Calculating rate of return on investment assets

Does a future change in the inflation rate reduce real returns going forward?


Since returns for regular assets and retirement accounts are set using nominal rates, does adjusting the inflation rate in a future year reduce the real returns going forward?

If that's the case, then if one adjusts the inflation rate at a future year, one should also adjust the nominal rates of return for those accounts at that same future year. This nuance didn't occur to me until recently.

Calculation of real rate of return on investment assets

We have an assumed rate of return on our investment assets at 4% (inflation at 2.5%). How does the software compute our investment balances moving forward? Is it compounded annually? We re-enter our balances at the beginning of each year. Note too that Monte Carlo is turned off. This question is less about RRR more so about how the calculation is handled by the software. Thank you.

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