Glossary term
Real return
Real return is an investment return after adjusting for inflation.
Plain meaning
What real return means
Real return estimates the return left after inflation is considered. It is a purchasing-power measure, not just an account-growth measure.
Formula role
How OpenBook uses it
Real-return calculators compare nominal return with inflation. A common approximation is nominal return minus inflation, while a more precise formula adjusts by compounding both rates.
Common confusion
Not the same as after-tax return
Real return adjusts for inflation. It does not automatically adjust for income tax, fees, currency, or investment risk unless the calculator says so.