Real Rate of Return

The real rate of return is the return you receive adjusted for inflation.

Inflation measures gauge the increase in prices of a basket of everyday goods consumed by the general population. The real rate of return puts in to perspective the return an investor gets from an investment by comparing it against the increase in the price of living.

In the situation of high inflation and low interest rates, the real rate of return is negative meaning, in effect, you are losing money by leaving it in a low interest rate deposit account.

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