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Glossary
Markets & macro

Real return

Your return after inflation. The only one that buys anything.

A savings account paying 2% while inflation runs at 4% delivers a nominal return of +2% and a real return of roughly −2%. The number in your account grew while your wealth shrank.

Every long-run return figure you see quoted should be interrogated for whether it is nominal or real. The difference across decades is enormous.

The formula
Real return ≈ Nominal return − Inflation
Figure

The basket is an average, and you are not average

Housing
32%
Transport
16%
Food
13%
Recreation
11%
Energy
8%
Everything else
20%

If you rent in a city and drive to work, your personal inflation rate in a year of surging rents and fuel can be double the headline. The number is not lying. It simply is not about you.

Why it matters

It is the only measure of whether you actually got richer.

The mistake everyone makes

Celebrating a positive nominal return that is negative in real terms.

Related terms

Inflation
The general rise in prices, which quietly shrinks the value of cash.
CAGR
The smooth annual rate that would have produced your actual result.

See Real return on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

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