What's the Safest Return You Can Get Right Now?
What Is the "Safest" Return You Can Earn?
The risk-free rate is the starting point for every discount rate. It represents what you earn with zero risk โ the floor below which no return makes sense.
Live Result
$0.02
ฦ: govt_bond_yield - expected_inflationraw: 0.0200000
Use variable names from the panel above (e.g.
FV, r, n) โ or type numbers directly: 10000 / (1 + 0.08)^10govt_bond_yield% as decimal
10-year government bond nominal yield
govt_bond_yield = 0.045
expected_inflation% as decimal
Expected long-run inflation rate
expected_inflation = 0.025
๐ก You can also enter values directly in the formula:
10000 / (1 + 0.08)^10โฌ Export Calculation
Exports a plain .txt file with your expression, formula, all variable values, result, and educational notes โ ready to paste into any report, Word doc, Notion, or Google Docs.
The exported file includes the formula in standard mathematical notation โ you can paste it directly into Excel, Google Sheets, or back into FinanceSheep.
๐
Learn: What Is the "Safest" Return You Can Earn?
Estimating Discount Rates ยท Educational Guide
The Core Idea
Before you can measure how risky an investment is, you need a baseline: what return could you get with zero risk? That's the risk-free rate โ the foundation of every valuation.
How It Works
Risk-free rate = return on an investment with no default risk and no reinvestment risk. In practice: long-term government bond yield of a stable country (US Treasury, German Bund). It anchors all discount rates.
๐ก
Real-World Example: US 10-year Treasury yield: 4.5%. Expected inflation: 2.5%. Real risk-free rate = 4.5% โ 2.5% = 2%. This 2% is your real return for lending to the US government with zero risk.