Inflation and Real Return Calculator
Turn a nominal balance into purchasing power with the inflation rate you type, and read the real return from the Fisher equation.
Key concepts
Nominal balance
The currency amount after monthly compounding. It is not adjusted for rising prices.
Real return
The return left after inflation, using (1 + nominal) / (1 + inflation) − 1. Subtracting the two rates is only a rough shortcut, and this page does not use it.
What this tool does
Prices, not a forecast
You type both the nominal return and the inflation assumption. A consumer-price index is the usual reference for that second number. The page then shows the nominal balance, what that balance buys in today’s money, and the annual real return.
What is left out
Contributions stay in the currency you type. They do not step up with inflation. Fees and taxes are not deducted. Scenario B is a second inflation rate or a second nominal return over the same kind of horizon.
NominalvsReal
Nominal is the annual rate before inflation. Real is the Fisher return, (1 + nominal) / (1 + inflation) − 1. Subtracting the two rates is a shortcut this page does not use.
Current CPI · 3.74%. Reference month: September 2026.
This is not an official real rate. Current CPI fills the latest 12-month CPI-U change and shows the reference month. You can still edit the field. Indicative rate, not a recommendation.
Real return formula
Real return = (1 + nominal) / (1 + inflation) − 1 Purchasing power = nominal balance / (1 + inflation)^years
The nominal balance uses monthly compounding with end-of-month contributions, the same engine as the compound-interest calculator. Purchasing power deflates each year-end balance by cumulative inflation. The real-return figure is the Fisher equation on the two annual rates you enter. It does not depend on the contribution.
Worked example
Leave 10,000 idle, earn 0%, and assume 10% inflation for one year. The nominal balance is still 10,000. Purchasing power is 10,000 / 1.10, about 9,091. The Fisher real return is about −9.09%, not −10%. The one-point gap is why this page does not subtract the rates.
Common mistakes
- Subtracting inflation from the nominal rate and calling that the real return.
- Reading the nominal balance as what the money will buy.
- Assuming monthly contributions grow with prices. In this model they stay flat.
Methodology on this page
Nominal growth is monthly compounding. Purchasing power divides that balance by (1 + inflation)^years. Real return is the Fisher equation. Current CPI fills the latest 12-month CPI-U change and shows the reference month, and you can still type over it. This is not an official real rate. The page does not model taxes. Educational only — not financial advice.
Read the full FinTools4U methodology →Frequently asked questions
Which inflation rate should I type?
Any assumption you want to test. Current CPI fills the latest 12-month CPI-U change, and you can still type over it. Indicative rate, not a recommendation.
Why isn’t real return just nominal minus inflation?
That shortcut is close when both rates are small, and it drifts as they grow. The Fisher equation is what this page reports.
Do contributions rise with inflation?
No. Each monthly contribution stays at the number you type. Stepping contributions up would be a different model.
Is this financial advice?
No. It is an educational view of purchasing power that runs in your browser.
Is the real return an official rate?
No. This page does not publish an official real rate. Nominal is the return you type. Real is the Fisher equation, (1 + nominal) / (1 + inflation) − 1. Current CPI fills the latest 12-month CPI-U change and shows the reference month. You can still edit the field.
Sources & further reading
- U.S. Bureau of Labor Statistics — CPI — A public reference for consumer inflation. The rate in the calculator is still the one you type.
- Investor.gov — Compound Interest — Background for the nominal compounding path.
Related guide
Inflation and real return
The Fisher equation, purchasing power, and how to read the FinTools4U inflation calculator without treating the rate as a forecast.
How rent versus buy is calculated
Net cost of owning and renting over a horizon you choose, what the optional rates change, and when the FinTools4U comparison is not enough.
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Rent vs Buy
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