{"id":1677,"date":"2025-10-09T06:00:00","date_gmt":"2025-10-09T06:00:00","guid":{"rendered":"https:\/\/casapraquetequero.com.br\/?p=1677"},"modified":"2025-10-07T23:36:48","modified_gmt":"2025-10-07T23:36:48","slug":"nominal-interest-vs-real-interest-understand-what-they-are-and-the-differences-in-practice","status":"publish","type":"post","link":"https:\/\/casapraquetequero.com.br\/en\/nominal-interest-vs-real-interest-understand-what-they-are-and-the-differences-in-practice\/","title":{"rendered":"Nominal interest vs. real interest - understand what they are and the differences in practice"},"content":{"rendered":"<html><body><h1 data-start=\"414\" data-end=\"485\"><\/h1>\n<p data-start=\"487\" data-end=\"778\">Understand the difference between <strong data-start=\"517\" data-end=\"534\">nominal interest<\/strong> x <strong data-start=\"537\" data-end=\"551\">real interest<\/strong> is essential for anyone who wants to invest wisely and protect their assets from <strong data-start=\"653\" data-end=\"665\">inflation<\/strong>.<\/p><div class=\"code-block\"><div class=\"ads-title\">Advertising<\/div> \r\n<div id=\"content1-slot-area\" style=\"min-width: 250px; min-height: 250px;\"><\/div> \r\n<\/div>\n<p data-start=\"487\" data-end=\"778\">These two concepts, although they may seem similar, have very different impacts on people. <strong data-start=\"751\" data-end=\"777\">financial results<\/strong>.<\/p>\n<h2 data-start=\"785\" data-end=\"807\">\ud83d\udca1 What is interest?<\/h2>\n<p data-start=\"809\" data-end=\"925\">First of all, it's important to understand the basic concept of <strong data-start=\"867\" data-end=\"876\">interest<\/strong>.<br data-start=\"877\" data-end=\"880\">In a nutshell, <strong data-start=\"891\" data-end=\"922\">interest is the cost of money<\/strong>.<\/p>\n<ul data-start=\"926\" data-end=\"1046\">\n<li data-start=\"926\" data-end=\"983\">\n<p data-start=\"928\" data-end=\"983\">When you <strong data-start=\"940\" data-end=\"968\">borrow money<\/strong>, you pay interest.<\/p>\n<\/li>\n<li data-start=\"984\" data-end=\"1046\">\n<p data-start=\"986\" data-end=\"1046\">When you <strong data-start=\"998\" data-end=\"1030\">lend or invest money<\/strong>, you earn interest.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"1048\" data-end=\"1170\">Interest therefore represents the <strong data-start=\"1082\" data-end=\"1100\">price of time<\/strong> - how much it is worth postponing present consumption in exchange for a future gain.<\/p>\n<h2 data-start=\"1177\" data-end=\"1212\">\ud83d\udcca What they are <strong data-start=\"1193\" data-end=\"1211\">Nominal Interest<\/strong>?<\/h2>\n<p data-start=\"1214\" data-end=\"1432\">The <strong data-start=\"1217\" data-end=\"1235\">nominal interest<\/strong> represent the <strong data-start=\"1250\" data-end=\"1273\">gross interest rate<\/strong>, without taking into account the impact of inflation.<\/p>\n<p data-start=\"1214\" data-end=\"1432\"><br data-start=\"1316\" data-end=\"1319\">This is the value that appears in loan contracts, financing or descriptions of financial investments.<\/p>\n<p data-start=\"1434\" data-end=\"1606\">\ud83d\udc49 In other words, nominal interest shows <strong data-start=\"1483\" data-end=\"1525\">how much your money \u201cyields\u201d on paper<\/strong>, but <strong data-start=\"1531\" data-end=\"1576\">don't reveal how much you really earn<\/strong> in terms of purchasing power.<\/p>\n<p data-start=\"1608\" data-end=\"1846\"><strong data-start=\"1608\" data-end=\"1628\">Practical example:<\/strong><br data-start=\"1628\" data-end=\"1631\">If an investment offers <strong data-start=\"1658\" data-end=\"1689\">10% per year nominal interest<\/strong>, This means that, at the end of a year, you will have 10% more than the amount invested - but without taking into account the loss of purchasing power caused by inflation.