You've heard it time and time again: On average, over the long term, the stock market generally returns 10% a year. Unfortunately, that maxim doesn't give you the whole story.

Solid, growing companies like the ones below certainly seem to promise you robust returns:

Company

CAPS Stars (out of 5)

20-Year Avg. Annual Growth Rate

Amgen (NASDAQ:AMGN)

****

22%

Adobe (NASDAQ:ADBE)

*****

18%

Home Depot (NYSE:HD)

***

16%

Deere (NYSE:DE)

****

13%

McDonald's (NYSE:MCD)

****

12%

FedEx (NYSE:FDX)

***

11%

Disney (NYSE:DIS)

****

7%

S&P 500

 

6%*

Data: Motley Fool CAPS, Yahoo! Finance. S&P return does not include dividends.

But those growth numbers ignore a critical factor in the changing value of money over time: inflation. While you work at growing your money, inflation's almost always trying to shrink it. It usually hovers between 2% and 4%, although it can occasionally spike much higher. Between 1989 and 2009, inflation averaged about 2.8% -- enough to make something that cost $1,000 in 1989 cost $1,745 in 2009.

Factoring it in
To discover your real rate of return from a stock investment, you'll have to factor in inflation. Sometimes the financial media will do this for you, but usually, the numbers you see are "nominal" -- in other words, inflation-free. In those cases, you'll need to crunch the numbers yourself.

For instance, according to figures from Jeremy Siegel 's book, Stocks for the Long Run, stocks returned a bit more than 10% per year between 1926 and 2006. But when you factor in inflation, which averaged around 3% over that period, the total real return falls to 6.8%.

In perspective
That's the bad news: You're not growing your money as quickly as you think. Your savings will likely not buy you all that you want, come retirement time. The health-care costs for which you're budgeting, say, $500 per month will cost you $900 per month in 20 years, if inflation stays at 3%.

But the news isn't all bad. By investing in stocks, you're fighting inflation rather effectively, since many public companies can deal with inflation by raising their prices. And even when you reduce your returns to account for inflation, you can still end up with powerful growth rates. Even at just 6.8%, investing just $5,000 each year can make you a millionaire in 40 years.

To stand the best chance of thwarting inflation, look for the best buys you can, and aim to hang on for the long haul. Given enough time, you'll get where you want to go.

Longtime Fool contributor Selena Maranjian owns shares of Amgen, Home Depot, and McDonald's. Walt Disney and Home Depot are Motley Fool Inside Value recommendations. Adobe Systems, Walt Disney, and FedEx are Motley Fool Stock Advisor picks. Try any of our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.