The traditional (and incorrect) method for calculating real returns is:

Nominal return – inflation = real return. This formula would give you a real return of 10%.  30% – 20% = 10%

The correct method is: (1 + nominal return)/(1 + inflation) – 1 = real return

(1.30/1.20)–1 = 8.33%

In this example, the traditional method overstates return by 20 percent ((10%/8.33%) –1). Be very careful of inflation, especially high inflation!