Inflation SIP Calculator
Project your future purchasing power after adjusting for inflation.
Purchasing power in today's rupees after adjusting for 6% annual inflation over 15 years.
| Year | Invested Amount | Projected Corpus |
|---|---|---|
| Year 1 | ₹1,20,000 | ₹1,27,665 |
| Year 2 | ₹2,40,000 | ₹2,70,650 |
| Year 3 | ₹3,60,000 | ₹4,30,793 |
| Year 4 | ₹4,80,000 | ₹6,10,153 |
| Year 5 | ₹6,00,000 | ₹8,11,036 |
| Year 6 | ₹7,20,000 | ₹10,36,025 |
| Year 7 | ₹8,40,000 | ₹12,88,013 |
| Year 8 | ₹9,60,000 | ₹15,70,240 |
| Year 9 | ₹10,80,000 | ₹18,86,334 |
| Year 10 | ₹12,00,000 | ₹22,40,359 |
| Year 11 | ₹13,20,000 | ₹26,36,867 |
| Year 12 | ₹14,40,000 | ₹30,80,956 |
| Year 13 | ₹15,60,000 | ₹35,78,336 |
| Year 14 | ₹16,80,000 | ₹41,35,401 |
| Year 15 | ₹18,00,000 | ₹47,59,314 |
Discounted for 6% expected annual inflation.
Illustrative projection, not a forecast. Returns are not guaranteed. Not investment advice.
| Year | Total Invested | Total Growth | Corpus at Year End |
|---|---|---|---|
| Year 1 | ₹1,20,000 | +₹7,665 | ₹1,27,665 |
| Year 2 | ₹2,40,000 | +₹30,650 | ₹2,70,650 |
| Year 3 | ₹3,60,000 | +₹70,793 | ₹4,30,793 |
| Year 4 | ₹4,80,000 | +₹1,30,153 | ₹6,10,153 |
| Year 5 | ₹6,00,000 | +₹2,11,036 | ₹8,11,036 |
| Year 6 | ₹7,20,000 | +₹3,16,025 | ₹10,36,025 |
| Year 7 | ₹8,40,000 | +₹4,48,013 | ₹12,88,013 |
| Year 8 | ₹9,60,000 | +₹6,10,240 | ₹15,70,240 |
| Year 9 | ₹10,80,000 | +₹8,06,334 | ₹18,86,334 |
| Year 10 | ₹12,00,000 | +₹10,40,359 | ₹22,40,359 |
| Year 11 | ₹13,20,000 | +₹13,16,867 | ₹26,36,867 |
| Year 12 | ₹14,40,000 | +₹16,40,956 | ₹30,80,956 |
| Year 13 | ₹15,60,000 | +₹20,18,336 | ₹35,78,336 |
| Year 14 | ₹16,80,000 | +₹24,55,401 | ₹41,35,401 |
| Year 15 | ₹18,00,000 | +₹29,59,314 | ₹47,59,314 |
Nominal Returns vs. Real Purchasing Power
In financial economics, evaluating future accumulation in nominal currency units overlooks the erosion caused by compound inflation. Over multi-decade investment horizons, persistent price inflation alters the basket of goods and services that a given rupee corpus can acquire.
To evaluate future wealth in constant units, financial analysts discount the nominal future value (FV) back to present value (PV) using the expected inflation rate (i) over tenure (n):
This purchasing power discount provides a realistic baseline for retirement, education, and long-term capital preservation goals.
The Real Rate of Return Formula
While informal rules of thumb casually subtract inflation from annual returns, the mathematically rigorous standard is Irving Fisher's relationship:
For an equity allocation with a 12% nominal CAGR and a 6% annual inflation rate:
This 5.66% net real growth rate reflects the pace at which purchasing power expands beyond cost of living increases.
Frequently Asked Questions: Inflation-Adjusted SIP
Common questions regarding SIP calculations, compounding formulas, and mutual fund conventions.
Inflation steadily reduces the purchasing power of money over time. Compounding nominal returns are partially offset by escalating prices of goods and services, meaning the real purchasing power of your final corpus will be lower than the face-value rupee figure.
Historically, India's Consumer Price Index (CPI) has averaged between 5.5% and 6.5%. For general lifestyle and retirement expenses, 6% is a standard planning baseline. Specialized goals like higher education or healthcare often experience higher inflation rates.
Instead of simple subtraction, the precise real rate of return uses the standard formula: (1 + r_real) = (1 + r_nominal) / (1 + i_inflation). For a 12% equity return and 6% inflation, the exact real annual growth is (1.12 / 1.06) - 1 = 5.66% per year.