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Huard & Co

Real vs. nominal return

Real and nominal returns

The nominal return is what your investments earn in dollars; the real return is what’s left after inflation. It’s your true gain in buying power.

The 2026 numbers

2.1%
Expected inflation (2026 guidelines)
4.6%
Default nominal return, after fees
2.5%
The matching real return

Numbers checked against the official sources on September 28, 2026.

What it’s for

  • Knowing whether your money is really gaining on rising prices.
  • Reading a projection correctly: Huard & Co shows future amounts in today’s dollars.

Who it’s for

  • Anyone comparing investments or looking at a long-term projection.

How it works

  1. Real return ≈ nominal return − inflation. The exact math: (1 + nominal) ÷ (1 + inflation) − 1.

  2. With a 4.6% return and 2.1% inflation, the real return is about 2.5%.

  3. A savings account at 2.4% barely beats inflation: about 0.3% in real terms.

  4. Today’s dollars: a future amount brought back to today’s buying power. That’s what Huard & Co’s projections show.

An example

$10,000 invested for 20 years

If your investments earn 4.6% a year and prices rise 2.1%:

Value shown in the account
$24,800
Buying power, in today’s dollars
$16,300
What costs $10,000 today would cost
$15,200

Fictional example, round numbers.

Common mistakes

  • Celebrating a big future number without taking inflation out.
  • Believing cash loses nothing: in real terms, it stands still or slips.
  • Comparing numbers of different kinds: check whether a return is real or nominal.

In Huard & Co

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General information to help you understand, not personalized advice. Rules change: every number links to its official source.