Nominal return

If your portfolio grows from £10,000 to £11,000 in a year, your nominal return is 10%. That is the number most statements and fund factsheets show first.

Nominal returns are useful for comparing products and tracking account balances. They are not useful for measuring whether you are actually richer, because they ignore what the money can buy.

To see the real return, subtract inflation from the nominal return. A 10% nominal return with 7% inflation gives roughly a 3% real return.