Inflation Adjusted Returns
See the real value of your investment returns after accounting for inflation. Compare nominal vs real purchasing power.
₹10,00,000 today will only have the purchasing power of ₹5,58,395 in 10 years at 6% inflation.
Year-by-Year Comparison
| Year | Nominal Value | Purchasing Power |
|---|---|---|
| 1 | ₹11,20,000 | ₹10,56,604 |
| 2 | ₹12,54,400 | ₹11,16,412 |
| 3 | ₹14,04,928 | ₹11,79,605 |
| 4 | ₹15,73,519 | ₹12,46,375 |
| 5 | ₹17,62,342 | ₹13,16,924 |
| 6 | ₹19,73,823 | ₹13,91,467 |
| 7 | ₹22,10,681 | ₹14,70,229 |
| 8 | ₹24,75,963 | ₹15,53,450 |
| 9 | ₹27,73,079 | ₹16,41,381 |
| 10 | ₹31,05,848 | ₹17,34,289 |
Understanding Inflation-Adjusted Returns
Nominal returns are the raw percentage gains on your investment. Real returns subtract the effect of inflation, showing the actual increase in purchasing power. If your investment grows 12% but inflation is 6%, your real return is approximately 5.66%.
The Fisher Equation
Real Return = ((1 + Nominal Rate) / (1 + Inflation Rate)) - 1. This is more accurate than simply subtracting inflation from nominal returns, especially at higher rates.
Why This Matters
A fixed deposit offering 7% returns with 6% inflation gives you only about 0.94% real return. Meanwhile, equity mutual funds averaging 12% with the same inflation deliver about 5.66% real returns. Always evaluate investments on real returns.
Beating Inflation
To truly grow wealth, your investments must consistently beat inflation. Historically, equities, real estate, and gold have outpaced inflation over the long term, while savings accounts and low-yield FDs often fail to keep up.