Inflation-Adjusted Return Calculator
Understand how your investments will perform in real terms after adjusting for inflation. See how inflation affects your purchasing power and investment returns.
Calculate Real Investment Returns
Enter your investment details to see how inflation affects your purchasing power and real returns.
How to Use This Calculator
Step 1: Enter Investment Amount
Enter the amount you plan to invest. This is your principal that will earn interest over the investment period.
Step 2: Enter Interest Rate
Input the annual interest rate offered by your investment. This is the nominal rate before inflation adjustment.
Step 3: Set Inflation Rate
Use the slider to set the expected annual inflation rate. The Bank of Canada targets around 2% inflation. Higher inflation reduces your real purchasing power.
Step 4: Set Investment Term
Enter how long you plan to hold the investment. Longer terms mean more time for inflation to erode purchasing power.
Understanding the Results
Nominal Return: The return based on the interest rate without considering inflation.
Real Return: The return after accounting for inflation - this shows your actual purchasing power gain.
Real Interest Rate: Your interest rate minus inflation rate. If this is negative, inflation is eroding your purchasing power faster than your investment is growing.
Purchasing Power Loss: The amount of value lost due to inflation. This shows how much less your money will be worth in real terms.
Why This Matters
Even if your investment earns a positive return, inflation can reduce or eliminate your real gains. For example, if you earn 3% but inflation is 2.5%, your real return is only 0.5%. This calculator helps you understand whether your investments are truly protecting and growing your purchasing power.
⚠️ Important Disclaimer
This calculator provides estimates for educational purposes. Actual inflation rates vary and are difficult to predict. Investment returns and inflation rates are subject to change. Always consult with a financial advisor for personalized advice.