Lumpsum Calculator with Inflation

Nominal return is what your account statement shows - the raw percentage gain. Real return adjusts for inflation to show actual purchasing power. If you earn 10% but inflation is 6%, your real return is roughly 3.8%, not 4%. The Fisher Equation gives the exact calculation: ((1+0.10)/(1+0.06))-1 = 3.77%.

For general financial planning in India, use 6% as a baseline (10-year CPI average). However, adjust based on your specific goals: education costs rise 8-12% annually, healthcare 10-15%, while general goods might only rise 4-5%. For US-based planning, 2-3% is more realistic.

Over 25 years at 6% inflation, prices roughly quadruple. Your ₹1 crore retirement corpus will only buy what ₹23 lakh buys today. This calculator helps you see this reality upfront so you can set realistic targets.

The math is precise (Fisher Equation). However, future inflation is unpredictable. We recommend running multiple scenarios: optimistic (4% inflation), baseline (6%), and pessimistic (8%) to understand your range of outcomes.

Yes! If inflation exceeds your investment return, you lose purchasing power even while your account balance grows. A 5% return with 7% inflation means you're actually 1.9% poorer in real terms each year. This is known as 'inflation risk' - where rising costs outpace your investment growth.

Focus on investments that historically outpace inflation: equity mutual funds (10-12% long-term), real estate, and inflation-indexed bonds. Avoid keeping large amounts in savings accounts (3-4% interest) - you're guaranteed to lose purchasing power.

It shows the gap between nominal value (what your account displays) and real value (actual purchasing power). Think of it as the reduction in what you can buy due to rising prices. While mathematically it mixes two different time frames, it effectively communicates how much purchasing power you've lost.