Inflation Adjusted Return Calculator: Measure Your Real Investment Performance
Enter the nominal return and inflation rate; the tool applies the formula $$ rac{1+R}{1+I}-1$$ to reveal your real return. Example: 8.3 % with 3 % inflation gives 5.15 %. Knowing this matters: U.S. CPI inflation has averaged 3.2 % a year since 1913 (BLS, 2024), eroding unadjusted gains.
Inflation Adjusted Return Calculator
Real Return:
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How to use the tool
Type your nominal return (%) e.g., 8.3 or 15.0.
Enter the current inflation (%) e.g., 3.0 or 6.0.
Press “Calculate” The tool shows your real, inflation-adjusted return instantly.
R = nominal return (decimal), I = inflation (decimal).
Example calculations
Example A: R = 8.3 %, I = 3.0 % → real = 5.15 %.
Example B: R = 15.0 %, I = 6.0 % → real = 8.30 %.
Quick-Facts
Average U.S. CPI inflation 1913-2023: 3.2 % (BLS, 2024).
Federal Reserve inflation target: 2 % (Federal Reserve, 2023).
Long-term S&P 500 real return ≈ 7 % (Damodaran, 2023).
“The real rate equals nominal minus inflation, adjusted for compounding” (CFA Institute, 2022).
FAQ
What is a real rate of return?
It measures how much your purchasing power grows after subtracting inflation from the nominal gain (Investopedia, 2023).
Why adjust returns for inflation?
Inflation erodes money’s value; ignoring it can overstate growth by more than 3 % annually on average (BLS, 2024).
Which inflation figure should I input?
Use the most recent CPI or the inflation index relevant to your country or investment currency (OECD, 2024).
Can the tool handle deflation?
Yes. Enter a negative inflation value; the formula treats falling prices correctly, boosting the real return.
How accurate is the calculation?
It follows the standard compound adjustment used in CFA curricula; rounding is to two decimals (CFA Institute, 2022).
Does tax affect real return?
Taxes further reduce nominal gains; subtract the effective tax rate from R before using the formula (IRS Publication 550, 2023).
How often should I recalculate?
Update whenever either your investment’s nominal rate or the inflation rate changes, typically quarterly (Morningstar, 2023).
What is a good real return benchmark?
Financial planners aim for 3–5 % real growth for diversified portfolios (Vanguard, 2023).
Important Disclaimer
The calculations, results, and content provided by our tools are not guaranteed to be accurate, complete, or reliable. Users are responsible for verifying and interpreting the results. Our content and tools may contain errors, biases, or inconsistencies. We reserve the right to save inputs and outputs from our tools for the purposes of error debugging, bias identification, and performance improvement. External companies providing AI models used in our tools may also save and process data in accordance with their own policies. By using our tools, you consent to this data collection and processing. We reserve the right to limit the usage of our tools based on current usability factors. By using our tools, you acknowledge that you have read, understood, and agreed to this disclaimer. You accept the inherent risks and limitations associated with the use of our tools and services.