<\/p>\n<h2 data-start=\"1853\" data-end=\"1885\">\ud83d\udcc8 What they are <strong data-start=\"1869\" data-end=\"1884\">Real Interest<\/strong>?<\/h2>\n<p data-start=\"1887\" data-end=\"2069\">The <strong data-start=\"1893\" data-end=\"1908\">real interest<\/strong> show the <strong data-start=\"1919\" data-end=\"1936\">effective gain<\/strong> after discounting the <strong data-start=\"1954\" data-end=\"1977\">inflation for the period<\/strong>.<br data-start=\"1978\" data-end=\"1981\">In other words, it's how much your money has really appreciated in value <strong data-start=\"2036\" data-end=\"2068\">in terms of purchasing power<\/strong>.<\/p>\n<p data-start=\"2071\" data-end=\"2178\">If inflation is high, it <strong data-start=\"2099\" data-end=\"2139\">erodes the value of the nominal yield<\/strong>, reducing the investor's real gain.<\/p>\n<p data-start=\"2180\" data-end=\"2194\"><strong data-start=\"2180\" data-end=\"2192\">Example:<\/strong><\/p>\n<ul data-start=\"2195\" data-end=\"2248\">\n<li data-start=\"2195\" data-end=\"2224\">\n<p data-start=\"2197\" data-end=\"2224\">Nominal interest: 10% per year<\/p>\n<\/li>\n<li data-start=\"2225\" data-end=\"2248\">\n<p data-start=\"2227\" data-end=\"2248\">Inflation: 6% per year<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"2250\" data-end=\"2354\">Therefore <strong data-start=\"2258\" data-end=\"2272\">real interest<\/strong> is approximately <strong data-start=\"2291\" data-end=\"2297\">4%<\/strong>, because part of the income was \u201cconsumed\u201d by inflation.<\/p>\n<h2 data-start=\"2361\" data-end=\"2387\">\u2696\ufe0f Difference in Practice<\/h2>\n<p data-start=\"2389\" data-end=\"2510\">Suppose you invested R$ 10,000 with <strong data-start=\"2429\" data-end=\"2461\">nominal interest of 10% per year<\/strong>.<br data-start=\"2462\" data-end=\"2465\">At the end of 12 months, you would have R$ 11,000.<\/p>\n<p data-start=\"2512\" data-end=\"2647\">But if <strong data-start=\"2521\" data-end=\"2539\">annual inflation<\/strong> was <strong data-start=\"2547\" data-end=\"2553\">6%<\/strong>, their purchasing power increased by only about <strong data-start=\"2602\" data-end=\"2608\">4%<\/strong> - in other words, <strong data-start=\"2620\" data-end=\"2644\">R$ 400 real gain<\/strong>.<\/p>\n<p data-start=\"2649\" data-end=\"2758\">\u27a1\ufe0f Even if the nominal value seems high, <strong data-start=\"2691\" data-end=\"2757\">what really matters is the real gain in purchasing power<\/strong>.<\/p>\n<h2 data-start=\"2765\" data-end=\"2811\">\ud83e\udde0 Why is this difference so important?<\/h2>\n<p data-start=\"2813\" data-end=\"2894\">Understand the difference between <strong data-start=\"2840\" data-end=\"2857\">nominal interest<\/strong> e <strong data-start=\"2860\" data-end=\"2874\">real interest<\/strong> is essential for:<\/p>\n<ul data-start=\"2895\" data-end=\"3094\">\n<li data-start=\"2895\" data-end=\"2941\">\n<p data-start=\"2897\" data-end=\"2941\">Do <strong data-start=\"2903\" data-end=\"2938\">smarter investments<\/strong>;<\/p>\n<\/li>\n<li data-start=\"2942\" data-end=\"2989\">\n<p data-start=\"2944\" data-end=\"2989\">Avoid <strong data-start=\"2951\" data-end=\"2986\">losses masked by inflation<\/strong>;<\/p>\n<\/li>\n<li data-start=\"2990\" data-end=\"3041\">\n<p data-start=\"2992\" data-end=\"3041\">Compare investment options fairly;<\/p>\n<\/li>\n<li data-start=\"3042\" data-end=\"3094\">\n<p data-start=\"3044\" data-end=\"3094\">Planning the <strong data-start=\"3055\" data-end=\"3093\">real growth in your assets<\/strong>.