Financial glossary
Real Investment Return
In plain English
Investment return after removing inflation, showing the change in purchasing power rather than nominal account value.
Real investment return
Real return measures growth after inflation. If an investment gains 7% while prices rise 3%, the quick approximation is a 4% real return. The exact calculation is (1.07 / 1.03) - 1, or about 3.88%.
Nominal dollars are useful for projecting an account statement, but real dollars describe future purchasing power. Retirement plans can look much larger when stated only in future dollars even though future expenses also rise.
The Coast FIRE calculator grows the retirement target with inflation and investments with a nominal return, keeping the two assumptions visible. The inflation calculator isolates purchasing-power change.
Related calculators
- Coast FIRE CalculatorCalculate the retirement balance needed today to coast without new contributions, using spending, retirement age, return, inflation, and withdrawal rate.
- Inflation CalculatorSee what inflation does to your money: future cost of today's expenses and what a dollar amount will really buy in 10, 20, or 30 years.
- Retirement CalculatorProject your retirement savings with employer match, annual raises, and inflation. See your nest egg in today's dollars, year by year.