Real Return Calculator
Calculate the real rate of return from a nominal return and inflation, with the exact Fisher equation and the simple approximation.
What you enter is calculated only in this browser. It is not sent to a server or stored. Results are for reference and are not financial, tax or legal advice.
An assumed calculation: it treats the rate and period as fixed. A real product's interest and tax follow its terms and the institution's own calculation.
How to use it
- Enter the nominal return (%) and inflation (%). Negative values are allowed.
- The large figure is the exact (Fisher) value.
- Below it are the approximation (nominal - inflation) and the gap between the two, in percentage points (pp).
- You can change decimals and the rounding rule.
Formula
Definition used on this site: real return (Fisher equation) = (1 + nominal) / (1 + inflation) - 1; approximation = nominal - inflation; gap (pp) = approximation - exact. Example: 5% nominal, 3% inflation gives 1.05 / 1.03 - 1 = 0.019417..., i.e. 1.9417%, gap 0.0583 pp. Rounding happens once at the end.
Reading the result
This is a one-year, simple calculation. Real performance over several years multiplies each year's figure and can differ from this calculator. The result is for reference.
FAQ
What is the difference between the exact and approximate formulas?
The exact formula is (1 + nominal) / (1 + inflation) - 1; the approximation is nominal - inflation. With 5% nominal and 3% inflation, exact is 1.9417% and approximate is 2%, a gap of 0.0583 pp. The gap tends to grow when nominal return and inflation are further apart and when inflation is higher.
What if inflation is higher?
The real return turns negative. With 3% nominal and 5% inflation, exact is -1.9048% and approximate is -2%. It describes lost purchasing power but neither guarantees nor predicts actual results.
What should I enter?
Enter an annual return and an annual inflation rate for the same period. Whether tax and fees are included is up to you; this calculator does not add them.
Is there an input range?
Both values must be between -99% and 1000% with up to 6 decimals (limits set by this site). Within that, the math is exact fractions.
Sources and check date
This calculator uses plain mathematical definitions and does not rely on an outside reference document.
Date we opened the official documents ourselves: 2026-11-11. Rates, limits and rules can change, so read the original again before an important decision.