How much will today's Rs 1 crore be worth in 2040? Here's the complete calculation
If you have ₹1 crore today and think it will be enough for major expenses in 15 years, you might be wrong. ₹1 crore may not be worth as much as you thought it would be in 15 years. This is due to inflation.
Nowadays, everyone is worried about their future. Whether it's buying a house, educating their children, or marrying off their daughter, people save every penny for all these things. People think that by accumulating ₹1 crore in 20-30 years, they can easily meet their needs.
If this is on your mind, this calculation may change your thinking. This is because the value of money decreases over time. While ₹1 crore may seem substantial today, ₹1 crore will no longer be as valuable 20-30 years from now.
Yes, the rising inflation is eroding the value of the rupee, and if proper investments are not made, your savings will fall far short of expectations.
Today, we'll learn how much ₹1 crore will be worth 25 years from now, i.e., in 2040. Why does this value decrease? Where can you invest to maintain the true value of your money?
How much will its real value be left by 2040?
Every year, the prices of things increase, such as food, housing, vehicles, medicines, and other essential items. When these prices rise, less goods are available for the same amount of money.
This is inflation. In India, inflation has hovered around 5% or 7% for the past several years. If we assume an average inflation rate of 6%, then according to the inflation calculator, the future cost of Rs 1 crore should be approximately Rs 2.39 crore.
This means that in 2040, the value of Rs 1 crore today will be approximately Rs 404.5 million today. This does not mean that the rupee will depreciate.
This means that to buy goods that you can buy today for Rs 404.5 million, you will have to spend Rs 1 crore in 2040. To put it another way, to buy the same goods that you can buy today for Rs 1 crore, you will need to have Rs 2.39 crore in 2040.
What happens at the rate of inflation, why does the value of the rupee decrease?
Inflation refers to the rising prices of everyday goods and services. When prices rise, the purchasing power of the rupee decreases. Every investor saves and invests so that their money grows over time and can easily meet future needs.
However, external factors like inflation have a significant impact on your savings. Rising inflation makes things more expensive and reduces your purchasing power.
Most people keep money in banks to earn interest, but sometimes bank interest rates don't increase enough to fully cover the impact of inflation.
The impact of inflation also depends on the type of investment. The returns on different investments can vary according to inflation.
This is how the value of the rupee will increase with investment
Investment Method Average Return Return on investment of Rs 1 crore in 15 years (approximately)
Mutual Funds 12% ₹5.47 crore (high risk investment)
FD (Fixed Deposit)- 6.5% ₹2.63 crore
Savings Account 3% ₹1.56 crore
How to prepare to deal with inflation?
Inflation will always be a part of the economy. The government tries to control it, but some of its effects are beyond its control. Therefore, individuals must prepare in advance.
Inflation can be defeated through proper investments and good financial planning, such as investing in stocks and mutual funds. These often provide returns that exceed inflation.
However, it is important to note that these also carry risks, which can lead to losses. Therefore, include a variety of investments in your investments and choose options that offer good returns over the long term. This can help you more easily manage the effects of inflation.