I've just learned the following way of calculating the real return rate $R$ of an investment:
$$R=\frac{P(1+N)-P(1+I)}{P(1+I)}$$
Where $P$ is the initial value invested, $N$ is the nominal interest rate and $I$ is the inflation rate.
However, I've seen an alternative formula for calculating the same thing, which is
$$R=N-I$$
So my question is, which one gives a better result for the effective rate of return of an invesment and why? Thanks very much in advance.