Worked example
Invest ₹10,000 a month for 10 years at an assumed 12% a year and the SIP grows to ₹23,23,391. With 6% inflation a year, that is worth ₹12,97,369 in today’s money, because prices will be 1.79 times as high.
- Estimated value
- ₹23,23,391
- Assumed inflation (per year)
- 6%
- Value in today’s money
- ₹12,97,369
- Amount invested
- ₹12,00,000
- Return after inflation
- 5.66%
| Year | Invested so far | Estimated value | In today’s money |
|---|---|---|---|
| 1 | ₹1,20,000 | ₹1,28,093 | ₹1,20,843 |
| 2 | ₹2,40,000 | ₹2,72,432 | ₹2,42,464 |
| 3 | ₹3,60,000 | ₹4,35,076 | ₹3,65,299 |
| 4 | ₹4,80,000 | ₹6,18,348 | ₹4,89,790 |
| 5 | ₹6,00,000 | ₹8,24,864 | ₹6,16,386 |
| 10 | ₹12,00,000 | ₹23,23,391 | ₹12,97,369 |
Why the after-inflation figure matters
A big target amount sounds good, but years from now it will buy less than the same amount buys today. If you plan for a house deposit, a child’s fees or retirement, plan with today’s-money figures and raise the SIP until the after-inflation number is enough.
In the example above, ₹10,000 a month for 10 years at an assumed 12% reaches ₹23.23 lakh. After 6% inflation, that is ₹12.97 lakh in today’s money.
How the value after inflation is worked out
First the SIP value is found with the usual formula. Then it is divided by the price growth over the same years:
Today’s-money value = FV ÷ (1 + i)n
FV is the SIP value in future rupees, i is the yearly inflation (as a decimal) and n is the number of years. The inflation rate is your assumption, like the return.
Frequently asked questions
Why should I look at a SIP after inflation?
Because prices rise every year. ₹23,23,391 after 10 years sounds like a lot, but with 6% inflation it buys what ₹12,97,369 buys today. Planning with the today’s-money figure tells you what the SIP can really do for you.
Which inflation rate should I use?
Nobody can know the future rate. This calculator offers 4%, 6%, 8% and starts with 6%. For the same SIP, 4% inflation leaves ₹15,69,600 in today’s money and 8% leaves ₹10,76,179. Try more than one.
What is the return after inflation?
It is (1 + return) ÷ (1 + inflation) − 1. A 12% return with 6% inflation is about 5.7% a year after inflation. That slower growth is what your money really earns in buying power.
Does a longer SIP beat inflation more easily?
The gap between the two figures grows with time, but so does the SIP itself. Doubling the SIP to 20 years grows it to ₹99,91,479, which is ₹31,15,390 in today’s money.
Is the return in this calculator guaranteed?
No. The return is assumed, not predicted. Market-linked returns go up and down. The result is an illustration, not investment, tax or legal advice.