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Definition of 'Real Rate Of Return'

The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. This method expresses the nominal rate of return in real terms, which keeps the purchasing power of a given level of capital constant over time.

Investopedia explains 'Real Rate Of Return'

Adjusting the nominal return to compensate for factors such as inflation allows investors to determine how much of their nominal return is actually real return. For example, let's say your bank pays you interest of 5% per year on the funds in your savings account. If the inflation rate is currently 3% per year, then the real return on your savings today would be 2%. In other words, even though the nominal rate of return on your savings is 5%, the real rate of return is only 2%, which means that the real value of your savings only increases by 2% during a one-year period. Pip Tax-Sheltered Annuity RBCC is Through The Roof! Scalping Cash Flow Statement Leprechaun Leader

H otD efnii i tons

Rel ed D efnii at i tons

I l i nfaton
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with ... Read More

Cyclical Unemployment

Par ner Li t nks

Discuss trading and investing with other active traders Make income by learning how to trade Options Unleash Your Trading Potential with NinjaTrader Visit the leading online trading forum for active traders Try Mirus Futures Trading Demo with MultiCharts and Zen-Fire

D efaton l i
A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The ... Read More

RealI er Rat nt est e

An interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower, and the real yield to the lender. The real interest rate of ... Read More

Bank Rat es

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Ret n ur
The gain or loss of a security in a particular period. The return consists of the income and the capital gains relative on an investment. It is usually quoted as a percentage. Read More Savings
Product

Home Equity

Mortgage
Today

Auto
Last Wk

A r t etc M ean ihm i

A mathematical representation of the typical value of a series of numbers, computed as the sum of all the numbers in the series divided by the count of all numbers in the series. ... Read More

$30K HELOC $30K Home Equity Loan $50K Home Equity Loan $50K HELOC $100K Home Equity Loan $100K HELOC

4.59% 5.91% 5.66% 4.25% 5.54% 4.19%

4.61% 5.91% 5.64% 4.27% 5.54% 4.20%

N om i nal
An unadjusted rate, value or change in value. This type of measure often reflects the current situation, such as the current price of a car, and doesn't make adjustments to reflect ... Read More

Equiy Pr i Puzzl - EPP t em um e

An phenomenon that describes the anomalously higher historical real returns of stocks over government bonds. The equity premium, which is defined as equity returns less bond returns, has ... Read More

Rate data provided by

Suggest D efnii ed i tons

Accounts Receivable - AR Equity Acquisition

I l i A dj ed Ret n nfaton- ust ur

A measure of return that accounts for the return period's inflation rate. Inflation-adjusted return reveals the return on an investment after removing the effects of inflation. It is ... Read More

M oney Il on lusi
An economic theory stating that many people have an illusory picture of their wealth and income based on nominal dollar terms, rather than real terms. Real prices and income take into ... Read More

Compound Annual Growth Rate - CAGR Zero-Based Budgeting - ZBB Beta

Pr ax Rat O fRet n et e ur
The rate of return on an investment that does not take the taxes the investor must pay on this return. Because individuals' tax situations differ and different investments attract ... Read More

Show More 'Related Definitions'

N ear D efnii by i tons

Real Income Real Interest Rate Real Option Real Property Real Rate Of Return Real Time Real Time Forex Trading Real Time Gross Settlement - RTGS Real-Time Quote

A r i es O fI er tcl nt est
W hy The Consum er Pr ce I i ndex I Cont over al s r si
Find out why economists are torn about how to calculate inflation. Read More

Com batng Retr ents SientKil :I l i i i em ' l ler nfaton

Inflation can devour a once secure nest egg. Learn how to protect yours.

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Read More

W hatYou Shoul Know A boutI l i d nfaton

Find out how this figure relates to your investment portfolio. Read More

The I er i nt natonalFi sher Ef ect A n I r f : nt oducton i

The Fisher models have the ability to illustrate the expected relationship between interest rates, inflation and exchange rates. Read More

Cur ng The Ef ect O fI l i bi f s nfaton

Your investments suffer when general price levels rise. Learn how you can control the damage with IPSs. Read More

Behavi alFi or nance:A nom ales i

The presence of regularly occurring anomalies in conventional economic theory was a big contributor to the formation of behavioral finance. Read More

A l A boutI l i l nfaton
What causes inflation? How does it affect your investments and standard of living? This tutorial has the answers. Read More

Equiy Pr i s:Looki Back A nd Looki A head t em um ng ng

If stocks become less profitable in the future, you may have to change your investment strategy. Read More

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