The first time I felt “rich” on paper was the year my investments showed a clean 12% return.

Then I tried to actually use that money.

Prices were higher. Taxes hit harder than I expected. And somehow, that shiny 12% didn’t feel like progress at all. It felt like running on a treadmill that was quietly speeding up.

That gap — between what your return says and what your money actually does — is where most people get fooled.

“My investment made 10%. Why do I feel poorer?”

Because returns lie by omission.

Most numbers you see are nominal returns. They ignore two leaks that quietly drain your money:

• Inflation (the slow theft)
• Tax (the loud one you notice too late)

If you don’t adjust for both, you’re not measuring growth. You’re measuring fantasy.

From what I’ve seen, even finance-savvy people often adjust for one and forget the other. That’s usually where bad decisions start.

Inflation isn’t a percentage. It’s a lifestyle tax.

Inflation isn’t just “6% this year.”
It’s the coffee that used to be ₹120 and is now ₹180.
It’s rent renewals. School fees. Insurance premiums.

When someone says, “My portfolio returned 8% and inflation was 6%, so I made 2%,” that’s already an oversimplification. But let’s stay practical.

In real life, inflation:

• Hits essentials harder than averages suggest
• Compounds quietly year after year
• Hurts long-term money more than short-term cash

I’ve seen people celebrate beating inflation for one year, then ignore the next five. That’s how long-term plans rot slowly without anyone noticing.

Tax is where most calculators become dishonest

This is my biggest frustration with online advice.

They’ll happily show “real returns after inflation,” then casually ignore tax — as if tax is optional or theoretical.

It’s not.

Tax depends on:

• Your income slab
• The type of investment
• How long you held it
• Rule changes (which happen more often than people admit)

From personal experience, tax usually hurts after you feel confident. You see the gain, mentally spend it, then the tax bill arrives and resets your expectations.

That emotional whiplash matters more than people think.

A real example (where things quietly go wrong)

Let’s say you earn 10% on an investment.

• Inflation runs at 6%
• Your effective tax on gains is 20%

On paper:
10% looks fine.

In reality:

• Your gain shrinks after tax
• Inflation eats the purchasing power of what remains

What you’re left with might be closer to 2–3% real growth, sometimes less.

That difference decides:

• Whether retirement math works
• Whether long-term goals stay realistic
• Whether you’re actually compounding or just treading water

This is where most “safe” plans quietly fail over 15–20 years.

The biggest mistake I keep seeing

People compare pre-tax returns of one option with post-tax outcomes of another.

Example:

• “Equity gives 12%, fixed income gives 7%”
• Decision made instantly

But after inflation and tax, those numbers often land much closer than expected — sometimes even reverse depending on timing and cash flow needs.

The real consequence isn’t just lower returns.
It’s false confidence.

People take on risk thinking they’re being smart, when they’re just reacting to incomplete math.

Why real return math feels harder than it is

It’s not the math. It’s the honesty.

Real returns force you to accept that:

• Some years you don’t really “grow”
• Beating inflation is harder than headlines suggest
• Taxes change the story depending on you, not averages

Once you accept that, decisions actually get clearer.

You stop chasing the highest number and start asking:
“After everything leaks out… is this still worth it?”

That’s a better question.

Timelines people underestimate

• It takes a few cycles (not months) to feel inflation properly
• It takes one bad tax surprise to permanently change how you look at returns
• It takes years to see whether your real return assumptions were realistic or optimistic

Anyone promising clarity in a weekend spreadsheet is selling confidence, not accuracy.

Things I now always check (the boring but important part)

• Whether the return number is pre-tax or post-tax
• Whether inflation used is an average or my actual lifestyle inflation
• Whether tax rules could change during the holding period
• Whether the “real return” still makes sense after a bad year, not just a good one

Practical considerations people ignore

• Liquidity matters more when real returns are low
• Predictability can beat higher average returns in some life stages
• Compounding works best when fewer leaks exist, not when returns look high

Personally, I’ve become more skeptical of anything that looks amazing before inflation and tax are mentioned.

What to be careful about

• Assuming inflation stays stable
• Assuming tax rules stay friendly
• Using generic calculators without adjusting inputs to your situation
• Anchoring decisions to past returns instead of future constraints

What usually matters more than people think

• Consistency of real returns, not peak returns
• How much you actually get to keep
• How decisions feel during bad years, not good ones

There’s no single “correct” real return number. It shifts with policy, prices, and personal context. That uncertainty is uncomfortable — but ignoring it is worse.