Nominal return
The stated return before adjusting for inflation’s effect on purchasing power.
Definition
The stated return before adjusting for inflation’s effect on purchasing power.
Why this concept matters
It describes the change in current money and is the starting point for real return.
What to watch
A positive nominal return can still mean a loss of purchasing power.
Simple example
An investment returning 4% with 3% inflation shows 4% nominal but much less in real terms.
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