Fisher Equation Calculator

This tool is used to calculate the real interest rate, nominal interest rate and inflation rate by using fisher equation.



In order to find the real rate of return, we use the Fisher equation. The equation states that:

(1 + i) = (1 + r) (1 + π)

We can rearrange the equation to find real interest rate:

r = (1 + i)(1 + π)-1

Therefore, the real interest rate, or actual return on investment, of the portfolio equals:

r = (1 + 3.25)(1 + 2)-1

r = 1.0331.020-1

r = 1.012 - 1

Real Interest = 1.23%


Formula To Calculate Fisher Equation :

The Fisher equation is a concept of economics stating the relationship between nominal interest rates and real interest rates under inflation.

The Fisher equation is expressed through the following formula:

(1 + i) = (1 + r) (1 + π)


r = the real interest rate, The real interest rate refers to the amount reflecting the buying capacity of the money borrowed over a specific time.

i = the nominal interest rate, The nominal rate of interest is the type of interest rate which is measured before considering the inflation in an economy.

p = the inflation rate, The inflation rate is a measure of the price inflation comprehending the annual percentage change in the consumer price index (CPI).

However, one can also use the approximate version of the previous formula:

i ≈ r + p