The real-return relationship
Real return = (1 + nominal return) / (1 + inflation) − 1
If nominal growth is 10% and inflation is 6%, real growth is about 3.77%, not exactly 4%. Subtraction is only a rough shortcut when both rates are small.
Your inflation may differ from the headline index
A consumer-price index follows a representative basket. Your own mix of rent, healthcare, education, transport, and food can move differently. A useful plan therefore includes both an official inflation assumption and a stricter personal-cost scenario.
Inflation and market returns also change over time. Do not enter today's rate for a multi-decade horizon and label the result a forecast. Money Stack deliberately keeps the arithmetic deterministic so the assumption remains visible.
Use the calculator without hiding purchasing power
Money Stack reports nominal currency. You can discount the ending balance by an inflation assumption, or enter a carefully estimated real rate instead of a nominal rate. The first method is clearer when taxes and fees are modelled separately.
Build three views:
- a base inflation path;
- a higher-inflation, lower-return stress case;
- a personal basket focused on your largest future expenses.
The U.S. Bureau of Labor Statistics CPI overview explains what the consumer price index measures. It does not predict your personal inflation or any asset's future return. This article is educational, not investment advice.