Too embarrassed t ask: what is “real return”?

MoneyWeek's latest "too embarrassed to ask” video explains what a real return is and why it's so important for investors.

Let’s say you have £1,000 pounds and you want to save it towards a purchase that you plan to make in a year’s time. The best savings account you can find offers an interest rate of 3%. So your £1,000 pounds will grow into £1,030 pounds in a year’s time. Is that good or bad? The answer is, we don’t know.

That 3% interest rate is the “nominal” return on your savings. What we need to know is the “real” return. That is, your return after inflation is taken into...
source: Money Week

2020-08-05 09:44
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