Real Rate of Return is the actual annual percentage return earned on an investment after adjusting for the eroding effects of inflation (or purchasing power loss).
While the Nominal Rate of Return reflects the raw percentage gain in nominal currency (the number on your bank statement), the Real Rate of Return measures the net increase in your real purchasing power—what that money can actually buy in the real economy.
Key Real Estate & Market Benchmarks
| Asset Class | Typical Nominal Profile | Inflation Resistance | Real Return Driver |
| Cash & Money Markets | Low to Moderate | Poor | Yield rarely stays ahead of unexpected inflation surges. |
| TIPS (Treasury Inflation-Protected Securities) | Low (Guaranteed Real Yield) | High | Principal value adjusts upward with CPI inflation. |
| Broad Equities (Stocks) | Moderate to High | Moderate-High | Companies can pass rising input costs on to consumers via pricing power. |
| Direct Real Estate | Moderate to High | High | Rents and property replacement costs rise alongside general price inflation. |