Inflation & Real Return Calculator
A 7% FD during 6% inflation grows your purchasing power by barely 1% a year — the other 6% just keeps up with prices. This calculator separates the two: it converts a nominal return into the real return, and translates any future value into today's rupees.
Enter an amount, the nominal annual return, the inflation rate and the period. You get the real return, the nominal future value, and what that future value is actually worth in today's money.
How it works
- Real return uses the exact Fisher relation, not the rough subtraction: (1 + nominal) ÷ (1 + inflation) − 1.
- Future value compounds at the nominal return; its value in today's rupees deflates it by inflation over the same period.
Frequently asked questions
What inflation rate should I assume for India?
Headline CPI has averaged roughly 5–6% over the past decade, and the RBI targets 4% ±2%. For personal planning, 6% is a sensible default — and lifestyle categories like education and healthcare have historically inflated faster than CPI.
Why not just subtract inflation from the return?
The subtraction is an approximation that overstates the result. At 12% return and 6% inflation, the real return is (1.12 ÷ 1.06) − 1 = 5.66%, not 6%. Small gap per year, but it compounds over decades.
Is a fixed deposit losing me money?
Often, yes, after tax. FD interest is taxed at your slab rate — at 30%, a 7% FD nets 4.9%, below 6% inflation, so purchasing power falls even as the balance grows. That gap is the core argument for holding growth assets for long-term goals.
What does ₹1 crore in 20 years buy?
At 6% inflation, about what ₹31 lakh buys today. This is why long-term targets should be set in future rupees — the goal SIP calculator can inflate a today-value target for you.
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This tool is an educational estimate, not investment or tax advice. Rates and rules change — verify current figures and consult a professional before acting.