Example 1 — moderate inflation
- Nominal rate: 8%
- Inflation: 3%
Real (Fisher) 4.85%
Approx. n − i +5.00%
Nominal − real 3.15%
At 8% nominal and 3% inflation Fisher gives ≈4.85% real — simple n−i is 5%.
Real rate of return
See how much of a nominal return remains after inflation — with the Fisher formula and the simple n − i approximation.
The primary result is the Fisher real rate: (1 + nominal) = (1 + real) × (1 + inflation). We show the linear n − i approximation alongside — the gap grows when inflation is high. Rates and inflation should be annual and in the same purchasing-power currency. Optionally enter an amount and years to see what remains of purchasing power.
Result
Enter data and click Calculate.
How results are calculated
Real rate of return (Fisher) = (1 + n) ÷ (1 + i) − 1, where n is the nominal rate and i is inflation — both on an annual basis.
Linear approximation = n − i — quick, but accurate mainly at low inflation.
Nominal − real (Fisher) gap shows how many percentage points inflation takes from the headline nominal return.
The real rate answers: did purchasing power grow? A positive nominal result with inflation above the return can still yield a negative real rate.
Optional amount helper: with a starting amount and years it shows the nominal value after N years and real purchasing power (amount × (1 + real rate)^N) — the same idea as comparing nominal vs real FV.
Compare the result with the CAGR, FV, and PV calculators when analysing long saving or investing horizons.
How to use the calculator
- Enter the nominal return rate (% per year).
- Enter inflation (% per year).
- Read the Fisher real rate — the primary result.
- Compare with the n − i approximation and the nominal − real gap.
- Optionally enable the amount helper: enter a starting amount and years to see purchasing power.
- Also check the purchasing-power inflation calculator and FV.
Usage examples
Example 2 — inflation eats the gain
- Nominal rate: 5%
- Inflation: 6%
Real (Fisher) -0.94%
Approx. n − i −1.00%
Nominal − real 5.94%
5% nominal with 6% inflation: Fisher ≈−0.94% — purchasing power falls despite a positive nominal headline.
Example 3 — high nominal return
- Nominal rate: 12%
- Inflation: 4%
Real (Fisher) 7.69%
Approx. n − i +8.00%
Nominal − real 4.31%
12% nominal and 4% inflation: ≈7.69% real (Fisher), approximation 8%.
Example 4 — purchasing power of an amount
- Nominal rate: 8%
- Inflation: 3%
- Starting amount: 10,000
- Years: 10
Real (Fisher) 4.85%
After 10 years: nominal ≈21,589 · real ≈16,064
Same Fisher rate as example 1, but with an amount — you see how much of the paper growth remains in purchasing power.
FAQ
What does real rate of return mean?
The nominal rate adjusted for inflation — what remains after purchasing-power loss. The primary result uses the Fisher formula.
When use real instead of nominal?
Over long horizons comparing deposits / investments to rising prices — a nominal “plus” can be real zero.
Which approximation does the simple model use?
Often r ≈ n − i. More precisely (1+n)/(1+i) − 1; the gap grows when inflation is high.
What mistake confuses interpretation?
Subtracting inflation from an after-tax rate without gross/net consistency, or mixing monthly inflation with an annual rate.
When is nominal positive but real negative?
When inflation exceeds the nominal return — capital grows in numbers but loses purchasing power.
What should I compare the real rate with?
With the CAGR, future value (FV), and present value (PV) calculators when planning long-term saving or investing.
What does the optional starting amount and years add?
It shows how the real rate maps onto purchasing power of a concrete amount after N years — nominal vs real value. The primary result remains the Fisher rate.