1. What is Real Return?

Real return is the annual percentage return realized on an investment, adjusted for changes in prices due to inflation. It shows the true increase in purchasing power from an investment in Malaysia.

2. How Does the Calculator Work?

The calculator uses the real return formula:

Where:

• \( \text{Nominal Return} \) — The stated return on investment (decimal)
• \( \text{Inflation} \) — The inflation rate (decimal)

Explanation: The formula adjusts the nominal return by removing the effect of inflation to show the actual growth in purchasing power.

3. Importance of Real Return Calculation

Details: Calculating real return is crucial for understanding the true value of investments in Malaysia, especially for long-term financial planning where inflation can significantly erode purchasing power.

4. Using the Calculator

Tips: Enter nominal return and inflation rate as decimals (e.g., 0.05 for 5%). Both values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate real return instead of just looking at nominal return?
A: Nominal return doesn't account for inflation, which can give a misleading picture of actual investment growth in Malaysia's economy.

Q2: What's a good real return for investments in Malaysia?
A: This depends on individual goals, but generally a positive real return means your investments are growing faster than inflation.

Q3: How often should I calculate real return?
A: For long-term investments, annually is sufficient. For active portfolios, quarterly or semi-annually may be appropriate.

Q4: Does this calculation work for all types of investments?
A: Yes, the formula applies to stocks, bonds, mutual funds, and other investments in Malaysia, provided you have accurate nominal return and inflation data.

Q5: Where can I find Malaysia's inflation rate?
A: The Department of Statistics Malaysia (DOSM) publishes official inflation figures monthly.