How to Calculate the Realized Rate of Return Online

by D. Laverne O'Neal

Discovering the realized rate of return, also known as the real rate of return or ROR, can help investors make better-informed decisions. The ROR represents the return on an investment adjusted for factors such as inflation during a stated period. In other words, it can give you a more accurate idea of how much money your money is really making. To calculate the realized rate of return online, you need the nominal rate of return, such as the investment's interest rate, and the inflation rate.

Find the nominal rate of return for your investment. For most investments, the interest rate is the figure you are after.

Get the inflation rate for the period under review. For example, the rate for the period beginning June 2010 and ending June 2011.

Find an online real rate of return calculator.

Plug in the interest and inflation rate figures and press "submit" or "calculate" to reveal the ROR.

Tip

  • To arrive at the inflation rate for a given year-long period, find the Consumer Price Index, an index published monthly by the Bureau of Labor Statistics, for the start and end of the period under review. For example, to discover the inflation rate for the period from June 2010 to June 2011, deduct the consumer price index of June 2010 from the index of June 2011. Then divide the result by the June 2011 rate. Multiply that figure by 100 to arrive at a percentage. For example, if last year's index was 100 and this year's is 120, the calculation would be 120 minus 100 equals 20. The figure 20 divided by 100 equals 0.2. 0.2 times 100 equals 20 percent.

Items you will need

  • Calculator

About the Author

D. Laverne O'Neal, an Ivy League graduate, published her first article in 1997. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish. Her strongest interests are the performing arts, design, food, health, personal finance and personal growth.

Photo Credits

  • Take note of your investments image by Victor Soares from Fotolia.com