SIP vs inflation: Your Rs 20,000 SIP investment can generate Rs 341 crore in 25 years, but what will its real value be? (Internal calculation table)
SIP vs inflation: Charts of long-term SIP returns can impress any investor as they show a small amount to become a huge corpus. For example, an annual rate of return of 12% per month for drinking can generate a corpus of Rs 9.2 lakh in 20 years, Rs 309 crore in 30 years, and Rs 980 crore in 40 years.
But is the value of Rs 980 crore 40 years from now the same as today?
No, if inflation is adjusted, the amount may not be large enough.
It may not help you achieve your financial goals at the time.
How inflation plays a role in your investment growth.
In fact, how much do you need to create a corpus that will be associated with it for a long time, and what will the value of Rs 341 crore in the 25 years from a monthly SIP investment of Rs 20,000?
Get answers to these questions in this article.
The relationship between return on investment and inflation
Suppose you have an investment with an annual rate of return of 12% and an average rate of inflation of 6%, what is the actual return you will get?
It will be 12%-6%= 6%
No, it will be below 6%, certainly below 12%. To calculate the adjusted returns, we apply –
Actual rate of return (%) = (1+ rate of return)/(1+ rate of inflation) -1×100
So if the annual return is 12% and the average inflation is 6%, the real return will be 5.66%.
By this logic, see References: Annual returns of age of 7% to 25% will give real benefits with an average inflation of 6%.
Return on Investment and Inflation Chart
| return on investment | Inflation rate | Actual rate of return |
| 7.00% | 6.00% | 0.94% |
| 8.00% | 6.00% | 1.89% |
| 9.00% | 6.00% | 2.83% |
| 10.00% | 6.00% | 3.77% |
| 11.00% | 6.00% | 4.72% |
| 12.00% | 6.00% | 5.66% |
| 13.00% | 6.00% | 6.60% |
| 14.00% | 6.00% | 7.55% |
| 15.00% | 6.00% | 8.49% |
| 16.00% | 6.00% | 9.43% |
| 17.00% | 6.00% | 10.38% |
| 18.00% | 6.00% | 11.32% |
| 19.00% | 6.00% | 12.26% |
| 20.00% | 6.00% | 13.21% |
The true value of your earnings in 10 years (Rs 5,000,000 monthly SIP investment)
If you invest Rs 5,000 to Rs 1,00,000 per month and get an annual return of 12% at an average inflation rate of 6%, this is a form of the value of the investment and the future value of the gains over different time frames.
| SIP volume | Current value within 10 years | Future value over 10 years (in 6% inflation) |
| Rs 5,000.00 | Rs 11,20,179.45 | Rs 8,02,010.45 |
| Rs 10,000.00 | Rs 22,40,358.90 | Rs 16,04,020.91 |
| Rs 15,000.00 | 33,60,538.34 rupees | Rs 24,06,031.36 |
| Rs 20,000.00 | 44,80,717.79 rupees | Rs 32,08,041.81 |
| Rs 25,000.00 | Rs 56,00,897.24 | Rs 40,10,052.27 |
| Rs 30,000.00 | 67,21,076.69 rupees | €48,12,062.72 |
| Rs 35,000.00 | 78,41,256.13 | 56,14,073.17 |
| Rs 40,000.00 | 89,61,435.58 rupees | 64,16,083.63 rupees |
| Rs 45,000.00 | 1,00,81,615.03 | 72,18,094.08 rupees |
| Rs 50,000.00 | €1,12,01,794.48 | Rs 80,20,104.54 |
| Rs 55,000.00 | €1,23,21,973.93 | 88,22,114.99 rupees |
| Rs 60,000.00 | €1,34,42,153.37 | Rs 96,24,125.44 |
| Rs 65,000.00 | €1,45,62,332.82 | €1,04,26,135.90 |
| Rs 70,000.00 | €1,56,82,512.27 | €1,12,28,146.35 |
| 75,000.00 rupees | €1,68,02,691.72 | €1,20,30,156.80 |
| Rs 80,000.00 | €1,79,22,871.16 | €1,28,32,167.26 |
