Inflation - Historic Impact on Investments
Inflation reduces your the purchasing power of your money. Use this calculator to see the historic impact of inflation on an investment or savings balance.
How the inflation - historic impact on investments calculator works
It grows your investment at the nominal return, then again at the real (inflation-adjusted) rate, to reveal the buying power your nominal balance actually represents in today’s dollars.
Worked example: with amount invested of $50,000, nominal annual return of 7.00% and average inflation of 3.00%, the inflation — historic impact on investments shows real value in today’s dollars of $129,609.
- Nominal value
- $271,372
- Real (inflation-adjusted)
- $129,609
- Lost to inflation
- $141,763
- Real annual return
- 3.88%
The formula
Real rate = (1 + nominal return) ÷ (1 + inflation) − 1. Real value = amount × (1 + real rate)^years.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the inflation - historic impact on investments
Why is real return more important than nominal?
Because inflation erodes what your money can buy. A 7% nominal return with 3% inflation is really about 4% of added purchasing power — the figure that matters for your goals.
How much does inflation erode investments?
Over decades, a great deal. Even moderate inflation can halve the real value of a fixed sum, which is why long-term money must be invested to grow faster than prices.
What investments beat inflation?
Historically, stocks and real assets have outpaced inflation over the long run, while cash and many bonds struggle to. Diversification across them is the usual defense.
Is the Inflation - Historic Impact on Investments free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.