Glossary · Returns
Real return
A return after inflation has been removed — what the money can actually buy.
A nominal 6% in a year when prices rose 4% is not 6% of additional purchasing power. The real return strips inflation out, so returns across different inflationary periods can be compared on the same footing.
This site deflates using CPIH, the official UK measure that includes owner-occupiers’ housing costs. Different inflation measures give different real returns; the measure used is always stated.
Real returns are computed by compounding, not by subtracting: dividing the growth factor by the inflation factor, rather than taking one percentage away from the other.
How we calculate it
Nominal series divided by the CPIH index, rebased to the period start.
The full method, with a worked exampleRelated terms
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Definitions describe how a term is used on Fundology. This is information, not advice.