SIP Calculator with Inflation

How the SIP calculator with inflation works

First it grows your monthly SIP at the expected return, the same way as the basic SIP calculator. Then it divides the result by (1 + inflation)^years to bring it back to today's rupees. The table shows both columns for every year.

₹10,000 a month for 20 years at 12% gives about ₹99.9 lakh. With 6% inflation, divide by 1.06^20 = 3.207, which gives about ₹31.2 lakh in today's money. You invested ₹24 lakh, so in real terms the gain is about ₹7 lakh, not ₹76 lakh. That is still a gain, but a far more sober one.

Real return: the number that matters

The real return is the growth left after inflation: (1.12 ÷ 1.06) − 1 = 5.66% a year. A fixed deposit at 7% with 6% inflation earns only about 0.9% in real terms, before tax. After tax it can be negative. That is the main reason people take equity risk for long term goals.

Inflation adjusted SIP calculator with step up

Raising your SIP every year fights inflation directly. With a 10% yearly step up, ₹10,000 a month for 20 years at 12% grows to about ₹1.99 crore, or about ₹62 lakh in today's money, on roughly ₹69 lakh invested over the period. Use the step up box to see how your plan changes, and the step up SIP calculator for more detail on the raises themselves.

Which inflation rate to use

• General living costs: 5% to 6% is a common planning figure for India over long periods.
• Education: fees have often risen faster than general prices; many planners use 8% to 10%.
• Medical costs: also often above general inflation.
• Housing: varies by city.

Pick the rate that fits the goal. For a child's college in 15 years at 9% education inflation, a course that costs ₹15 lakh today would cost about ₹55 lakh then. The calculator's real value column tells you whether your SIP keeps pace.

Planning a goal in today's money

1. Price the goal at today's cost.
2. Choose a cautious expected return and a fitting inflation rate.
3. Change the SIP amount until the “in today's money” value reaches the goal.
4. Add a step up if the needed SIP is too high to start with.
5. Review every year and adjust.

Fifteen years of ₹10,000 monthly at 12% reach about ₹50.5 lakh, roughly ₹21 lakh in present day rupees at 6% inflation. If your goal is ₹30 lakh in today's terms, you need either more years, a bigger SIP or a step up.

Lumpsum and inflation

The same idea applies to a one time investment. A lumpsum of ₹5 lakh growing at 12% for 15 years reaches about ₹27.4 lakh; at 6% inflation that is about ₹11.4 lakh today. The lumpsum calculator gives the future figure, and you can divide by 1.06 raised to the years to adjust it. For retirement income drawn from a corpus, the SWP calculator shows how long the money lasts.