Finance & Interest
Advanced

Real Rate of Return

Return adjusted for inflation.

Formula

r=1+n1+i−1r = \frac{1+n}{1+i} - 1

Variables

nNominal rate
iInflation rate

Example

Preserves purchasing power

Did You Know?

Adjusting for inflation reveals that a 1970s salary was worth far more than its dollar figure suggests today.

inflation