Real bond yield.

Bond yield vs inflation calculator computes real yield - the actual purchasing power growth from bond investments. 5% bond yield with 3% inflation = 1.94% real yield. Negative real yields (yield < inflation) destroy purchasing power - lose buying power despite earning interest. Common during financial repression periods.

Example: 5% nominal bond yield, 3% expected inflation. Real yield = (1.05/1.03) - 1 = 1.94%. Approximation: 5% - 3% = 2% (close enough for casual use). Difference between 100k earning 5% nominal at 3% inflation: nominal value 100,500 at year 1 vs real (purchasing power) value 101,940 - small but positive real growth.

Real yield assessments: (1) Above 2% = strong positive real yield (rare). (2) 0-2% = marginal positive real yield (typical). (3) -2% to 0% = mild financial repression (post-2009 era). (4) Below -2% = significant repression (1970s, post-COVID inflation spike). Negative real yields force investors into riskier assets to maintain purchasing power. Index-Linked Gilts and TIPS protect against inflation risk - useful when real yields negative.

Run it with sensible defaults

Using nominal bond yield of 5%, expected inflation of 3%, the calculation works out to 1.94%. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Nominal Bond Yield % and Expected Inflation % — do not pull with equal force. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the winning option changes.

How the math works

Fisher equation: real yield = (1 + nominal)/(1 + inflation) - 1. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".

Why investors run this

Most people's intuition for compounding is wrong — not because the math is hard, but because linear thinking doesn't account for curves. Running numbers through a calculator like this one is the cheapest way to recalibrate that intuition before making an irreversible decision about contribution rate, asset mix, or retirement age.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. Treat the number as one scenario, not a forecast.