GLOSSARY · FIRE & EARLY RETIREMENT

Real return

The growth of your money after inflation, so it measures what your savings can buy rather than the number on the statement. Plans stated in today's dollars must grow at the real return, not the nominal one.

Also called: inflation-adjusted return, real rate of return

FORMULA

Real return = (1 + nominal return) ÷ (1 + inflation) − 1

COMPUTE IT WITH YOUR NUMBERS

Real (inflation-adjusted) return →What am I earning after inflation?FIRE Calculator →Given savings and spending, when can I stop working?

LEARN IT PROPERLY

CHAPTER · SAVINGS FOUNDATIONS & EMERGENCY FUNDS · FOUNDATIONSSaving Versus Investing: Matching Money to Time CHAPTER · INCOME FUNDAMENTALS · FOUNDATIONSLow-Risk Places to Keep Cash

RELATED TERMS

Compound growth FIRE number Coast FIRE

SOURCES

The Theory of Interest. Irving Fisher, 1930.

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