ones.
Worked Example
Say you invest $10,000 at a 7% nominal annual return for 20 years, while inflation averages 3% a year. Your nominal future value would be $38,696.84 — but in today’s purchasing power, that’s really worth $21,425.50, a real annual return of +3.88%.
FAQ
Why is the “real” future value so much lower than the nominal one?
Because inflation erodes purchasing power over time. The nominal figure shows the raw dollar amount you’d have; the real figure shows what that amount could actually buy in today’s dollars.
What inflation rate should I use?
A common long-run assumption is 2-3% (roughly the historical U.S. average), but you can adjust it to model higher or lower expectations.
Can my real return be negative even if my investment grows?
Yes — if you enter a nominal return below your inflation rate, the calculator will show a negative real return, meaning your investment loses purchasing power over time even though the dollar amount grows.
Does this also adjust for taxes?
No — this calculator only adjusts for inflation. Taxes would reduce your real return further and aren’t included here.