Business and Personal Finance Dictionary

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• REAL INTEREST RATE
  
  Your real interest rate is the interest rate you're getting on an investment minus the rate of inflation. For example, if you're earning 6.25% on a bond, and the inflation rate is 2%, your real rate is 4.25%. That's enough higher than inflation to maintain your buying power and have some in reserve to build your investment base. But if the inflation rate were 5%, your real rate would be only 1.25%.
  
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