Nominal return
Also called: money return
The return on an investment measured in rupees, before allowing for inflation.
Almost every return you see quoted, from deposit rates to fund returns, is nominal. It tells you how much the number of rupees changed, not how much more those rupees can buy.
To see the change in buying power, convert it into a real return: (1 + nominal return) ÷ (1 + inflation) − 1.
Example
A deposit paying 7% has a nominal return of 7%; with 5% inflation its real return is about 1.9%.
Learn more in these lessons
- Nominal and real returnsWhat is a real return after inflation?
Related terms
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