Real vs Nominal Return Calculator

The return your brokerage statement reports — the "nominal" return — isn't what you actually gained in purchasing power, because inflation is quietly eating into it the whole time. This calculator applies the Fisher equation, real return = (1 + nominal) / (1 + inflation) − 1, to convert your stated return into the rate at which your money's actual buying power grows. It also layers in taxes: your nominal return is first reduced by your entered tax rate to get an after-tax nominal figure, which is then run back through the same Fisher equation to produce an after-tax real return — the number that best represents what you truly keep.

All three rates (nominal, real, after-tax real) are then compounded forward over your chosen time horizon to show three different future values for the same starting investment, letting you see in dollar terms how much inflation erodes (nominal future value minus real future value) and how much taxes additionally cost you (real future value minus after-tax real future value). A genuinely useful feature here is the built-in comparison against the common shortcut of just subtracting inflation from nominal return (e.g., "10% minus 3% is 7% real") — the calculator computes that naive approximation alongside the exact Fisher-equation answer and reports the gap between them, which grows larger the higher the nominal and inflation rates get; at low single-digit rates the shortcut is nearly exact, but it visibly diverges at higher rates. As with any return-based calculator, all of this assumes constant nominal and inflation rates held steady for the entire period, which is a simplifying assumption, not a forecast.