nominal return

The nominal rate of return is the amount of money generated by an investment before factoring in expenses such as taxes, investment fees, and inflation. If an investment generated a 10% return, the nominal rate would equal 10%.

The famous Fisher equation captures the relationship between nominal and real rate of return under inflation:

Real return = Nominal return - Inflation rate

For example, assume a bond pays an interest rate of 5% per year. If the inflation rate is currently 3% per year, then the real return on your savings is only 2%.