Example 1
- 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 Calculator
Enter a nominal rate and inflation. The calculator applies the Fisher formula: (1 + n) / (1 + i) − 1. At 8% and 3% the real result is 4.85%, while simple subtraction gives 5%. Optionally turn on an amount and years to see purchasing power. No capital-gains tax and no CPI feed here.
Result
Nominal return (%), Inflation (%), Starting amount and Number of years. The result shows up here.
Fisher: (1 + nominal) = (1 + real) × (1 + inflation). 8% and 3% give 4.85%. Bare amount erosion is on purchasing power.
How results are calculated
A real rate of return asks whether purchasing power grew after you take inflation out of a nominal rate. The headline result is Fisher: (1 + n) ÷ (1 + i) − 1. Beside it the calculator shows the linear shortcut n minus i. At low inflation the two sit close. At high inflation they drift apart.
8% nominal and 3% inflation give 4.85% by Fisher. Plain 8 minus 3 is 5%, and nominal minus real is 3.15 points. At 5% nominal and 6% inflation Fisher falls to −0.94%: the headline is positive and purchasing power still drops. 12% and 4% give 7.69% real, with an 8% shortcut.
Enter Nominal return (%) and Inflation (%). Both should be annual. Tick the amount helper if you want Starting amount and Number of years: then you see a nominal path and real purchasing power. The 8, 3, 10000, and 10 placeholders match the first example plus the helper.
Bare today's amount after inflation lives on purchasing power: 10000 at 5% for 10 years leaves about 6139. CAGR, the compound annual growth rate, can take the same inflation and print a real CAGR. FV adds contributions.
Fisher assumes flat inflation and a flat rate. A CPI basket, which is not loaded here, and tax on a gain will move a real result. A negative real rate at 5% and 6% is not advice to sell everything; it is arithmetic on two typed numbers.
Enter 8 and 3. Check 4.85% and 5%. Then try 5 and 6 to see minus 0.94%.
How to use the calculator
- In Nominal return (%), enter the headline return, for example 8.
- In Inflation (%), enter annual inflation, for example 3. Keep both rates yearly.
- Click Calculate. At 8 and 3, Fisher should be 4.85%, and n minus i = 5%.
- Optionally turn on the amount helper, enter a start and years, and read the nominal and real paths.
- Bare amount erosion, with no nominal rate, lives on the purchasing-power page.
Fisher real rate from nominal and inflation
Fisher: (1 + nominal) = (1 + real) × (1 + inflation). At 8% nominal and 3% inflation the real rate is 4.85%, while simple subtraction is 5%.
- Fisher
- 1.08 / 1.03 − 1 ≈ 4.85%. Simple 8 − 3 = 5 is the approximation in this calculator, not Fisher.
- Nominal
- The Nominal return (%) field. 8% with 3% inflation is 4.85% Fisher. 5% with 6% inflation is about −0.94% real.
- Inflation
- The second Fisher input. 3% against 8% nominal yields 4.85%, not the 5% from subtracting the two headlines.
Usage examples
Example 2
- 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
- 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
- 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.
Related calculators
FAQ
What is the real rate at 8% and 3% inflation?
Fisher 4.85%. The n minus i shortcut is 5%. Nominal minus real is 3.15 points.
What about 5% nominal and 6% inflation?
Fisher about −0.94%. The shortcut is −1%. Purchasing power falls even though the headline is positive.
What about 12% and 4%?
Fisher 7.69%, shortcut 8%, gap 4.31 points. The result is both sketches.
How is Fisher different from n minus i?
Fisher divides (1+n) by (1+i) and subtracts one. n minus i is faster and at 8% and 3% overstates by 0.15 points.
Do I have to enter an amount?
No. Starting amount and years sit under a toggle. 8 and 3 alone are enough for 4.85%.
How is this different from the inflation calculator?
There you divide an amount by (1+i)^years. Here you compute a rate. 10000 at 5% for 10 years is that other card.
Is this a real CAGR?
No. Real CAGR from two values and inflation lives on the CAGR page. Here you start from a nominal rate, not from a start and an end.
Does a negative result mean I must sell?
No. It is arithmetic on 5% and 6%. An investment call needs risk, horizon, and tax, which are not here.
What period should the rates use?
Annual, in the same purchasing-power currency. A monthly rate is not converted automatically.
Does 4.85% include capital-gains tax?
No. You enter clean rates. Take 19% of a gain on the withholding page or the deposit page.
How do I calculate a real rate of return with Fisher?
Real = (1 + nominal/100) / (1 + inflation/100) − 1, then × 100. At 8% and 3%: 1.08 / 1.03 − 1 ≈ 4.85%. The linear n − i shortcut at the same inputs is 5%.
Why is the result negative at 5% nominal and 6% inflation?
Fisher: 1.05 / 1.06 − 1 ≈ −0.94%. The nominal rate is positive, but purchasing power falls. The n − i shortcut is −1%.
Does the calculator subtract capital-gains tax?
No. You enter clean rates. A 19% (or other) tax on nominal gains belongs on a separate tax or deposit page.
How does this differ from the amount-after-inflation calculator?
That page divides an amount by (1 + inflation)^years with no nominal return. Here you start from a nominal rate and inflation (Fisher), and the amount path is optional.
Knowledge sources
The real rate is Fisher’s formula from the nominal and inflation you type. This is not a BLS reading.
Page updated in 2026.