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?
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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.
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