Your Real Return Is Not What Your Broker Shows You

Open your brokerage app and you see one number for the year: up 7%, say. That's your nominal return, and it's not the same as what you actually keep.

Your real return is what's left after three things come out of that 7%: the fund's fee, the tax on what it pays you, and inflation. The fee is small and the same for everyone. Inflation is roughly the same wherever you live. Tax is the one that varies the most, because it depends on your country and which account holds the fund.

The fee comes out first

A fund's expense ratio is taken out before you ever see a return, so the 7% on your screen already has it removed. The problem is that it's easy to overpay without noticing. A broad index fund like VTI or VOO charges 0.03% a year. Plenty of funds offering the same exposure charge ten to twenty times that, and over a few decades that small gap compounds into a large one.

For a whole portfolio, what counts is the weighted average fee across your holdings. It's the one deduction you fully control, and the easiest to fix: sort the screener by cost and the cheap funds come up first.

Tax depends on where you live

This is where the same fund can cost you very different amounts, for reasons that have nothing to do with the fund itself.

In the US, the dividends from a fund like VTI are usually qualified, so they're taxed at 0%, 15%, or 20% depending on your income, with an extra 3.8% surtax for higher earners. Interest from a bond fund like BND doesn't get that lower rate; it's taxed as ordinary income. Gains on shares you haven't sold aren't taxed until you sell. The exception is physical gold: a fund like GLD is treated as a collectible, so long-term gains can be taxed as high as 28% instead of the usual 20% (ETF.com; SSGA's GLD tax FAQ).

In France, dividends and realized gains in a regular brokerage account are taxed at a flat 30%, rising to 31.4% under the 2026 finance law. Inside a PEA, equity gains are free of income tax after five years and only owe social contributions. It's the same fund, but in a regular account you pay 30% and in a PEA you pay almost nothing.

In the UK, the first £500 of dividends each year is tax-free, then you pay 8.75% or 33.75% depending on your tax band. Gains above a £3,000 allowance are taxed at 18% or 24%. Hold the fund in an ISA and all of it is tax-free, up to £20,000 paid in per year.

In all three countries, the account you choose sets the tax, not the fund. That's what asset location is about.

Inflation lowers what's left

Even after fees and tax, your gain is still measured in money, and money buys a little less each year. To see what your return is really worth, you adjust for inflation:

real return = (1 + nominal) ÷ (1 + inflation) − 1

In 2025, inflation ran about 2.7% in the US, 3.4% in the UK, and 0.8% in France (BLS; ONS; INSEE). On a 6.6% return after fees and tax, US inflation alone brings you down to about 3.8% in real terms. Your broker won't show this, because no money actually leaves your account. You still have the same amount; it just buys less than it did a year ago.

The same 7%, four real returns

Take a portfolio that returns 7% in a year, where 2 of those points are paid out as taxable distributions and the other 5 are unrealized gains on shares you haven't sold. Here's what's left after each deduction, in four different accounts:

Same fund, same 7% headline, but the real return ranges from 3.4% to 6.0%. The US investor in a taxable account keeps a bit over half the headline once you count inflation; the French PEA holder keeps most of it. The surprise is the UK ISA: it's completely tax-free, yet it comes out lowest, because UK inflation was the highest of the three. The account sets the tax, but the inflation rate where you live can matter just as much.

What you can control

Two of those four columns are out of your hands: you can't set the market's return, and you can't do anything about inflation. The other two are up to you: the fund you buy sets the fee, and the account you hold it in sets the tax, within your country's rules. Those are the parts worth your attention. It's the same idea as why most active funds lose to the index: keeping costs low is most of what you can actually control. Get your allocation and the number of funds right first, then hold the cheapest, best-placed version of it. If you already own a pricier one, check the tax before you switch.

How Beacon can help

The fee is the part you can act on today. Sort the screener by cost to find the cheapest fund for the exposure you want, then build an allocation and save it to see the blended fee across the whole portfolio. Start with a free account. Beacon shows you the fees. The tax and inflation you'll have to work out yourself, using the method on this page.