Real rate of return

(redirected from Inflation-Adjusted Returns)

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 ?
Real return: The inflation-adjusted returns of an investment.
The first of these concerned the UK equity markets and returns to shareholders: the annual inflation-adjusted returns on British pension funds in 2000-09 averaged only 1.
Using these inflation-adjusted returns, we find that there is still substantial evidence of excess return predictability in liquidity-adjusted inflation-indexed bond returns as well as in breakeven inflation returns in both the US and the UK, which we interpret as evidence of a time-varying real interest risk premium and a time-varying inflation risk premium.
5% within a month, offering better inflation-adjusted returns than most emerging markets.
He said going back to 1960, the first 7 months of the third year of a presidential cycle (like 2011) produced inflation-adjusted returns of 20 percent for the 48-month presidential cycles.
In contrast to most studies, which employ statistical techniques to test the correlation between inflation and stock returns, this study uses two investment strategies--lump-sum and annuity--to investigate actual inflation-adjusted returns among the ten African stock markets.
Real, inflation-adjusted returns over the period are fairly high in China--between 5 percent and 10 percent--and quite low in Japan--ranging from zero to about 3 percent.
The second column shows inflation-adjusted returns while the third column shows the risk, as measured by the standard deviation of returns, of the various asset classes.