Nominal value is not purchasing power
A nominal balance records currency units at the future date. A real balance expresses their equivalent buying power in today’s units using an assumed inflation rate. The inflation adjustment does not remove tax or fees automatically. It changes the unit of comparison, not the actual amount in the account.
Two directions for a price assumption
Investment mode first grows principal and scheduled deposits, then divides the terminal balance by (1+inflation)^years. Future-cost mode multiplies today’s cost by that same inflation factor. A $1,000 cost rising 10% annually becomes $1,210 after two years. Conversely, $1,210 then represents $1,000 of today’s purchasing power.
Use a consistent real-return comparison
The exact real annual return is (1+nominal effective return)/(1+inflation) − 1. Subtracting inflation from nominal return is only an approximation. Deposits in this tool stay fixed in nominal units; they are not automatically increased with prices. Historical CPI comparisons belong to the separate historical-dollar calculator.
Questions about this calculation
How can I check the inputs behind the result?
Open “Show calculation & assumptions” for the formula and timing conventions, then inspect the breakdown. Export CSV to keep the last calculated inputs and numerical results together.
Does this include taxes or changing market returns?
No tax calculation or variable market-return path is included. The task-specific assumptions above describe the scope. Calculated values are conditional on the inputs, not personalized recommendations.
Learn more
Start with the step-by-step future value formula guide.
Open the formula guide →How to calculate future value · Spreadsheet calculations · All learning guides
Use these figures to explore assumptions. Actual interest, returns, fees, taxes and purchasing power can differ.