For fixed income securities compare net present value of
the returns after adjusting for inflation and tax.
Compare net present value of
the returns after adjusting for inflation and tax.
The term nominal return describes the rate of return before adjusting for inflation, and the term real return describes the rate of
return after adjusting for inflation.
Not exact matches
It's long been established that, over the long term and
after adjusting for inflation, housing produces almost no
return on investment.
Assume their salaries grow each year by 2 % in real terms (
after adjusting for inflation), they save 10 % of their annual salaries, and their investments earn a 3 % real annual
return.
Although they are not as egregiously expensive as 10 - year Swiss government bonds — currently trading at a yield of negative 0.25 % — Canadian bonds are offering a relatively paltry real
return, even
after adjusting for low
inflation.
Although they are not as egregiously expensive as 10 - year Swiss government bonds — currently trading at a yield of negative 0.25 % — U.S. bonds are offering a relatively paltry real
return, even
after adjusting for low
inflation.
The annualized real
return (that is,
after adjusting for inflation) of the stock market is 6.5 % to 7.0 %.
The long term
return of the stock market has been 6.5 % to 6.8 %
after adjusting for inflation.
Adding 1.1 % to 1.5 % per year (real) dividend growth, the Investment
Return would rise to 10.1 % to 11.3 % per year (annualized)
after adjusting for inflation.
Looking backward, the long - term total
return of stocks,
after adjusting for inflation, has been around 6.5 % to 6.7 %.
Although they are not as egregiously expensive as 10 - year Swiss government bonds — currently trading at a yield of negative 0.25 % — Canadian bonds are offering a relatively paltry real
return, even
after adjusting for low
inflation.
But the
returns can be very nominal,
after adjusting for inflation.
Although they are not as egregiously expensive as 10 - year Swiss government bonds — currently trading at a yield of negative 0.25 % — U.S. bonds are offering a relatively paltry real
return, even
after adjusting for low
inflation.
The
returns from the bond portion as you point out is a very low these days
after adjusting for inflation.
After adjusting for taxes and
inflation, most of these investments won't give you better
returns and your wealth may get eroded in long term.
The Investment
Return of the overall portfolio was lowered slightly via TIPS in order to maintain a steady income stream (
after adjusting for inflation).
The reason
for the loss is simple: TIPS have a lower Investment
Return (2 % per year
after adjusting for inflation, the same as their interest rate).
If we use post-tax
returns as R (nominal
return after adjusting for taxes) in
inflation adjusted returns formula then this new
returns becomes «
inflation adjusted post tax
returns.»
Total
Return (approximately, at Year 10,
after adjusting for inflation) = Investment Return + Speculative Return — I
inflation) = Investment
Return + Speculative
Return —
InflationInflation.
Should we
adjust this number
for inflation since we are comparing it to market
returns of 7 %
after inflation?
But the
returns can be very nominal,
after adjusting for inflation.