By Admin 
Whenever we make our retirement planning, we usually guess the money in today’s value. But have we thought what will be the cost of our money after 20-30 years? Inflation gradually reduces the purchase power of money. That is, what seems cheap today can be very expensive in future.
How does inflation affect?
Understand from an example, suppose, in 2010, the price of a gas cylinder was Rs 350, but in 2025 it has increased to 1,050. That is, on average, prices have increased at the rate of 7.6 percent per annum. Similarly, in 2009, 2 liters of petrol was available for 100 rupees, but today only 1 liter is available. It is clear that inflation has reduced the strength of money about half during this period.
What do inflation figures say?
The government uses the Consumer Price Index (CPI) to measure inflation, which tracks the prices of essential things like eating and drinking, clothes, home, transport, health. In February 2025, the CPI inflation was 3.61 percent, but on an average it remains around 5 percent.
In 2013, the CPI inflation reached 12.2 per cent, while in 2017 it fell to 1.5 per cent. RBI tries to remain on a target of 4 per cent, but in reality the prices of essential things are always higher than this.
What is the real return on investment?
According to the report of Financial Express, 6 % in fixed income schemes (eg bank FD, PPF, EPFO, Post Office Savings). 8.25 percent of the annual return is received, but after reducing inflation, the real return remains only 2-3 percent. Equity-linked investment such as mutual funds gives 12 %-15 per cent annual returns, but after adjusting inflation, the real return remains between 6-9 per cent.
How to make a fund of 1 crore
Let us understand how inflation affects our savings and money price. If a 40 -year -old person wants to make a fund of 1 crore for retirement today and the rate of inflation is considered to be 5 per cent annually, then he will have to invest in 18,000 per month Mutual Fund SIP, in which he got 15 per cent annual returns.
Disclaimer: (The information provided here is being given only for information. It is necessary to tell here that the investment in the market is subject to risks. Always consult expert before investing as an investor. Abplive.com is never advised to invest money here.)
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