Compounding vs Inflation: The Real Return You Actually Keep

Nominal returns lie without inflation. Learn real return, why inflation matters, and how small differences compound over time. Includes easy examples.

Real return is what you keep after inflation. A high nominal return can still be mediocre in real terms.

Nominal vs real

Real return ≈ nominal return - inflation (approximation).

Why it matters

Inflation compounds against you over long horizons.

Tools:

• Compound Interest Calculator
• ROI / PnL Calculator

Related guides

• Investing Basics
• Compound Interest Explained