Advanced SIP Calculator with Inflation
Planning for the future requires understanding not just how your money grows, but also how its purchasing power changes over time. Our Advanced SIP Calculator with Inflation helps you do exactly that. It calculates the future value of your investments while also showing you its 'real' value after accounting for inflation, giving you a much clearer picture of your future wealth.
This tool is essential for anyone serious about long-term financial planning, from young professionals saving for retirement to parents planning for their children's future education costs.
How to Use the Inflation Adjusted SIP Calculator
- Monthly Investment: Enter the amount you plan to invest each month.
- Expected Annual Return: Input the annual return rate you anticipate from your investments.
- Investment Period: Set the total number of years you plan to stay invested.
- Inflation Rate: Enter the average annual inflation rate you expect over the investment period (e.g., 6%).
- Analyze Your Results: The calculator will instantly show your total invested amount, the future value of your corpus, and its inflation-adjusted value. The charts and table provide a detailed breakdown.
Your Investment Details
Year-by-Year Growth Table
| Year | Invested Amount | Future Value | Inflation Adjusted Value |
|---|
Investment Growth
The Formula Behind the Calculation
This calculator uses two key formulas. First, the standard future value formula for a SIP:
- FV: Future Value
- P: Monthly Investment
- i: Monthly Rate of Return (Annual Rate / 12)
- n: Number of Months (Years x 12)
Next, to find the value in today's money, we calculate the inflation-adjusted return:
- rinf: Annual Inflation Rate
- t: Investment Period in Years
Use Cases and Examples
Scenario 1: Planning for Retirement
Goal: Raj, 30, wants to see what his retirement corpus would be worth in today's money. He invests ₹15,000 per month for 30 years, expecting a 12% return with 6% average inflation.
Result: The calculator shows a future value of over ₹5.2 Crore. However, the inflation-adjusted value is approximately ₹92 Lakhs. This gives Raj a realistic target for his retirement planning.
Scenario 2: Saving for a Car
Goal: Sunita wants to buy a car in 5 years that costs ₹10 Lakhs today. She wants to know how much she needs to save, accounting for the car's price increase due to inflation.
Result: By inputting her investment details, she can see the future value and compare it to the car's likely future cost, helping her adjust her monthly SIP amount to meet her goal accurately.
Frequently Asked Questions (FAQs)
Why is calculating for inflation important?
Inflation erodes the purchasing power of your money over time. A corpus of ₹1 Crore today will not buy the same amount of goods and services in 20 years. Calculating the inflation-adjusted value tells you what your future money is worth in today's terms, which is crucial for realistic goal setting.
What is a realistic inflation rate to use?
In India, the long-term average inflation rate has been around 5-6%. Using this as a baseline is a reasonable approach for long-term calculations.
Does this calculator consider taxes?
No, this calculator does not account for capital gains tax. The final returns would be subject to taxation as per the prevailing laws when you withdraw the money.