Tools · Real Return Calculator

Real return calculator.
What your interest actually earns after inflation.

A 4.5% savings account with 4% inflationinflationA general increase in prices over time, meaning each dollar buys less than it did before.Full definition earns 0.5% in real terms. The bank statement shows your balance growing. Your purchasing powerpurchasing powerWhat a dollar can actually buy, not what the dollar number says. A 1971 dollar bought a gallon of gas. Today's dollar buys roughly a third of one. Same dollar, much less buying ability.Full definition 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 CPIConsumer Price Index (CPI)The government's measure of how much a typical basket of consumer goods costs over time.Full definition 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 RATEreal interest rateThe nominal interest rate minus inflation. A 5% savings account at 3% inflation earns 2% real. The only rate that actually matters for whether your purchasing power grows. Cash with negative real rates loses ground every year, no matter what the statement says.
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.
  • The inflation default is the latest CPI year-over-year print (3.46% for the 12 months through June 2026, BLS CPIAUCSL via FRED), stamped at every build. A real-return question is a question about conditions now, so the default tracks the current print; substitute any other measure (or country) you prefer.
  • 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 ×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 ratemarginal tax rateThe tax rate on your last dollar of income. The highest bracket you're in, not the rate you pay on all your income.Full definition from the nominal first, then compare to inflation. The tool does not do this automatically.

Not financial advice.

Related

→ Inflation Types, where the inflation number comes from → Cash Management, what to do with savings that need to keep up → Money Market Comparison, after-tax yield comparison across funds → Time Value of Money, the underlying concept
HOW THIS IS CALCULATED

This tool runs entirely in your browser — no data is sent to any server. All formulas use standard financial math. Verify the methodology or inspect the source code in your browser's dev tools.