| Rs 85,000.00 | €1,90,43,050.61 | €1,36,34,177.71 |
| Rs 90,000.00 | 2,01,63,230.06 | €1,44,36,188.16 |
| Rs 95,000.00 | Rs 2,12,83,409.51 | €1,52,38,198.62 |
| Rs 1,00,000.00 | Rs 2,24,03,588.96 | €1,60,40,209.07 |
The true value of your earnings over 20 years (Rs 5,000 rupees per month SIP investment)
| SIP volume | Current value within 20 years | Future value over 20 years (in 6% inflation) |
| Rs 5,000.00 | 45,99,286.78 rupees | Rs 21,92,928.70 |
| Rs 10,000.00 | 91,98,573.56 rupees | 43,85,857.39 rupees |
| Rs 15,000.00 | €1,37,97,860.34 | 65,78,786.09 |
| Rs 20,000.00 | €1,83,97,147.12 | 87,71,714.78 rupees |
| Rs 25,000.00 | Rs 2,29,96,433.89 | €1,09,64,643.48 |
| Rs 30,000.00 | €2,75,95,720.67 | €1,31,57,572.17 |
| Rs 35,000.00 | Rs 3,21,95,007.45 | Rs 1,53,50,500.87 |
| Rs 40,000.00 | Rs 3,67,94,294.23 | €1,75,43,429.57 |
| Rs 45,000.00 | 4,13,93,581.01 rupees | €1,97,36,358.26 |
| Rs 50,000.00 | Rs 4,59,92,867.79 | 2,19,29,286.96 |
| Rs 55,000.00 | Rs 5,05,92,154.57 | Rs 2,41,22,215.65 |
| Rs 60,000.00 | Rs 5,51,91,441.35 | Rs 2,63,15,144.35 |
| Rs 65,000.00 | 5,97,90,728.12 | 2,85,08,073.04 |
| Rs 70,000.00 | Rs 6,43,90,014.90 | Rs 3,07,01,001.74 |
| 75,000.00 rupees | Rs 6,89,89,301.68 | Rs 3,28,93,930.44 |
| Rs 80,000.00 | Rs 7,35,88,588.46 | Rs 3,50,86,859.13 |
| Rs 85,000.00 | Rs 7,81,87,875.24 | Rs 3,72,79,787.83 |
| Rs 90,000.00 | 8,27,87,162.02 | Rs 3,94,72,716.52 |
| Rs 95,000.00 | Rs 8,73,86,448.80 | 4,16,65,645.22 rupees |
| Rs 1,00,000.00 | Rs 9,19,85,735.58 | Rs 4,38,58,573.91 |
The true value of your earnings in 30 years (Rs 5,000 rupees per month SIP investment)
| SIP volume | Current value within 30 years | Future value over 30 years (in 6% inflation) |
| Rs 5,000.00 | €1,54,04,866.05 | 46,05,183.48 rupees |
| Rs 10,000.00 | Rs 3,08,09,732.10 | €92,10,366.97 |
| Rs 15,000.00 | €4,62,14,598.15 | €1,38,15,550.45 |
| Rs 20,000.00 | 6,16,19,464.20 rupees | €1,84,20,733.93 |
| Rs 25,000.00 | Rs 7,70,24,330.25 | Rs 2,30,25,917.42 |
| Rs 30,000.00 | €9,24,29,196.30 | 2,76,31,100.90 |
| Rs 35,000.00 | Rs 10,78,34,062.34 | Rs 3,22,36,284.39 |
| Rs 40,000.00 | Rs 12,32,38,928.39 | Rs 3,68,41,467.87 |
| Rs 45,000.00 | €13,86,43,794.44 | Rs 4,14,46,651.35 |
| Rs 50,000.00 | Rs 15,40,48,660.49 | Rs 4,60,51,834.84 |
| Rs 55,000.00 | Rs 16,94,53,526.54 | Rs 5,06,57,018.32 |
| Rs 60,000.00 | Rs 18,48,58,392.59 | 5,52,62,201.80 rupees |
| Rs 65,000.00 | Rs 20,02,63,258.64 | Rs 5,98,67,385.29 |
| Rs 70,000.00 | €21,56,68,124.69 | Rs 6,44,72,568.77 |
| 75,000.00 rupees | Rs 23,10,72,990.74 | Rs 6,90,77,752.25 |
| Rs 80,000.00 | Rs 24,64,77,856.79 | Rs 7,36,82,935.74 |
| Rs 85,000.00 | Rs 26,18,82,722.84 | Rs 7,82,88,119.22 |
| Rs 90,000.00 | 27,72,87,588.89 | 8,28,93,302.71 |
| Rs 95,000.00 | €29,26,92,454.94 | 8,74,98,486.19 |
| Rs 1,00,000.00 | 30,80,97,320.99 rupees | Rs 9,21,03,669.67 |
Estimated value in 25 years is Rs 20,000
If you invest Rs 20,000 in a mutual fund diet you will get an annual return of 12%, then the investment in 25 years will be Rs 60,000,000 and the estimated corpus estimated at Rs 3,40,444,131.
However, if we adjust this amount based on 6% of average inflation, the value of Rs 3,40,44,131 would be Rs 1,29,36,296.02.
(Disclaimer: These are forecasts, not financial advice. Do due diligence or consult a specialist for financial planning.)
