Interest and Revaluation Calculator – Adjusted Interest Calculator
Calculate interest adjusted for revaluation and inflation
How to Use
- Enter your principal amount
- Input the interest rate (annual percentage)
- Enter the revaluation rate (positive for appreciation, negative for depreciation/inflation)
- Set the time period in years
- Select how often interest compounds
- Calculate to see both nominal and adjusted values
What is Revaluation?
Revaluation refers to adjusting the value of money, assets, or currencies to reflect changes in purchasing power, exchange rates, or economic conditions. In the context of interest calculations, revaluation adjusts nominal returns to show real value after accounting for inflation, currency fluctuations, or other economic factors.
Understanding revaluation is crucial for international investments, inflation-adjusted returns, and real estate valuations. A 5% interest rate with 3% inflation yields only 2% real return—revaluation calculations make this clear.
Nominal vs. Real Returns
Nominal returns show the dollar amount you earn without adjustments. Real returns account for purchasing power changes:
| Scenario | Nominal Return | Inflation/Revaluation | Real Return |
|---|---|---|---|
| Savings Account | 2% | 3% inflation | -1% (loss of purchasing power) |
| Stock Investment | 10% | 3% inflation | 7% real gain |
| Foreign Bond | 5% | 2% currency appreciation | 7% in your currency |
| Real Estate | 8% | -1% market adjustment | 7% adjusted value |
Always consider both nominal and real returns when evaluating investments. High nominal returns can still result in losses if inflation or currency depreciation exceeds your gains.
Common Use Cases
- Inflation-adjusted savings: Calculate real purchasing power of retirement savings
- Foreign currency investments: Account for exchange rate changes
- Real estate appreciation: Adjust for market revaluations
- Wage growth analysis: Compare salary increases against inflation
- Debt planning: Understand how inflation affects real debt burden
- International business: Calculate cross-border investment returns
- Asset valuation: Adjust historical costs to current values
- Retirement planning: Project real income after inflation
Revaluation Calculation Method
The calculator uses a two-step approach each period:
- Step 1: Apply compound interest to the balance
- Step 2: Apply revaluation rate to the interest-adjusted amount
- Result: Balance adjusted for both interest earnings and value changes
For example, $1,000 at 5% interest with 3% revaluation over 1 year: Step 1: $1,000 × 1.05 = $1,050. Step 2: $1,050 × 1.03 = $1,081.50 adjusted value.
Frequently Asked Questions
- When should I use a negative revaluation rate?
- Use negative revaluation rates to represent inflation erosion, currency depreciation, or market downturns. For example, if inflation is 3%, enter -3% to see how purchasing power declines. If a foreign currency you're invested in depreciates by 2% annually, enter -2%.
- How is this different from a regular interest calculator?
- Regular interest calculators show nominal returns only. This calculator adds a revaluation layer to show real value after economic adjustments. It's essential for understanding purchasing power, currency effects, and inflation-adjusted returns.
- Can I use this for foreign currency investments?
- Yes! Enter the foreign interest rate, then use the revaluation rate to represent expected currency appreciation or depreciation against your home currency. This shows your total return in home currency terms.
- What's a typical revaluation rate to use?
- For inflation adjustments, use historical inflation rates (typically 2-3% in developed economies). For currency investments, research expected exchange rate movements. For real estate, use local market appreciation/depreciation trends.