T/03Tool

Inflation

Inflation is the quiet force shrinking idle cash. Compare nominal and real values side by side.

Your inputs

Amount today

Years from now

Assumed inflation

Rough long-run averages are about 3% for the US and 5–6% for India, but they vary a lot year to year.

Today's basket in 20y: $21.9K
Same cash buys: $4.6K; An untouched amount, in today's prices
Buying power lost: 54%; At 4% for 20 years
Rule of 72: 18.0y; Time for prices to roughly double

Two lines that explain inflation

Cost of today's basket
What cash will buy

The gap between the two lines is inflation's work: things get more expensive, and cash buys less. Assets that grow faster than inflation close the gap.

01Method

How this works.

Future cost: amount × (1 + inflation)^years. What today's cash will buy later: amount ÷ (1 + inflation)^years.

What it assumes

One constant rate. For reference, the US Federal Reserve aims for 2% inflation over the longer run; actual inflation is often higher or lower.
Actual inflation is published as the Consumer Price Index: by the US Bureau of Labor Statistics and, for India, by MOSPI.
Your personal inflation depends on what you buy. Rent, school fees, and healthcare often rise faster than the average.

Worked example

At 4% inflation, something that costs $10,000 today costs about $21,911 in 20 years. The same $10,000 kept as cash would buy what about $4,564 buys today.

At 4% inflation, something that costs ₹8,50,000 today costs about ₹18,62,455 in 20 years. The same ₹8,50,000 kept as cash would buy what about ₹3,87,929 buys today.

Learn the idea behind it

Terms used here: Inflation, Purchasing power, Real return, Nominal.

Every number here is a simplified illustration based on the inputs you choose. Returns are not guaranteed and real markets vary — sometimes a lot — year to year. This is education, not financial advice.