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Finance: What Is a Real Return? 67 Views
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What is real return? Real return is the actual return made from an investment after inflation is factored in. Return is expressed as a percentage called a nominal rate of return before inflation; real return shows how much was actually made given inflation.
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- Finance / Financial Responsibility
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- Life Skills / Finance Definitions
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- Finance and Economics / Terms and Concepts
- Terms and Concepts / Accounting
- Terms and Concepts / Bonds
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- Terms and Concepts / Econ
- Terms and Concepts / Index Funds
- Terms and Concepts / Investing
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Transcript
- 00:00
finance- a la shmoop. what is a real return? like is there a fake return? you
- 00:09
know like the news? well kinda .real return refers to an [man frowns talking to camera]
- 00:13
investment return mapped against inflation. so let's say you invest in a
- 00:17
bond that pays five percent a year for ten years and then pays you back your
- 00:21
principal .boring but nice- you know like a good doctor visit. your nominal return
Full Transcript
- 00:27
over that period was 5% but since inflation was 3% a year during that
- 00:32
period on average your real return was only 2% a year- meaning that the
- 00:38
performance of your investment only eked out a 2% net gain against the price of [equation]
- 00:43
milk gas and you know knocked off iPhones. so don't be a chump who thinks
- 00:48
that they're making more money than they really are, and you know keep on keeping
- 00:52
it real. [man sitting in chair, talks to camera]
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