Everyday money · General financial education

Nominal vs real

Nominal is what the account shows in money. Real is what that money still buys after prices have changed.

In more detail

As an approximation: real rate ≈ nominal rate minus inflation. If the balance rises 2% and prices rise 3%, purchasing power shrinks by about 1%. The Bundesbank publishes real rates on bank deposits in that logic: deposit nominal rates minus consumer-price change.

Background

The exact real rate is (1 + nominal rate) / (1 + inflation rate) − 1. 2% against 3% is about −0.97%, not exactly −1%. Expected inflation gives an expected real rate; realised inflation a backward-looking one. Tax and fees are a further deduction and are not in the Bundesbank series. Finmon does not calculate your tax.

An example

2% interest, 3% prices: approximation −1%. Exact 1.02 / 1.03 − 1 ≈ −0.97% before tax.

A common misconception

The rate on the statement is what I gain.

The statement shows nominal. Real is what remains buyable after the price change: tax extra.

Source: Deutsche Bundesbank · Realzinssätze. Last reviewed: 2026-11-09. Editorially reviewed on 2026-11-09. Next review 2027-11-09. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.