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Real return

A return after inflation. A 6% return with 4% inflation is about a 2% real return: the gain in what your money can buy.

Nominal returns are the percentages quoted. Real returns subtract inflation, approximately, to show the change in purchasing power.

Why it matters

Cash and bonds can lose money in real terms when inflation runs above their interest rate, even while their nominal value grows. Long-term investing goals are real, not nominal.

General information, not advice.