Real Rate of Return (Fisher) Calculator
Inflation eats into investment returns, so the nominal return overstates how much your purchasing power actually grows. The real rate of return strips out inflation using the Fisher equation. Enter your nominal return and the inflation rate, and this calculator returns the exact real rate alongside the common nominal-minus-inflation approximation, so you can see how much the two differ. A negative real rate means inflation outpaced your return.
Fisher equation
Real rate = (1 + nominal) / (1 + inflation) - 1
Approximation: real rate is about nominal - inflation
Both rates are entered as percentages and converted to decimals. The exact form is preferred; the approximation is shown for comparison and drifts further from the exact value as the rates grow.
Worked example
Nominal return 7 percent, inflation 3 percent:
- Exact real rate = (1.07 / 1.03) - 1 = 0.038835, or 3.88 percent.
- Approximation = 7 - 3 = 4.00 percent.
- The approximation overstates the real return by about 0.12 percentage points here.
Real rate of return: frequently asked questions
What is the real rate of return?
The real rate of return is the return on an investment after removing the effect of inflation. It measures how much your purchasing power actually grows. The exact Fisher equation is: real rate = (1 + nominal rate) / (1 + inflation rate) - 1.
What is the difference between the exact and approximate formulas?
The common approximation is real rate is roughly nominal rate minus inflation rate. The exact Fisher equation divides the gross nominal return by the gross inflation factor. The approximation is close when rates are small, but the exact form is more accurate, especially at higher inflation. This calculator shows both.
Can the real rate of return be negative?
Yes. If inflation is higher than your nominal return, your real return is negative, meaning your money buys less than before even though the nominal balance grew. For example, a 3 percent nominal return with 5 percent inflation gives a real return of about -1.90 percent.
Where do I get the inflation rate?
A common measure in the United States is the Consumer Price Index published by the U.S. Bureau of Labor Statistics. The inflation rate here is a user input so you can use the period and index that fit your situation; we do not assume a figure.
Official sources
- U.S. Bureau of Labor Statistics: Consumer Price Index.
- U.S. Securities and Exchange Commission, Investor.gov: Rate of Return.
Reviewed by the CalculatorHub team, edited by James Graham, 19 June 2026. See our methodology.