Tools · Real Return Calculator
Real return calculator.
What your interest actually earns after inflation.
A 4.5% savings account with 4% inflation earns 0.5% in real terms. The bank statement shows your balance growing. Your purchasing power barely changes. This calculator shows the gap between nominal yield and real return so you can compare cash, bonds, and equities on a consistent footing.
US examples below; the math is general. Substitute any country's inflation measure (UK CPIH, EU HICP, etc.) for the US CPI default.
FISHER EQUATION (APPROXIMATION)
Real rate ≈ Nominal rate − Inflation rate. Exact form: (1 + nominal) / (1 + inflation) − 1, which matters more at high inflation.
YOUR INPUTS
RESULTS
REAL INTEREST RATE
0.00%
Nominal minus inflation, exact Fisher form.
NOMINAL BALANCE AFTER PERIOD
$0
What the account statement shows.
REAL PURCHASING POWER (TODAY'S DOLLARS)
$0
Inflation erosion: $0
BREAK-EVEN INFLATION RATE
0.00%
At what inflation does this account earn 0% real?
VERDICT
Enter your numbers above.
How this tool works
- Real rate uses the exact Fisher form: (1 + nominal) / (1 + inflation) − 1. The approximation (nominal − inflation) is close at low inflation but diverges as inflation rises.
- Nominal end balance = balance × (1 + nominal)years. This is what the account shows.
- Real end balance = balance × (1 + real)years. This is what your purchasing power becomes, expressed in today's dollars.
- Break-even inflation = the inflation rate at which real return equals zero, which is exactly the nominal rate (since 1 + nominal = 1 + inflation).
- Long-run US equity real returns are approximately 6% to 7% per year over multi-decade periods verify×DON'T TRUST, VERIFYClaim: Long-run US equity real returns center on 6% to 7% per year over multi-decade periods.Verify at: Shiller US Stock Market Data ↗Real returns vary by period; the Shiller dataset back to 1871 centers on the 6 to 7% range.. Use that as a comparison anchor for whatever the tool produces for cash.
- For tax-aware comparisons, subtract your marginal tax rate from the nominal first, then compare to inflation. The tool does not do this automatically.