Real Rate Of Return

Real, as in: inflation-adjusted.

Example:

In the last decade, your investment compounded at 7%. But inflation during that period afteraged 2% a year. The real rate of return then? About 5% a year.

Why the "about"? Well, inflation averaged 2%. But it may have been 5% early in the decade in year 2 and 3...and then 0 for 3 years. So the data might skew to the early years, and with the power of compounding, drift a bit one way or another. But since inflation is a very much guessed-at and somewhat relative number, most people don't do "precision math," and wiggle the numbers around. Econ is, after all, a back-of-the-envelope discipline.