# Real rate of return

Also found in: Acronyms.

## 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.

References in periodicals archive ?
The unitized risk values for the real rate of return for the FTSE Index are indicated on the basis of data in Figure 4 and Table 3.
50% Real rate of return on equity 10% Inflation rate 2.
To a large extent, the difference in these three factors ultimately boils down to the difference in the estimates of real rate of return, in addition to the fact that underlying data used by the CPP and Diewert-Yu are different in many aspects.
where: p--assumed pre-tax real rate of return, r--real rate of return and [R.
government issues both kinds, so looking at the difference between the interest rate on nominal treasury bonds and TIPS (Treasury Inflation Protected Securities), which are protected against inflation and thus offer a real rate of return, provides an estimate of expected inflation, at least among the bond-buying public.
The second paper, which is more relevant to our present study, sought to analyze a stable long-term relationship between real consumption and the term spread between 3-month and 10-year yields, through a clever construction of a real rate of return of assets borrowed from Keeler (2006).
During that period consumer prices grew by 17% - providing investors with a significant real rate of return.
Suppose we also assume that (i) money and capital pay either the same real rate of return or closely related real rates of return (1) and (ii) the real return on money is the negative of the net inflation rate [pi].
To accomplish the goal of achieving a real rate of return on investments after taxes and inflation are considered, history proves that can only be supplied by owning hard assets.
If income has grown by a real rate of return above inflation, savings in the later years may ramp up even further.
For examining this, they estimated nominal return on equity by using reserve Bank of India for share prices and equity yield and real rate of return is calculated by whole sale index as well as consumer price index for the time period of 1953-1987.

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