Investing term

What is Nominal return?

The headline return, before inflation is subtracted. What the portfolio says on paper.

Nominal return is the headline percentage gain, before inflation is taken out — the number your statement shows. It overstates how much richer you actually became, because some of that gain just keeps pace with rising prices. Subtract inflation and you get the real return, which is the figure that reflects genuine growth in what your money can buy.

For example

A 7% nominal return in a year of 3% inflation is really only about a 4% gain in purchasing power — the rest just offset rising prices.

Nominal return is taught hands-on in Stage 2 — Why Investing Matters (And When It Doesn't).

See the lesson →

Related terms

Asset classA broad category of investment with similar behavior. Stocks, bonds, cash, real estate, commodities.Behavior gapThe difference between a fund's reported return and what its investors actually earned — usually worse.Dollar-cost averagingInvesting a fixed amount on a fixed schedule, regardless of market level.FOMO buyingFear of missing out — piling into something after it has already run, because everyone else seems to be winning.
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