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Inflation decreases the value of money over time, making items more expensive. Moderate inflation is good, but high inflation is concerning. Investing helps grow your money and beat inflation.
Inflation Calculator.
Inflation Calculator: Inflation is a purchasing power eater that decreases the value of the amount you have in hand. For instance, the number of items you can buy with a note of Rs 500 today would be less in the next two or three years. The prices of items will increase eventually, making it harder to get the same items with Rs 500.
The rise in prices of general items is called inflation. Inflation at a moderate level is good for the economy, but if it tends to run at a galloping pace, then it is a matter of concern. Eventually, the prices of items become so high that it becomes practically impossible for commoners to afford them.
How To Calculate Inflation Effect On Money?
You can calculate inflation with the following formula to understand how much a certain amount of money will be worth in the specified future.
FV (Future Value) = PV (Present Value) x (1 + r (Annual Inflation Rate))^n
Example:
Let’s understand how much Rs 1 crore today would be in the next five years with the current inflation rate of India at 4.31 per cent.
FV = Rs 1,00,00,000 x (1 + 0.0431)^5
FV = 1,00,00,000 x 1.2347
FV = 1,23,47,000
The value lost due to inflation:
1,23,47,000 – 1,00,00,000 = Rs 23,47,000
So, this means ₹1 crore today will be worth only about Rs 76.53 lakh in today’s terms after five years.
Moreover, you can check inflation with the SEBI Inflation Calculator.
Investing is a powerful tool that helps your money grow over time, allowing you to reach your financial goals. Whether it’s buying a home, funding your children’s education, or securing a comfortable retirement, investing plays a crucial role.
Here’s why investing is essential:
1. Investing allows your money to grow, outpacing inflation and increasing your wealth.
2. Investing helps you beat inflation, ensuring your purchasing power is maintained over time.
3. Investing helps you achieve various financial goals, from short-term aspirations to long-term dreams.
4. Investing early and regularly helps you build a substantial retirement fund, securing your financial future.
