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What is Real Rate of Return

What is Real Rate of Return

Submitted by • August 5, 2020 blog.finology.in

The nominal rate of return is the rate without making any deductions like inflation, taxes, etc. This is actually the rate you will see at the advertisements or documents. There is a high chance that an investor may easily be consumed by merely looking at the nominal numbers of a return. But calculating the real return is essential to know what your investment actually brings home. In order to do that, you will have to take into account all the external factors. The formulae for calculating the nominal value is as follows,

Nominal rate of return = (current investment value / original investment price)-1

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