ClarityHow to use this tool
- Enter nominal return, inflation.
- Select Calculate to view the result.
- Check the method and assumptions below before using the result.
Input reference and sample values
Use the units and choices shown for each field. Sample values are provided for practice, not as recommendations.
| Input | Format and units | Sample |
|---|---|---|
| Nominal return | Numeric value. Unit: %. Minimum: -100. Maximum: 100000. | 8 |
| Inflation | Numeric value. Unit: %. Minimum: -99. Maximum: 1000. | 3 |
Result for these sample inputs
4.85436893 percent
Select Try the example in the form to load these values and calculate them again. This replaces the current form inputs. Compare the result with the method and worked explanation below.
The method, explained
Real return = [(1 + nominal return/100) ÷ (1 + inflation/100) − 1] × 100.
An 8% nominal return with 3% inflation corresponds to approximately 4.8544% real return.
What to keep in mind
Use return and inflation covering the same period. Taxes and fees are excluded unless reflected in nominal return; the inflation rate is user supplied.
Common questions
Can I just subtract inflation?
That is an approximation. The ratio formula accounts for compounding between the two percentage changes.
Can real return be negative?
Yes. Purchasing power falls when the nominal result does not keep pace with inflation.
Methodology maintained by ClarityKit. How these tools are built and checked.