Inflation-Adjusted Rates of Return financial definition of Inflation-Adjusted Rates of Return. Inflation-Adjusted Rates of Return finance term by the Free Online Dictionary.

Real rate of return

The percentage return on some investments that has been adjusted for inflation.

Real Rate of Return

The rate of return on an investment after adjusting for inflation. It is calculated simply by taking the gross return and subtracting the inflation rate. For example, if the return on an investment is 7% and the inflation rate is 4%, the real rate of return is 3%.

Real rate of return. You find the real rate of return on an investment by subtracting the rate of inflation from the nominal, or named, rate of return.

For example, if you have a return of 6% on a bond in a period when inflation is averaging 2%, your real rate of return is 4%. But if inflation were 4%, your real rate of return would be only 2%.

Finding real rate of return is generally a calculation you have to do on your own. It isn't provided in annual reports, prospectuses, or other publications that report investment performance.

Real Rate of Return

What Does Real Rate of Return Mean?

The annual percentage return realized on an investment, adjusted for changes in prices that result from inflation or other external factors. This method expresses the nominal rate (not adjusted for inflation) of return in real terms, which keeps the purchasing power of a specific level of capital constant over time.

Investopedia explains Real Rate of Return

Adjusting the nominal rate of return to compensate for factors such as inflation allows investors to determine how much of their nominal return is real return. Let's say a bank pays 5% interest per year in an investor's savings account. If the inflation rate is currently 3% per year, the real return on the investor's savings today is 2%. In other words, even though the nominal rate of return on the savings is 5%, the real rate of return is only 2%, which means that the real value of the investor's savings increases only 2% during a one-year period.

Related Terms:
• Earnings
• Equity Risk Premium
• Inflation
• Return on Investment—ROI
• Total Return

Mentioned in	?		Financial browser	?		Full browser	?
After-Tax Real Rate of Return Fisher Effect Hedge Against Inflation Inflation-Adjusted Return Nominal GDP Nominal Return Real Return Savings Bonds Tasa real de retorno TIPS Treasury Inflation Protected Securities US Savings Bond	Inflacion de costos Inflacion de demanda Inflacion encubierta Inflacion importada Inflacion inercial Inflacion latente Inflacion salarial Inflacion subyacente inflation Inflation Accounting Inflation des couts inflation guard inflation hedge Inflation hors energie et alimentation Inflation importee Inflation inertielle Inflation larvee Inflation latent Inflation non corrigee Inflation par la demande Inflation par les salaires Inflation Premium Inflation Rate Inflation Risk Inflation Uncertainty Inflation-Adjusted Rates of Return Inflation-Adjusted Return Inflation-escalator clause Inflation-Indexed Securities Inflation-Indexed Security Inflation-Linked Certificates of Deposit Inflation-Linked Savings Bond Inflation-Protected Annuity Inflation-Protected Security Inflationary Gap Inflationary Psychology Inflazione Inflazione a due cifre Inflazione causata da aumenti salariali Inflazione da costi Inflazione dovuta all'incremento della domanda Inflazione occulta Inflazione strisciante Inflazione strutturale Inflection Point Inflexible expenses Informacion confidencial Information Agent Information asymmetry Information Circular Information Coefficient	Inflation Linked Certificate of Deposit Inflation Linked Certificates of Deposit Inflation Linked Savings Bond Inflation Linked Savings Bonds Inflation Measures Division Inflation non corrigee Inflation par la demande Inflation par les salaires inflation premium Inflation Protected Annuities Inflation Protected Annuity Inflation Protected Securities Inflation Protected Security inflation rate inflation rate Inflation rates Inflation rates Inflation risk Inflation targeting Inflation Targeting Framework Inflation Targeting Regime Inflation theory inflation therapy Inflation uncertainty Inflation-Adjusted Inflation-Adjusted Inflation-Adjusted Inflation-Adjusted Inflation-Adjusted Rate of Return Inflation-Adjusted Rates of Return Inflation-adjusted return Inflation-Adjusted Returns Inflation-escalator clause Inflation-Forecast-Based Inflation-Indexed Inflation-indexed bond Inflation-indexed bonds Inflation-indexed interest Inflation-indexed interest Inflation-indexed interest Inflation-indexed interest Inflation-indexed interest Inflation-indexed securities Inflation-Indexed Security Inflation-Linked CD Inflation-Linked CDs Inflation-Linked Certificate of Deposit Inflation-Linked Certificates of Deposit Inflation-Linked Savings Bond Inflation-Linked Savings Bonds Inflation-Linked Securities Index inflation-proof Inflation-Protected Annuities Inflation-Protected Annuity Inflation-Protected Annuity Inflation-Protected Annuity Inflation-Protected Annuity Inflation-Protected Securities Inflation-protected security Inflation-protected security

Mentioned in

Financial browser

Full browser