How to Use This Calculator
- Enter your initial investment and the nominal annual return you expect (or achieved).
- Enter how many years the money is invested.
- Enter your expected inflation rate and your capital-gains tax rate.
- Read the results. "Nominal ending value" ignores tax and inflation. "After-tax value" subtracts tax on the gain. "Real value" restates that in today's purchasing power. "Real annualized return" is the compound yearly rate that actually matters. The bar chart lines up all three ending values.
The Formula Explained
Grow the investment, tax the gain, then deflate for inflation:
- P — initial investment
- g — nominal annual return
- f — annual inflation rate
- y — years held
A quick shortcut, the Fisher approximation, is real ≈ nominal − inflation; the calculator uses the exact division above.
Frequently Asked Questions
What is the difference between a nominal and a real return?
A nominal return is the raw percentage gain. A real return removes inflation, so it measures how much more your money can actually buy. An 8% nominal return in a year of 3% inflation is roughly a 5% real return.
How are capital gains taxed?
In the U.S., assets held over a year are taxed at long-term rates of 0%, 15% or 20% depending on income (sometimes plus a 3.8% surtax); assets held a year or less are taxed as ordinary income. Rules differ by country and by account type — tax-advantaged accounts may owe nothing at sale.
Does this calculator include dividends and fees?
No. Enter a return that already reflects reinvested dividends and is net of fund fees. The tool then applies capital-gains tax to the total gain and adjusts for inflation.
Related Calculators
- Inflation Calculator — isolate the inflation piece.
- Compound Interest — the nominal growth engine on its own.
- Present & Future Value — discount any future cash flow to today.