Real vs Nominal Return Calculator

Use the Fisher equation to convert nominal investment returns into real (inflation-adjusted) returns. See what your money actually earns.

Financial Disclaimer

This calculator is for educational purposes only and does not constitute financial advice. Results are estimates based on the inputs provided. Consult a qualified financial advisor before making investment or financial planning decisions.

Inputs

Nominal Return (%)

Inflation Rate (%)

Investment Amount ($)

Investment Period (years)

Tax Rate on Returns (%)

Tab to move between fields

Results

Real Return (%)

6.8%

After-Tax Real Return (%)4.66%

Nominal Future Value ($)$672,749.99

Real Future Value ($)$372,485.36

After-Tax Real FV ($)$248,674.20

Inflation Erosion ($)$300,264.63

Tax Drag ($)$123,811.16

Approximation Error (%)0.2%

How to Use This Calculator

Enter the nominal return rate on your investment (e.g., 10% for the stock market).
Set the annual inflation rate (U.S. historical average is about 3%).
Enter your investment amount and time period in years.
Set your tax rate on investment returns.
Review the real return (after inflation), after-tax real return, and the inflation erosion and tax drag in dollar terms.
The real return — not the nominal return — represents your actual gain in purchasing power.

How the result changes with Nominal Return (%)

Nominal Return (%)	Real Return (%)
-25	-27.18%
38	33.98%
113	106.8%
175	166.99%

What each input means

Nominal Return (%): Stated investment return before adjusting for inflation (e.g., 10% stock market return).
Inflation Rate (%): Annual inflation rate (US historical average ~3%).
Investment Amount ($): Amount invested to see future values in nominal vs real terms.
Investment Period (years): Time horizon to project nominal and real growth.
Tax Rate on Returns (%): Tax rate applied to investment returns (capital gains or income tax bracket).

What each result means

Real Return (%): True return after inflation — what your purchasing power actually grows by (Fisher equation).
After-Tax Real Return (%): Return after both inflation and taxes — your true net gain.
Nominal Future Value ($): What your account balance will show (unadjusted for inflation).
Real Future Value ($): Future value in today's purchasing power (inflation-adjusted).
After-Tax Real FV ($): Future value after both taxes and inflation — what you can actually buy.
Inflation Erosion ($): How much purchasing power inflation destroys over the period.
Tax Drag ($): How much taxes cost you in real future value.
Approximation Error (%): Error from using simple subtraction (nominal - inflation) instead of Fisher equation.

How this is calculated

Worked example, using the default values

Identify Input Parameters
4 parameters
Nominal Return (%) = 10, Inflation Rate (%) = 3, Investment Amount ($) = 100000, Investment Period (years) = 20 = 5 input(s) provided
Calculate Real Return
Real Return = realReturn * 100
6.796 = 6.796%
Calculate After-Tax Real Return
4.66 = 4.66%
Calculate Nominal Future Value
Nominal Future Value = investmentAmount * pow(1 + nominalReturn, years)
672749.99 = $672,749.99