Skip to content
Finance Calculators

Real Rate of Return Calculator

Verified formula Updated Jun 2026 Private — runs on your device

Enter details
%
%
Verified formula Private

Real rate of return

5.660%

Approximate (nominal − inflation)
6.00%

For general information only — not financial, tax, legal or medical advice. Verify before you rely on it.

How to use the Real Rate of Return Calculator

The Real Rate of Return Calculator works out your real rate of return, along with 1 related figure in an instant. Enter nominal return rate and inflation rate and the result updates as you type — it is free, needs no sign-up, and runs entirely in your browser so your figures stay private.

  1. Enter the nominal return rate.
  2. Enter the inflation rate.
  3. Read off your real rate of return, together with approximate (nominal − inflation) — the calculator updates automatically, with no button to press.

Formula

The Real Rate of Return Calculator uses the formula:

Real rate of return = ((1 + Nominal return rate ÷ 100) ÷ (1 + Inflation rate ÷ 100) - 1) × 100

Worked example

For example, with nominal return rate of 12% and inflation rate of 6%, the real rate of return is 5.660%.

Inputs used
Nominal return rate 12%
Inflation rate 6%
Results
Real rate of return 5.660%
Approximate (nominal − inflation) 6.00%

Results are estimates for educational use, not professional advice.

Key terms explained

Inflation
The rate at which prices rise over time, eroding the purchasing power of money.

Frequently asked questions

It is your investment return after adjusting for inflation, showing the real gain in purchasing power. A 12% return with 6% inflation is a real return of about 5.66%.

Subtracting gives a rough estimate. The exact Fisher formula, (1 + nominal) ÷ (1 + inflation) − 1, accounts for compounding and is slightly lower.

Only the real return grows your actual buying power. A return equal to inflation leaves you no better off in real terms.

Yes. If inflation is higher than your nominal return, your money loses purchasing power and the real return is negative.

The Real Rate of Return Calculator uses the formula: Real rate of return = ((1 + Nominal return rate ÷ 100) ÷ (1 + Inflation rate ÷ 100) - 1) × 100. For example, with nominal return rate of 12% and inflation rate of 6%, the real rate of return is 5.660%.

Enter the nominal return rate. Enter the inflation rate. Read off your real rate of return, together with approximate (nominal − inflation) — the calculator updates automatically, with no button to press.

Inflation and the Time Value of Money, Explained

Why a rupee today is worth more than a rupee tomorrow — how inflation erodes money, present versus future value, real versus nominal returns, why cash loses value, and how NPV guides decisions.

3 min read

Related calculators