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Inflation-adjusted return calculator

Turn a nominal rate and an inflation rate into a real yearly rate, and see the ending amount in starting-year dollars.

An illustration, not a forecast. This calculator applies a nominal rate and an inflation rate you choose and holds both steady. Real rates change from year to year; the result is the arithmetic, not a prediction.

Ending amount (nominal)1,628.89
Ending amount in starting-year dollars1,272.49
Real yearly rate2.44%

At 5.0% a year, 1,000.00 grows to 1,628.89 in 10 years. After inflation of 2.5% a year, that is 1,272.49 in starting-year dollars, a real rate of 2.44% a year. Subtracting the two rates would have given 2.50%; the exact figure divides one growth factor by the other.

The formula

Nominal ending amount = starting amount × (1 + nominal rate)years
Real ending amount = nominal ending amount ÷ (1 + inflation)years
Real yearly rate = (1 + nominal rate) ÷ (1 + inflation) − 1

Rates go into the formula as decimals (5% is 0.05). The real rate does not depend on the starting amount: 1,000 and 10,000 at the same two rates produce the same real rate.

A worked example

1,000 growing at 5% a year for 10 years becomes 1,000 × 1.0510 ≈ 1,628.89. Inflation of 2.5% a year over the same stretch multiplies prices by 1.02510 ≈ 1.280. In starting-year dollars the ending amount is 1,628.89 ÷ 1.280 ≈ 1,272.49. The real yearly rate is 1.05 ÷ 1.025 − 1 ≈ 2.44%. Subtracting 2.5 from 5 would have left 2.5%; the gap is small here and gets wider when the rates are larger.

The compound growth calculator shows the nominal path year by year. The growth rate calculator finds a nominal CAGR from two values you already have.

Common questions

What is a real return?

A return after inflation has been taken out: what the ending amount can buy in starting-year dollars, and the yearly rate that would have produced that real ending amount.

Why isn't the real rate just the nominal rate minus inflation?

Subtracting is a close shortcut when both rates are small. The exact figure divides the two growth factors: (1 + nominal) ÷ (1 + inflation) − 1. At 5% nominal and 2.5% inflation, subtracting gives 2.5%; the exact rate is about 2.44%.

What does "starting-year dollars" mean?

The ending amount divided by how much prices rose over the same years. If inflation ran 2.5% a year for 10 years, prices are about 1.280 times where they started, so 1,628.89 of later-year money is about 1,272.49 of starting-year money.

Can inflation be higher than the nominal rate?

Yes. Then the real rate is negative: the ending amount is larger in dollars but buys less than the starting amount did.

How is this different from CAGR?

CAGR is the steady yearly rate between a starting and an ending value, in the same dollars. To get a real CAGR, work out the nominal CAGR first (the growth rate calculator does that) and then adjust it for inflation here.

Disclosures

Editor holdings
The editor holds no position in any company named on this page. As of Nov 11, 2026.
Compensation
Nobody paid for this calculator. No affiliate links on this calculator.
Sources
Each company's own SEC filings, linked next to each number.
Last updated
Nov 10, 2026

General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.

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