Purchasing Power Calculator
Calculate the future purchasing power of your current money. See how much your savings will really be worth after accounting for inflation over the years.
Understanding Inflation
Inflation is the rate at which the general price level of goods and services rises, eroding purchasing power. When prices go up, each unit of currency buys fewer goods—your money becomes worth less over time.
Inflation Formula
Future Value = Present Value × (1 + r)ⁿ
Where: r = Annual inflation rate (decimal), n = Number of years. This tells you how much you'll need in the future to have the same buying power.
Example Scenarios
| Current | Rate | Period | Future Need | Future Value |
|---|---|---|---|---|
| ₹10,00,000 | 5% | 15 years | ₹20,78,928 | ₹4,81,017 |
| ₹25,00,000 | 6% | 25 years | ₹1,07,23,016 | ₹5,82,930 |
Beating Inflation
To preserve purchasing power, your investments must earn more than inflation. If inflation is 6%, any investment returning less than 6% is actually losing value. Consider SIP in equity funds (historically 12-15%) or PPF (7.1% tax-free) to beat inflation.
Frequently Asked Questions
How does inflation affect my savings?
If you keep ₹10 lakh in a savings account earning 3.5% while inflation is 6%, your money loses 2.5% purchasing power yearly. In 10 years, your ₹10 lakh will only buy what ₹7.4 lakh buys today.
How to protect savings from inflation?
Invest in assets that historically beat inflation: equity mutual funds (12-15%), real estate, gold, and inflation-indexed bonds. Even FDs at 7% barely keep pace with 6% inflation after tax.