Stock market vs inflation — why the headline number lies
Every chart you see of the stock market is a nominal chart. It shows the number going up. What it does not show is that the money itself was shrinking the whole time.
Inflation is the difference between the two, and over long periods it is enormous. A portfolio that grew tenfold over forty years sounds spectacular until you learn that prices rose sixfold over the same period — the real gain was not 900%, it was about 67%. This tool computes both numbers side by side for eight world markets, so you can see exactly how much of any historical return was real and how much was an illusion of the currency.
How to calculate real (inflation-adjusted) returns
To convert a nominal value into today's money, scale it by the change in the consumer price index:
Real value = Nominal value × ( CPI at start ÷ CPI at end )
For an annualised figure, the correct formula divides rather than subtracts:
Real CAGR = ( (1 + nominal CAGR) ÷ (1 + inflation) ) − 1
A very common shortcut is to just subtract: 8% return minus 3% inflation equals 5%. The true answer is 1.08 ÷ 1.03 − 1 = 4.85%. The gap looks trivial for one year, but compounded over thirty years the shortcut overstates your final purchasing power by roughly 5%. At 1970s inflation levels the error becomes severe. This tool always uses the division form.
What counts as a lost decade
A lost decade is any ten-year window where an investment failed to beat inflation — you ended with more money and less purchasing power. They are far more common than the "stocks always go up" framing suggests:
- US, 2000–2009. The dot-com crash and the financial crisis inside one decade, with steady inflation grinding away throughout. A negative real return over ten full years.
- US, the 1970s. Nominal returns were positive but inflation peaked in double digits, producing one of the worst real stretches on record.
- Japan, 1989 onwards. The most extreme case in modern developed markets. The Nikkei peaked in 1989 and took more than three decades to regain that level in nominal terms — a reminder that "wait long enough" is not a law of nature.
Select any range and the tool lists every ten-year window inside it that lost to inflation. If the answer is zero, it says so.
The worst-timing question
The fear that stops people investing is rarely "what is the average return?" — it is "what if I buy right before a crash?" The Worst Timing mode answers that directly. Set the year range to the length of holding period you care about, and the tool tests every possible start year in the market's history, then reports the single worst one in real terms.
The output that matters most is the count of negative windows: out of all possible ten-year holds in this market, how many actually lost to inflation? That is a historical frequency, not a forecast, but it is a far more useful anchor than an average return. It also tends to change people's minds in both directions — short holding periods are riskier than most expect, and long ones less so.
Lump sum vs monthly investing
Lump-sum investing beats dollar-cost averaging most of the time, for the unglamorous reason that markets rise more often than they fall, so money invested earlier spends longer compounding. That is arithmetic.
It is also not how most people acquire money. Monthly mode models a fixed amount invested every year across the period, which is what a salary-funded investor actually does. The benefit is not higher returns — it is that no single unlucky entry date can dominate the outcome. When comparing the two modes, compare the real CAGR and the multiple, not the ending values, because the two modes invest different total amounts.
Why cash is the riskiest asset over long periods
Cash is the only asset whose nominal value cannot fall, which is exactly why its losses go unnoticed. At 3% inflation, money held at 0% interest loses about a quarter of its purchasing power in ten years and roughly half in twenty-four. The balance never drops; the groceries just get more expensive. The orange line on the chart is that erosion, and over any long window it is the steepest reliable loss on the page.
Markets covered — and the fine print
| Market | Series | From | Measured against |
|---|
| S&P 500 | Total return (dividends reinvested) | 1970 | US CPI |
| MSCI World | Net total return, USD | 1986 | US CPI |
| EURO STOXX 50 | Total return | 1970 | Euro-area HICP |
| FTSE 100 | Total return | 1970 | UK CPI |
| Nikkei 225 | Total return | 1970 | Japan CPI |
| BSE Sensex | Price index — excludes dividends | 1979 | India CPI |
| TSX Composite | Total return | 1970 | Canada CPI |
| ASX 200 | Total return | 1970 | Australia CPI |
Three caveats worth stating plainly. The Sensex is a price index, so Indian real returns here are understated by roughly 1.5% a year versus the total-return markets. MSCI World is a net series, meaning it is already after dividend withholding tax, which makes it slightly more conservative than the gross series other sites quote. And every market is measured against its own domestic inflation, in local currency — the tool answers "what did this do for a local investor", not "which market would have been best for a dollar investor", which would require currency conversion.
Deep links — URL parameters
The address bar stays in sync as you change inputs, so any scenario is shareable. You can also build links by hand:
?market=US&amount=10000&from=2000&to=2025
Optional: mode (lump, dca or worst). Markets: US, WORLD, EU, UK, JP, IN, CA, AU.
Privacy — nothing leaves your browser
The entire dataset is embedded in the page and every calculation runs locally in JavaScript. Nothing you enter is transmitted, stored or logged, there is no account, no ads and nothing being sold to you. The page works offline once loaded.