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Real return & inflation impact

Nominal vs real value after fees, tax drag and inflation, plus the return you need to hit a real-return goal. Educational, not financial advice.

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Your money

Assumptions

Return lost to taxes each year, in percentage points.
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Educational, not financial advice. Constant-rate assumptions; real returns, inflation, fees and taxes vary.

How it works

A balance that grows 7% a year sounds great, but if prices rise 3% a year your money buys only about 3.9% more each year, and fees and taxes take another slice. This answers: "What is my money really worth after inflation, fees and taxes, and what return do I need to actually get ahead?"

  1. 1
    Your moneyStarting amount and monthly contribution
  2. 2
    The headwindsReturn, inflation, fees, tax drag
  3. 3
    The real pictureReal value, power lost, required return

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Disclosure: some links are affiliate or sponsored links (labelled); we may earn a commission at no extra cost to you. Placement in this list is editorial except items marked Sponsored. Educational, not financial advice.

Questions, answered

What is a real return?

Your return after inflation: how much more you can actually buy. It's calculated with the Fisher equation, (1 + nominal) = (1 + real) × (1 + inflation), so real = (1 + nominal) ÷ (1 + inflation) − 1. Simply subtracting inflation is only an approximation.

What is tax drag?

The part of your return lost to taxes each year, for example on interest, dividends or realized gains in a taxable account. Enter it as percentage points per year. Tax-advantaged accounts can reduce it.

How much do fees matter?

A lot over long periods. A 1% annual fee subtracts 1 percentage point every year, compounding, so it can cost a large share of the final balance. The calculator shows the dollar cost versus the same return with no fees or tax drag.

What return do I need to beat inflation?

Required nominal return = (1 + target real) × (1 + inflation) − 1, plus your fees and tax drag. With 3% inflation and a 4% real target that's 7.12% after costs.

Is this a prediction?

No. Returns and inflation are your assumptions and change over time. Educational, not financial advice.

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