Glossary term
Nominal return
Nominal return is an investment return before adjusting for inflation.
Plain meaning
What nominal return means
A nominal return shows growth in dollar terms before inflation is removed. If an account grows by 5% and inflation is 2%, the 5% figure is the nominal return.
Formula role
How OpenBook uses it
Projection calculators often use nominal return to grow dollar balances forward. If the calculator also models inflation, it may separately show a real return or today's-dollar result.
Common confusion
Growth and purchasing power differ
A positive nominal return does not always mean purchasing power increased. Purchasing power depends on the return after inflation.