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Inflation Adjusted SIP Calculator

Also try: SIP Calculator Goal SIP Calculator
₹21.05 L
₹
%
Yr
%

Corpus in today's purchasing power

₹21.05 L

Nominal projected value: ₹50.46 L — but only buys what ₹21.05 L does today at 6% inflation.

Invested Returns (nominal)

Invested

₹18 L

Nominal corpus

₹50.46 L

Real return p.a.

1.1%

What is an inflation-adjusted SIP calculator?

An inflation-adjusted SIP calculator projects your mutual fund SIP corpus and then discounts it for inflation, so you see the answer in two ways: the nominal rupee amount you'll have on paper, and the purchasing power that amount actually carries in today's money.

It's the right tool for long-horizon planning — retirement, child education, any goal more than 10 years away. The longer the horizon, the more inflation erodes the real value of the corpus, and the more important it is to plan against the inflation-adjusted number.

How the calculation works

Two-step math. First the standard SIP future-value formula gives the nominal corpus:

FV = P × ((1 + r)n − 1) / r × (1 + r)

Where P is the monthly SIP, r is the monthly return rate (annual ÷ 12), and n is the total number of monthly installments. Then we discount FV back to today's purchasing power:

Real value = FV ÷ (1 + inflation rate)years

The calculator runs both calculations every time you move a slider, and surfaces the real value as the headline number with the nominal value alongside.

Worked example — the ₹10,000 SIP over 25 years

Suppose you invest ₹10,000 a month for 25 years at 12% nominal return, and assume 6% inflation across the horizon.

  • Total invested over 25 years: ₹10,000 × 300 months = ₹30,00,000
  • Nominal corpus: approximately ₹1,89,00,000 (₹1.89 crore)
  • Real (inflation-adjusted) corpus: approximately ₹44,00,000 in today's purchasing power

The headline ₹1.89 crore looks impressive. But what it actually buys 25 years from now is roughly what ₹44 lakh buys today. That's the gap inflation opens up, and it's why long-horizon SIP plans should be sized against the real corpus, not the nominal one.

Nominal vs. real returns

Every published mutual fund return is a nominal number — the raw percentage growth, before subtracting inflation. Real return is what's actually left:

Real return ≈ nominal return − inflation rate

So a 12% equity fund at 6% inflation leaves about 6% real return. A 7% debt fund at 6% inflation leaves only ~1% real return. A 5% savings account at 6% inflation actually loses purchasing power every year. The calculator surfaces the effective real return as a stat — the difference between the nominal and real corpus expressed back as an annual rate.

Choosing an inflation rate

India's long-run consumer price inflation (CPI) has averaged roughly 6% a year. Reasonable defaults by goal type:

  • Generic long-term wealth — 5–6% is a safe baseline.
  • Retirement living costs — 6% works, but compounded over 25–35 years the difference between 5% and 7% is enormous. Err on the higher side.
  • Private education and healthcare — historically 8–11% in India. Plan at 8% or above for these specifically.
  • Premium real estate, lifestyle, weddings — 7% is defensible.

When this calculator is the right tool

Use this page when:

  • You have a monthly SIP in mind and want to understand the real purchasing power it'll build.
  • You're comparing equity vs. debt vs. hybrid funds — the real-return view exposes the gap that nominal-only projections hide.
  • You're planning a long-horizon goal (10+ years) and want to verify your SIP is large enough after inflation.

For sizing a SIP against a target corpus, the Goal SIP Calculator reverse-solves the monthly amount. To convert a goal from today's rupees into a future target before sizing the SIP, use the Goal Inflation Calculator.

Limitations

  • Constant rates. The calculator assumes a fixed return and a fixed inflation rate for the entire horizon. Real markets and real inflation both vary year to year — use the long-run average for planning, not as a forecast.
  • Pre-tax. No allowance for capital-gains tax, expense ratios (0.5–2% a year for active equity), or exit loads. Subtract these from your return assumption for a more conservative projection.
  • Headline CPI vs. your real cost of living. Headline inflation aggregates a basket of goods; your personal inflation rate depends on your spending. If most of your future spend is education or healthcare, plan with a higher rate than headline CPI.

FAQs

A regular SIP calculator projects a nominal corpus — the rupee number you'll see in your folio years from now. An inflation-adjusted SIP calculator goes one step further: it discounts that nominal corpus back to today's purchasing power, so you can see what the projected amount will actually buy in real terms. It's the same SIP math with an extra step that translates "rupees later" into "rupees today."

Long-horizon SIP projections look impressive in nominal terms — ₹10,000/month for 25 years at 12% projects to over ₹1.9 crore. But at 6% inflation, that ₹1.9 crore in 25 years has the purchasing power of roughly ₹44 lakh today. Ignoring inflation makes plans look stronger than they actually are. Sizing your SIP against the real (inflation-adjusted) corpus is what keeps the plan honest.

Two-step formula. First, project the nominal SIP corpus using the standard end-of-month future-value formula: FV = P × ((1+r)^n − 1) / r × (1+r), where P is the monthly amount, r is the monthly return rate, and n is total months. Then divide that by (1 + inflation rate)^years to get the inflation-adjusted (real) value. The calculator shows both numbers side by side.

Nominal return is the raw growth rate of your investment — typically 10–14% for Indian equity funds. Real return is what's left after subtracting inflation. As a rule of thumb, real return ≈ nominal return − inflation. So a 12% nominal return at 6% inflation leaves roughly 6% real return — that's the rate at which your purchasing power actually grows. The calculator displays the effective real return as a stat next to the corpus values.

India's long-run CPI inflation has averaged around 6% a year. Use 4–5% for conservative planning, 6% as a baseline, and 7–8% for big-ticket categories like private education, healthcare, or premium real estate which have historically inflated faster than headline CPI. For retirement planning, err on the higher side — small differences in inflation compound dramatically over 25–35 years.

Only if your nominal return comfortably exceeds inflation. Equity mutual funds historically have — 10–14% nominal vs. 5–7% inflation leaves a healthy real return. Debt funds and traditional savings instruments (FDs, RDs) often barely keep pace with inflation after tax. The real-return stat in this calculator makes this trade-off explicit: a debt SIP at 7% nominal return and 6% inflation produces almost no real growth.