What Will Your Money Be Worth?
The money / cost of something today
India's average: 5–7% per year
How many years into the future?
| Year | Future Cost (₹) | Inflation Added (₹) | Buying Power (%) |
|---|
Understanding Inflation & Its Impact on Your Money
Inflation is the silent wealth destroyer. It's the rate at which the general price level of goods and services rises over time, which in turn reduces the purchasing power of money. If you have ₹1,00,000 today and inflation is 6% per year, you'll need ₹1,79,085 in 10 years just to buy the same things. This calculator helps you visualize this crucial effect.
Future Cost vs. Future Value — What's the Difference?
Future Cost After Inflation answers: "How much will
I need to pay for something in the future?" If a product costs
₹1,000 today at 6% inflation, it will cost ₹1,791 in 10 years.
Future Value After Inflation
answers: "What is my ₹1,000 actually worth in the future?" Due to
inflation eroding purchasing power, ₹1,000 today is only worth ₹558
in real terms after 10 years of 6% inflation — meaning prices have
risen so much that your ₹1,000 can only buy what ₹558 could buy
today.
India's Inflation Context
India's RBI targets a CPI inflation of 4%, with a tolerance band of ±2%. In reality, India has historically seen inflation in the 5–8% range. For financial planning, using 6% as a baseline is generally prudent. For education and healthcare costs, use 10–12% as those sectors inflate much faster.
Frequently Asked Questions
Q1. What is the formula for Future Cost After Inflation?
Future Cost = Present Amount × (1 + Inflation Rate)^Years. For example, ₹1,00,000 at 6% for 10 years = ₹1,00,000 × (1.06)^10 = ₹1,79,085.
Q2. What is the formula for Future Value After Inflation (Purchasing Power)?
Real Value = Present Amount ÷ (1 + Inflation Rate)^Years. For example, ₹1,00,000 at 6% for 1 year = ₹1,00,000 ÷ 1.06 = ₹94,340. This tells you what your ₹1,00,000 can actually buy in today's terms, one year from now.
Q3. What is the "Rule of 70"?
The Rule of 70 estimates how long it takes for prices to double. Divide 70 by the inflation rate. At 6% inflation, prices double in 70 ÷ 6 ≈ 11.7 years.
Q4. What investments best protect against inflation?
Historically, equity markets have returned 12–15% annually in India — well above inflation. Gold and real estate are traditional hedges. RBI Floating Rate Bonds are also effective inflation-linked instruments.