Work out real vs nominal rate (fisher) instantly with clear inputs, formula shown and shareable results.
The Fisher equation separates the reward for waiting from the compensation for inflation: (1 + nominal) = (1 + real)(1 + inflation). Subtracting inflation from the nominal rate is only an approximation and overstates the real return.
Fisher relation
real = (1 + nominal)/(1 + inflation) - 1
Figures are estimates for planning only. Rates, mortality and market assumptions change. This is not financial, actuarial or tax advice.
Roughly real × inflation. At 11% nominal and 6% inflation the shortcut overstates the real return by about 0.28 points.
Yes. Whenever inflation exceeds the nominal return your purchasing power falls even though the balance grows.