real return

Real return

The actual payback on an investment after removing the effect of inflation.

Real Rate of Return

The rate of return on an investment after adjusting for inflation. It is calculated simply by taking the gross return and subtracting the inflation rate. For example, if the return on an investment is 7% and the inflation rate is 4%, the real rate of return is 3%.

real return

The inflation-adjusted rate of return on an investment. If an investor earns a return of 12% during a year when inflation is 4%, the real return is 8%. Compare nominal return.