# Earning from stock market and inflation calculation understanding

Please, help me with earning and inflation understanding. I have invested in SEB Strategy Defensive stock in beginning of year 2016. At this time unit price was 112. Now unit price is 115. I suppose I have growth 115-112/112=0.0268 (2.68%).

During this time (2016-2021) approximate inflation in EU was 1.15% per year . This means total inflation during period is 5(years)*1.15%=5.75%. This means I lost 5.75%-2.68% = 3.07% of my money while investing in this stock. Is my understanding correct?

• You could compound the inflation rate to be more accurate, but you've got the correct idea. Oct 24 '20 at 16:27
• Keep in mind that you would have lost more if you kept the money in cash. The value of equities like stocks tend to rise along with inflation (other factors excluded).
– JohnFx
Oct 24 '20 at 17:24

You are correct that inflation reduces your real return, but there are a few other factors that may be helpful:

• Inflation is not a direct cost. It is a broad effect on the economy as a whole. You may have other things that offset any indirect cost from inflation (house value increase, salary increase, etc.)
• If the stock (or fund) paid dividends, that should be included in your growth as well since it has a negative effect on the share price.