Real Return

Real return is your investment return after subtracting inflation.

Why this matters

It shows whether your wealth is truly growing in terms of purchasing power.

Simple example

If your portfolio returns 7% and inflation is 3%, your real return is roughly 4%.

Common mistakes

Celebrating nominal returns without checking inflation.
Comparing returns from different periods without inflation context.
Ignoring taxes and fees when estimating real progress.

Related terms

Frequently Asked Questions

What does Real Return mean?

Real return is your investment return after subtracting inflation.

Why does Real Return matter?

It shows whether your wealth is truly growing in terms of purchasing power.

What is a simple example of Real Return?

If your portfolio returns 7% and inflation is 3%, your real return is roughly 4%.

What is a common mistake with Real Return?

Common mistakes include: Celebrating nominal returns without checking inflation. Comparing returns from different periods without inflation context. Ignoring taxes and fees when estimating real progress.