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Financial Planning

Real Return Calculator

Convert a nominal return into a real, inflation-adjusted return with the exact Fisher equation, optionally after tax.

Your inputs

Results

Real return (exact Fisher)

4.8544%

Approximation (nominal − inflation)
5%
Nominal return after tax
8%

✓Exact calculation — rounded only for display

Inputs are never added to links for financial, salary or health calculators.

What this calculator does

A 6 % return with 4 % inflation does not make you 6 % richer. The real return measures the increase in what your money can actually buy.

Formula and method

Real return = (1 + nominal after tax) ÷ (1 + inflation) − 1; After-tax nominal = nominal × (1 − tax rate)

Worked example

Calculated by this tool with its default inputs:

Inputs

  • Nominal return: 8 %
  • Inflation rate: 3 %
  • Tax rate on returns (optional): 0 %

Results

  • Real return (exact Fisher): 4.8544%
  • Approximation (nominal − inflation): 5%
  • Nominal return after tax: 8%

How to read the results

The simple subtraction is a close approximation at low rates but overstates real returns when rates are high.

Assumptions and limitations

  • Assumes tax is charged on the full nominal return each year.

Financial results are estimates based on the inputs and assumptions shown. They are not financial advice; confirm figures with your lender, provider or a qualified adviser before making decisions.

Questions

Can real returns be negative?

Yes — whenever inflation exceeds the after-tax return.

Methodology and verification

Result type
Exact mathematical calculation (rounded only for display)
Formula version
1.0
Automated verification
3 reference and validation test cases, checked against independently computed values. The site cannot be built if any of them fail.
Editorial review
Awaiting human editorial review. The explanation was drafted with AI assistance; the formula and examples are verified by the automated tests above.

Privacy

Everything you enter is calculated in this browser and is not sent to Numerith or anyone else. Because this calculator can involve personal financial or health details, your inputs are never added to share links or saved to history. Privacy policy