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"3096\" data-end=\"3230\">\ud83d\udc49 Investing without taking inflation into account can lead to <strong data-start=\"3145\" data-end=\"3172\">false sense of profit<\/strong>, when, in reality, purchasing power is decreasing.<\/p>\n<h2 data-start=\"3237\" data-end=\"3272\">\ud83e\uddee How to Calculate <strong data-start=\"3259\" data-end=\"3272\">Real Interest<\/strong><\/h2>\n<p data-start=\"3274\" data-end=\"3414\">Many people believe that <strong data-start=\"3309\" data-end=\"3348\">subtract inflation from the nominal rate<\/strong>, But the correct calculation is slightly different.<br data-start=\"3393\" data-end=\"3396\">The exact formula is:<\/p>\n<p><span class=\"katex-display\"><span class=\"katex\"><span class=\"katex-mathml\">Real Interest=(1+Nominal Interest1+Inflation)-1Real Interest = \\left(\\frac{1 + Nominal Interest}{1 + Inflation}\\right) - 1<\/span><span class=\"katex-html\" aria-hidden=\"true\"><span class=\"base\"><span class=\"mord mathnormal\">J<\/span><span class=\"mord mathnormal\">u<\/span><span class=\"mord mathnormal\">ro<\/span><span class=\"mspace\">\u00a0<\/span><span class=\"mord mathnormal\">R<\/span><span class=\"mord mathnormal\">e<\/span><span class=\"mord mathnormal\">a<\/span><span class=\"mord mathnormal\">l<\/span><span class=\"mrel\">=<\/span><\/span><span class=\"base\"><span class=\"minner\"><span class=\"mopen delimcenter\"><span class=\"delimsizing size3\">(<\/span><\/span><span class=\"mord\"><span class=\"mfrac\"><span class=\"vlist-t vlist-t2\"><span class=\"vlist-r\"><span class=\"vlist\">1<span class=\"mbin\">+<\/span><span class=\"mord mathnormal\">I<\/span><span class=\"mord mathnormal\">n<\/span><span class=\"mord mathnormal\">f<\/span><span class=\"mord mathnormal\">l<\/span><span class=\"mord mathnormal\">a<\/span><span class=\"mord accent\"><span class=\"mord mathnormal\">c<\/span><span class=\"accent-body\">\\c<\/span><span class=\"vlist-s\">\u200b<\/span><\/span><span class=\"mord accent\"><span class=\"vlist-t\"><span class=\"mord mathnormal\">a<\/span><span class=\"accent-body\">~<\/span><\/span><\/span><span class=\"mord mathnormal\">o<\/span>1<span class=\"mbin\">+<\/span><span class=\"mord mathnormal\">J<\/span><span class=\"mord mathnormal\">u<\/span><span class=\"mord mathnormal\">ro<\/span><span class=\"mspace\">\u00a0<\/span><span class=\"mord mathnormal\">N<\/span><span class=\"mord mathnormal\">o<\/span><span class=\"mord mathnormal\">mine<\/span><span class=\"mord mathnormal\">l<\/span><\/span><span class=\"vlist-s\">\u200b<\/span><\/span><\/span><\/span><\/span><span class=\"mclose delimcenter\"><span class=\"delimsizing size3\">)<\/span><\/span><\/span><span class=\"mbin\">\u2212<\/span><\/span><span class=\"base\"><span class=\"mord\">1<\/span><\/span><\/span><\/span><\/span><\/p>\n<h3 data-start=\"3492\" data-end=\"3513\">Applied example:<\/h3>\n<ul data-start=\"3514\" data-end=\"3559\">\n<li data-start=\"3514\" data-end=\"3540\">\n<p data-start=\"3516\" data-end=\"3540\">Nominal interest: <strong data-start=\"3531\" data-end=\"3538\">10%<\/strong><\/p>\n<\/li>\n<li data-start=\"3541\" data-end=\"3559\">\n<p data-start=\"3543\" data-end=\"3559\">Inflation: <strong data-start=\"3553\" data-end=\"3559\">6%<\/strong><\/p>\n<\/li>\n<\/ul>\n<p><span class=\"katex-display\"><span class=\"katex\"><span class=\"katex-mathml\">(1+0,10)\/(1+0,06)-1=0,0377(1 + 0,10) \/ (1 + 0,06) - 1 = 0,0377<\/span><span class=\"katex-html\" aria-hidden=\"true\"><span class=\"base\"><span class=\"mopen\">(<\/span><span class=\"mord\">1<\/span><span