How to Use SIP to Beat Inflation
Inflation is the silent wealth killer. A 12% return is actually only ~5.6% if inflation is 6%. Use this calculator to uncover the real purchasing power of your future wealth.
Calculator Inputs
✅ Your SIP is beating inflation by 6.0%
Your 12% return beats 6% inflation. Real (inflation-adjusted) return: 5.66% per year — your wealth is genuinely growing.
Total Invested
₹24.00 L
Nominal Corpus
₹99.91 L
Bank statement value
Real Corpus
₹31.15 L
Buying power today
Inflation will erode ₹68.76 L of your corpus's buying power over 20 years. Your ₹99.91 L will feel like ₹31.15 Lin today's money.
What Is Real Return?
Nominal Return is the raw percentage your investment grows — the number you see on your account statement. Real Return is what remains after subtracting inflation. It represents the true increase in your purchasing power. If a savings account gives you 4% return and inflation is 6%, your real return is actually negative. You are silently losing wealth.
Why 12% Return ≠ 12% Gain
A 12% equity mutual fund return looks great. But at 6% inflation, your real (Fisher-adjusted) return is only ~5.66%. The rest is just your money keeping pace with rising prices — not true wealth creation. This is why parking money in low-yield instruments is financially dangerous.
How to Choose a SIP to Beat Inflation
To truly build wealth, you need an asset class that consistently beats inflation. Equity mutual funds (via SIP) have historically delivered 10–15% returns — comfortably ahead of India's 5–7% inflation. Fixed deposits and traditional insurance policies often fail to beat inflation after tax.
Frequently Asked Questions
What is real return on SIP after inflation?
Real return is the actual growth of your purchasing power. If your SIP gives 12% return and inflation is 6%, your real return is roughly 5.66%.
Does SIP beat inflation in India?
Yes, equity mutual fund SIPs historically provide 10-15% returns, comfortably beating India's historical inflation rate of 5-7%.
What return rate beats 6% inflation?
Any return rate above 6% beats inflation, but to grow your wealth meaningfully, you should aim for returns of at least 10-12%.
How does inflation reduce my SIP returns?
Inflation doesn't reduce the numerical amount of your corpus, but it reduces what you can buy with it in the future.
Should I account for inflation in SIP planning?
Absolutely. If you need ₹1 Crore in 20 years, inflation means ₹1 Crore then will only buy what ₹30-40 Lakhs buys today. Always target an inflation-adjusted corpus.
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Disclaimer: Mutual fund investments are subject to market risks. Read all scheme related documents carefully.