Inflation silently erodes your investment gains. Enter your nominal return and inflation rate to see what you actually earned in purchasing-power terms.
Your portfolio's annual return
CPI or expected inflation
How long you plan to hold
Real return strips out the effect of inflation from your nominal investment return. A 10% nominal gain during a year with 8% inflation leaves you only 1.85% better off in purchasing-power terms.
Formula: Real Return = (1 + Nominal) / (1 + Inflation) − 1
The US CPI averages around 3% long-term, though it has ranged from under 1% to over 9% in recent years. Use the current CPI print for near-term scenarios or 3% as a long-run baseline.
Yes — if inflation exceeds your nominal return, you lose purchasing power. This is common with savings accounts during high-inflation periods.
Use the local inflation rate for the currency of your returns. Cross-currency comparisons also require adjusting for exchange rate movements.