class=\"mbin\">+<\/span><\/span><span class=\"base\"><span class=\"mord\">0<\/span><span class=\"mpunct\">,<\/span><span class=\"mord\">10<\/span><span class=\"mclose\">)<\/span><span class=\"mord\">\/<\/span><span class=\"mopen\">(<\/span><span class=\"mord\">1<\/span><span class=\"mbin\">+<\/span><\/span><span class=\"base\"><span class=\"mord\">0<\/span><span class=\"mpunct\">,<\/span><span class=\"mord\">06<\/span><span class=\"mclose\">)<\/span><span class=\"mbin\">\u2212<\/span><\/span><span class=\"base\"><span class=\"mord\">1<\/span><span class=\"mrel\">=<\/span><\/span><span class=\"base\"><span class=\"mord\">0<\/span><span class=\"mpunct\">,<\/span><span class=\"mord\">0377<\/span><\/span><\/span><\/span><\/span> <span class=\"katex-display\"><span class=\"katex\"><span class=\"katex-mathml\">0.0377\u00d7100=3.77%0.0377 \u00d7 100 = 3.77\\%<\/span><span class=\"katex-html\" aria-hidden=\"true\"><span class=\"base\"><span class=\"mord\">0<\/span><span class=\"mpunct\">,<\/span><span class=\"mord\">0377<\/span><span class=\"mbin\">\u00d7<\/span><\/span><span class=\"base\"><span class=\"mord\">100<\/span><span class=\"mrel\">=<\/span><\/span><span class=\"base\"><span class=\"mord\">3<\/span><span class=\"mpunct\">,<\/span><span class=\"mord\">77%<\/span><\/span><\/span><\/span><\/span><\/p>\n<p data-start=\"3634\" data-end=\"3692\">\u2705 Therefore <strong data-start=\"3648\" data-end=\"3661\">real interest<\/strong> in this case it is <strong data-start=\"3675\" data-end=\"3691\">3.77% per year<\/strong>.<\/p>\n<h2 data-start=\"3699\" data-end=\"3742\">\ud83d\udd22 Tools for Calculating Real Interest<\/h2>\n<p data-start=\"3744\" data-end=\"3930\">Today, there are several <strong data-start=\"3774\" data-end=\"3797\">online calculators<\/strong> which make it easier to calculate <strong data-start=\"3825\" data-end=\"3840\">real interest<\/strong>, This allows you to compare different investments quickly.<\/p>\n<p data-start=\"3744\" data-end=\"3930\"><br data-start=\"3899\" data-end=\"3902\">Some useful examples are:<\/p>\n<ul data-start=\"3932\" data-end=\"4042\">\n<li data-start=\"3932\" data-end=\"3983\">\n<p data-start=\"3934\" data-end=\"3983\"><strong data-start=\"3934\" data-end=\"3981\">Real Interest Calculator - Money.com<\/strong><\/p>\n<\/li>\n<li data-start=\"3984\" data-end=\"4020\">\n<p data-start=\"3986\" data-end=\"4020\"><strong data-start=\"3986\" data-end=\"4018\"><a class=\"decorated-link\" href=\"#\" rel=\"noopener\" data-start=\"3988\" data-end=\"4016\">Investment Calculator<\/a><\/strong><\/p>\n<\/li>\n<li data-start=\"4021\" data-end=\"4042\">\n<p data-start=\"4023\" data-end=\"4042\"><strong data-start=\"4023\" data-end=\"4040\"><a class=\"decorated-link\" href=\"#\" rel=\"noopener\" data-start=\"4025\" data-end=\"4038\">Bankrate<\/a><\/strong><\/p>\n<\/li>\n<\/ul>\n<p data-start=\"4044\" data-end=\"4149\">These tools help to visualize the <strong data-start=\"4084\" data-end=\"4106\">real profitability<\/strong> and make safer financial decisions.<\/p>\n<h2 data-start=\"4156\" data-end=\"4181\">\ud83d\udcac Comparative example<\/h2>\n<div class=\"_tableContainer_1rjym_1\">\n<div class=\"group _tableWrapper_1rjym_13 flex w-fit flex-col-reverse\" tabindex=\"-1\">\n<table class=\"w-fit min-w-(--thread-content-width)\" data-start=\"4183\" data-end=\"4483\">\n<thead data-start=\"4183\" data-end=\"4239\">\n<tr data-start=\"4183\" data-end=\"4239\">\n<th data-start=\"4183\" data-end=\"4199\" data-col-size=\"sm\">Type of Interest<\/th>\n<th data-start=\"4199\" data-end=\"4214\" data-col-size=\"sm\">Nominal Rate<\/th>\n<th data-start=\"4214\" data-end=\"4225\" data-col-size=\"sm\">Inflation<\/th>\n<th data-start=\"4225\" data-end=\"4239\" data-col-size=\"sm\">Real Interest<\/th>\n<\/tr>\n<\/thead>\n<tbody data-start=\"4301\" data-end=\"4483\">\n<tr data-start=\"4301\" data-end=\"4361\">\n<td data-start=\"4301\" data-end=\"4318\" data-col-size=\"sm\">Savings<\/td>\n<td data-start=\"4318\" data-end=\"4334\" data-col-size=\"sm\">6.17% p.a.