Saving under inflation: look at real, not nominal, return

40% interest with 45% inflation is a loss. What real return is and why our planner uses it.

A 40% deposit with 45% inflation shrinks your money.

Real return

(1 + nominal) / (1 + inflation) − 1.

We write goals in today’s money, so we use real return; the planner assumes 4% a year by default.

Author

Ahmet Kaya

Adviser · Sovereign Ledger

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