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Your FD earns 7%. Inflation runs at 6%. Your real return is just 1%. This calculator shows you what your investments are actually worth in today's money.
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Today's Value
₹10.00 L
Future Cost
₹17.91 L
Purchasing Power
₹5.58 L
Erosion %
44.2%
Inflation Rate
6%
| Year | Purchasing Power | Future Cost |
|---|---|---|
| Year 1 | ₹9.43 L | ₹10.60 L |
| Year 2 | ₹8.90 L | ₹11.24 L |
| Year 3 | ₹8.40 L | ₹11.91 L |
| Year 4 | ₹7.92 L | ₹12.62 L |
| Year 5 | ₹7.47 L | ₹13.38 L |
| Year 6 | ₹7.05 L | ₹14.19 L |
| Year 7 | ₹6.65 L | ₹15.04 L |
| Year 8 | ₹6.27 L | ₹15.94 L |
| Year 9 | ₹5.92 L | ₹16.89 L |
| Year 10 | ₹5.58 L | ₹17.91 L |
| Final | ₹5.58 L | ₹17.91 L |
₹10.00 L today will cost ₹17.91 L in 10 years. Your money's real value drops to ₹5.58 L.
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Nominal return is what the bank or fund quotes. Real return is what you actually gain in purchasing power after inflation. Always compare investments using real returns.
Divide 72 by the inflation rate to find how many years it takes for your money to halve in value. At 6% inflation, ₹1 lakh becomes worth ₹50,000 in just 12 years.
Historically, equity mutual funds have delivered 12–15% returns vs 5–7% inflation — a real return of 6–9%. FDs and savings accounts barely keep pace with inflation.
India's average CPI inflation has been 5–7% over the past decade. The RBI targets 4% with a 2% tolerance band. For long-term planning, use 6% as a conservative estimate.
If your FD rate is 6.5% and inflation is 6%, your real return is only 0.5% before tax. After 30% tax on interest, your post-tax real return becomes negative.
Historically: Equity mutual funds (12–15%), PPF (7.1% — tax-free, roughly matches inflation), Real estate (city-dependent). Fixed deposits and savings accounts often fail to beat inflation after tax.
Real Return ≈ Nominal Return − Inflation Rate (simplified). The precise formula is: Real Return = ((1 + Nominal) / (1 + Inflation)) − 1. For small numbers the approximation works fine.
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