Inflation Calculator
See how inflation silently eats away at cash balances over 5 to 30 years, and discover the required mutual fund return to beat it.
The Silent Wealth Thief: Why Bank Fixed Deposits Silently Lose Money
Inflation is the rate at which prices rise and currency purchasing power degrades. If you keep money in a savings account earning 3% or a bank FD earning 7% while paying 30% slab income tax, your post-tax return is just 4.9%. With annual inflation at 6%, your real purchasing power declines every year!
Nominal Returns vs. Real Returns Formula:
Only asset classes like Equity Mutual Funds that historically deliver 12%–14% CAGR comfortably generate positive real returns of +6% to +8% annually, actively compounding wealth above cost-of-living increases.
Frequently Asked Questions
Clear answers to common questions on formulas, taxation, and investing strategy.
Q1. What is the historical average inflation rate in India?
Over the past 25 years, India's Consumer Price Index (CPI) inflation has hovered between 5.5% and 6.5%. Specific sectors like healthcare and higher education, however, inflate at 9%–11%.
Q2. How does the 'Rule of 70' help estimate inflation impact?
Divide 70 by the annual inflation rate to find out how many years it takes for your purchasing power to halve. At 7% inflation, your money loses half its value every 10 years (70 / 7 = 10).
Q3. Why do debt mutual funds with indexation or equity mutual funds beat inflation?
Equity mutual funds invest in businesses whose revenue, profits, and dividends naturally grow with economic inflation. This structural pass-through makes equity the premier long-term inflation hedge.
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Turn Calculations into Real Financial Freedom
Calculators provide mathematical estimates, but consistent wealth creation requires choosing the right high-performing diversified schemes, tracking annual alpha, and disciplined rebalancing.