Renaissance for LEADERS

Peak Performance Resources for Leaders by Leaders

glossary

Real Estate

A property comprised of land, buildings and any natural resources including flora and fauna, farmed crops, livestock, water, and minerals. Real Estate can be grouped into three categories: residential, commercial and industrial. Examples include undeveloped land, houses, condominiums, townhomes; office buildings, warehouses, and retail store buildings; factories, mines, and farms.

Real Rate of Return

The actual financial benefit of an investment after accounting for inflation and taxes. The after-tax real rate of return is an accurate measure of investment earnings and usually differs significantly from an investment’s nominal rate of return. Calculated as the nominal return – inflation rate x tax rate = Real Rate of Return.

Assume your bank pays you interest of 5% per year on the funds in your deposit account. If the rate of inflation is 3.5% per year, and your tax rate is 33% the real return on your savings is 1%.

You may think 5% sounds great, however, when taking into account inflation and taxes, it is a very low return. If the nominal interest rate goes down, inflation goes up (global inflation was 5.05% in 2011), and taxes go up you can have a negative return on your savings.

 

Reality

1. The quality or state of being actual or true. 2. One, such as a person, an entity, or an event, that is actual. 3. That which exists, independent of human awareness. 4. The totality of facts as they are, independent of human awareness of them. 5. In human relationships, reality is measured by the amount of agreement between two or more people; a high reality means a high level of agreement. 6. Solid objects; the real things of life.

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