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Real return calculator

A 6% return sounds good — but what really stays with you once inflation and fees take their share? This calculator works out the real return with the exact Fisher relationship and sets it against the common 'nominal minus inflation' rule of thumb, so you can see the gap. Enter an amount and a term as well and it also shows the final value in money. Every figure is your own assumption; the maths runs in your browser, and nothing is stored or sent.

What really stays with you after inflation (and fees)? Every figure is your own assumption or an example assumption — no forecast, no market data. The calculation runs in your browser; nothing is stored.

Amount and term are optional — enter both to also see final values in money.

What your result means

The real return is the yearly figure after inflation and fees — what your purchasing power actually gains. Next to it sits the simple approximation and the gap between the two, which grows with higher rates.

'Nominal after fees' strips only the fees, before inflation. If you entered an amount and a term, the two money figures show the same growth in nominal terms and in today's purchasing power — the difference between them is what inflation takes.

How this calculator works

The real return shows how much your purchasing power grows, not just the headline figure. The calculator uses the exact Fisher relationship rather than a plain subtraction: the return factor is divided by the cost factor and the inflation factor. Ongoing fees sit in front multiplicatively — they cut the return like a negative interest rate.

For comparison it also shows the common approximation 'nominal − inflation − fees'. That drifts further off the higher the rates are, because it ignores how the factors interact; the difference between the two is shown.

If you add an amount and a term, the calculator gives the nominal final value (after fees) and the real final value in today's purchasing power. Tax is deliberately left out. Internally the calculation is unrounded and only rounded for display.

Formula and variables

r_real = (1 + r_nom) / ((1 + c) · (1 + p)) − 1 (exact Fisher relationship)Nominal after fees = (1 + r_nom) / (1 + c) − 1Simple approximation = r_nom − p − cReal final value = Amount · (1 + r_real)^n
r_nom
Nominal return per year as a decimal (6% is 0.06)
p
Annual inflation rate as a decimal
c
Annual ongoing fee rate as a decimal (0 = none)
r_real
Real return per year
n
Term in years (for the money view only)

Worked examples

Example 1: exact real return versus the rule of thumb

Example inputs
Nominal return (example assumption)7% p.a.
Inflation rate (example assumption)3% p.a.
Ongoing fees0%
Example results
Real return (exact)3.88% p.a.
Simple approximation4% p.a.
Difference exact − approximation−0.12 pp

Exact: (1 + 0.07) / (1 + 0.03) − 1 ≈ 3.88%. The rule of thumb '7% − 3%' gives 4% and slightly overstates the real return, because it ignores how the factors interact. The gap is small at low rates but grows with higher inflation. All figures are example assumptions.

Example 2: with fees and money values

Example inputs
Nominal return (example assumption)5% p.a.
Inflation rate (example assumption)2.5% p.a.
Ongoing fees0.5% p.a.
Amount€25,000.00
Term15 years
Example results
Real return (exact)1.93% p.a.
Nominal after fees4.48% p.a.
Final value, nominal (after fees)€48,226.81
Final value, real (today's purchasing power)€33,298.95

The 0.5% fees cut the nominal return to 4.48%, and inflation pulls the real return down to 1.93%. Over 15 years €25,000.00 grows to about €48,226.81 in nominal terms, but only about €33,298.95 in today's purchasing power. Tax is not included. All figures are example assumptions.

Assumptions

  • The nominal return, inflation and fees stay constant in the scenario (your chosen assumptions).
  • Fees act as an ongoing annual rate, applied multiplicatively before inflation.
  • All figures are your inputs or marked example assumptions — no researched market values.

Limitations of this calculator

  • Not a forecast: real returns vary and are not guaranteed.
  • No tax is applied (version 1 calculates without tax).
  • A simplified fee model as a flat annual rate; real cost structures can be more complex.

Common misconceptions

  • Using 'return minus inflation': That rule of thumb is only an approximation; it ignores how the factors combine and overstates the real return, more so at higher rates.
  • Ignoring fees: Ongoing fees cut the return like a negative rate. Left blank, the calculator assumes 0% fees.
  • Assuming a real return is always positive: If inflation and fees together beat the nominal return, the real return is negative — you lose purchasing power.
  • Reading it as a forecast: Real returns vary and are not guaranteed; every figure here is your own assumption, and tax is not included.

Frequently asked questions

Why not just do 'return minus inflation'?

That rule of thumb is an approximation. It ignores that the return and inflation factors combine multiplicatively. At low rates the error is small; at higher ones it becomes noticeable. The exact Fisher relationship divides the factors and gives the correct figure.

How do the ongoing fees work?

Fees cut the return like a negative rate, applied first: the return is reduced by the fees, then by inflation. Leave the field blank and the calculator uses 0% fees.

Can the real return be negative?

Yes. If inflation and fees together exceed the nominal return, you lose purchasing power and the real return is negative. The calculator shows that correctly.

Is tax included?

No. This version calculates without tax. Investment income can be taxable depending on where you live, reducing the real return further — worth checking your own position separately.

Sources and further reading

Official and independent sources on this topic. The links open each website in a new tab; no content is loaded from them into this page.

Spotted an error in the calculation or the text?

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Last reviewed: 26/07/2026 · All calculations run in your browser – inputs are not stored. ·How we check our calculators