<\/td>\n<td data-start=\"4334\" data-end=\"4346\" data-col-size=\"sm\">4.0% p.a.<\/td>\n<td data-start=\"4346\" data-end=\"4361\" data-col-size=\"sm\">2.08% p.a.<\/td>\n<\/tr>\n<tr data-start=\"4362\" data-end=\"4422\">\n<td data-start=\"4362\" data-end=\"4379\" data-col-size=\"sm\">CDB<\/td>\n<td data-start=\"4379\" data-end=\"4395\" data-col-size=\"sm\">10% p.a.<\/td>\n<td data-start=\"4395\" data-end=\"4407\" data-col-size=\"sm\">6.0% p.a.<\/td>\n<td data-start=\"4407\" data-end=\"4422\" data-col-size=\"sm\">3.77% p.a.<\/td>\n<\/tr>\n<tr data-start=\"4423\" data-end=\"4483\">\n<td data-start=\"4423\" data-end=\"4440\" data-col-size=\"sm\">IPCA+ Treasury<\/td>\n<td data-start=\"4440\" data-end=\"4456\" data-col-size=\"sm\">6% + IPCA<\/td>\n<td data-start=\"4456\" data-end=\"4468\" data-col-size=\"sm\">4.5% p.a.<\/td>\n<td data-start=\"4468\" data-end=\"4483\" data-col-size=\"sm\">6% p.a.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<p data-start=\"4485\" data-end=\"4629\">\ud83d\udcca As you can see, the <strong data-start=\"4502\" data-end=\"4519\">IPCA+ Treasury<\/strong> maintains <strong data-start=\"4529\" data-end=\"4560\">positive real profitability<\/strong>, This is because the value is adjusted for inflation and you pay an additional fee.<\/p>\n<h2 data-start=\"4636\" data-end=\"4672\">\ud83d\udca1 Golden Tip for Investors<\/h2>\n<p data-start=\"4674\" data-end=\"4891\">When choosing where to invest, <strong data-start=\"4701\" data-end=\"4739\">always evaluate the real interest rate<\/strong>.<\/p>\n<p data-start=\"4674\" data-end=\"4891\"><br data-start=\"4740\" data-end=\"4743\">An investment with <strong data-start=\"4763\" data-end=\"4784\">high nominal rate<\/strong>, but with <strong data-start=\"4794\" data-end=\"4814\">high inflation<\/strong>, may yield less than another with a lower rate, but <strong data-start=\"4867\" data-end=\"4890\">controlled inflation<\/strong>.<\/p>\n<p data-start=\"4893\" data-end=\"5043\">Another important point is <strong data-start=\"4918\" data-end=\"4934\">diversify<\/strong> your investments between <strong data-start=\"4970\" data-end=\"4995\">fixed and variable income<\/strong>, The aim is to balance profitability and security.<\/p>\n<h2 data-start=\"5050\" data-end=\"5064\">Conclusion<\/h2>\n<p data-start=\"5066\" data-end=\"5313\">Understand the difference between <strong data-start=\"5093\" data-end=\"5110\">nominal interest<\/strong> e <strong data-start=\"5113\" data-end=\"5127\">real interest<\/strong> is fundamental to protecting your money and ensuring that it actually grows over time.<\/p>\n<p data-start=\"5066\" data-end=\"5313\"><br data-start=\"5219\" data-end=\"5222\">Ignoring inflation can lead to wrong decisions, jeopardizing financial returns.<\/p>\n<p data-start=\"5315\" data-end=\"5503\">Therefore, when analyzing any investment, <strong data-start=\"5360\" data-end=\"5391\">always look at the real gain<\/strong>, use <strong data-start=\"5401\" data-end=\"5438\">reliable calculation tools<\/strong> and, if possible, <strong data-start=\"5455\" data-end=\"5502\">count on the support of a financial advisor<\/strong>.<\/p>\n<\/body><\/html>","protected":false},"excerpt":{"rendered":"<p>Nominal interest and real interest are essential concepts in economics. 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