An expert says 12% equity returns are not real. Let’s decode it in the shortest way.
In the latest LinkedIn post, certified financial planner Ritesh Sabharwal says many people misunderstand their actual returns. A 12% equity returns looks good on paper, but a 12% equity returns are not real once you factor in inflation and taxes. After adjusting for both, the real growth is much lower. In some cases, a 12 percent return might not even be profitable when you calculate the true value gained.
Ritesh Sabharwal breaks down why the popular “12% return” is not what it seems.
- 📉 12 percent falls to about 6.7 percent after inflation.
- 🧾 After tax, the real return drops further to nearly 5.8 percent.
- 💸 Savings accounts and FDs can even give negative real returns.
- 📊 Most people overestimate profits because they skip inflation and tax impact.
- 🪙 A simple index fund is one easy way to grow money steadily over time.
👉 Why this matters: Real returns decide long-term wealth, not the loud numbers.
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