Business and Personal Finance Dictionary

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• REAL RATE OF RETURN
  
  The rate of return on an investment minus the rate of inflation gives you a real rate of return. For example, if you are earning 6% interest on a bond in a period when inflation is running at 2%, your real rate of return is 4%, which is large enough to increase your buying power. But if inflation were at 4%, your real rate of return would be only 2%. Finding your real rate of return, however, is generally a calculation you have to do on your own. It isn't provided in annual reports, prospectuses, or other publications that report investment performance.
  
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