After-Tax Real Rate Of Return

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Dictionary Says

Definition of 'After-Tax Real Rate Of Return'

The actual financial benefit of an investment after accounting for inflation and taxes. The after-tax real rate of return is an accurate measure of investment earnings and usually differs significantly from an investment's nominal rate of return, or its return before inflation and taxes. However, investments in tax-advantaged securities (such as municipal bonds) and inflation-protected securities (such as TIPS) as well as investments held in tax-advantaged accounts such as Roth IRAs will show less discrepancy between nominal returns and after-tax real rates of return.
Investopedia Says

Investopedia explains 'After-Tax Real Rate Of Return'

Over the course of a year, an investor might earn a nominal return of 12% on his stock investment, but his real return, the money he gets to put in his pocket at the end of the day, will be less than 12%. Inflation might have been 3% for the year, knocking his real rate of return down to 9%. And since he sold his stock at a profit, he will have to pay taxes on those profits, taking another 2% off his return. The commission he paid to buy and sell the stock also diminishes his return. Thus, in order to truly grow their nest eggs over time, it is essential that investors focus on the after-tax real rate of return, not the nominal return.
Search results for

'After-Tax Real Rate Of Return'

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  • Analyzing A REX Agreement

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  • Retirement Planning: Where Will My Money Come From? | Investopedia

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    ... income sources are: $10,000 maximum annual retirement contributions from his $45,000
    after-tax earnings. ... At a reasonable 6% real rate of return for 25 years ...

  • Agency Bonds: Limited Risk And Higher Return

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    ... Federal Tax (35%)*, $1.90, $1.90, After-Tax Cash Flow, $3.54, $103.54, 3.54%. ... Read
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  • EOG Resources Storms The Eagle Ford Shale

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    ... In the east EOG Resource is currently getting a 77% after tax rate of return, and
    believes that the play will get a 15% after- tax rate of return at $44 per ...

  • The Equity-Risk Premium: More Risk For Higher Returns

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    ... The after-tax picture in this case makes equities look even ... 25 = 4%). If that seems
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  • Avoid Tricky Tax Issues On Municipal Bonds

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    ... states with high income taxes may find that they get a better after-tax return than
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