PORTFOLIO COMPARISON / ONE VARIABLE

Nominal vs Inflation-Adjusted Portfolio Returns

Compare nominal and real portfolio results to see how inflation changes purchasing-power conclusions.

THE QUESTION

Does a portfolio conclusion survive when results are measured in purchasing-power terms?

BASE PORTFOLIONominal portfolio returns
CONTROLLED CHANGEInflation-adjusted portfolio returns
ONLY CHANGED VARIABLEReturn measurement

The base rules, data treatment, and calculation assumptions remain visible throughout the comparison. Review the portfolio return and drawdown metrics used to interpret this result.

WHAT TO COMPARE

Read the trade-off as a system.

  1. 01Real annualized return
  2. 02Real drawdown
  3. 03Recovery time
  4. 04Purchasing-power growth

WHEN TO LOOK

Locate where the difference appeared.

Low inflationHigh inflationDisinflationRecent inflation shock

A useful comparison shows whether an advantage was broad or created by one unusually favorable period. For a direct test of this risk, compare the same rules across multiple portfolio start dates.

OBSERVED RESULT / REAL MARKET DATA

What the comparison actually produced.

The account grew to $23,231 nominally, but only $17,266 in Aug 2016 purchasing power. Inflation reduced the annualized growth rate from 9.37% to 5.97%.

WINDOWAug 2016–Dec 2025
CAPITAL$10,000 initial investment in 60% VTI / 40% BND
CALCULATIONAnnual rebalancing with distributions reinvested. Real value divides the nominal account by the change in US CPI-U from Aug 2016 to Dec 2025.
MeasurementEnding valueAnnualized returnCumulative inflation
Nominal USD$23,2319.37%Not deducted
Aug 2016 purchasing power$17,2665.97%34.5%

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