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Rising Prices Got You Worried? Learn How to Calculate the Effects of Inflation

Prices of essential goods and services rise during inflation, which will impact your life as you need to modify your monthly budget. Because of the prices rise, you will lose purchasing power as the money at your disposal will not be enough. You can prepare for inflation by signing up for investment tools like a mutual fund that might offer you inflation-beating returns.

Global inflation: Global economic downturn & impact of inflation on commodity market - The Economic Times

How inflation affects daily life?

Inflation devalues the currency. So, it is expensive for the common citizenry. Inflation makes both luxury and essential products unaffordable. Everything from food to medicines and treatments is out of reach if one hasn’t saved enough. That’s why it is imperative to save money by investing it in your long-term goals. However, calculate inflation before investing. It is possible with the help of an online inflation calculator.

What is an inflation calculator?

An inflation calculator evaluates the impact of inflation on your purchasing power. An inflation calculator shows you the worth of the quantity of money over time. You can determine inflation by calculating the CPI or consumer price index. CPI is the cost of some goods and services in the current year *100. The formula used for calculating inflation using CPI is:

Inflation = ((CPI x+1 – CPIx)/ CPIx))*100

How to use an inflation calculator?

There are three steps in using an inflation calculator. They are:

  1. Entering the current investment cost
  2. Setting the number of years
  3. Modifying the investment period

How does an inflation calculator help in mutual fund investments?

Inflation calculators can help you formulate a financial plan to accumulate long-term capital for the future. You can make wiser financial decisions and save for the future by determining how much your money will be worth. They are free and accessible regardless of time and location. There are no restrictions on how often you can use these online calculators. These factors make inflation calculators helpful.

What are the advantages of an inflation calculator?

Listed below are the advantages that are associated with an inflation calculator:

  • They are easily accessible:

Physical calculators are a thing of the past. That’s because online inflation calculators have replaced them. They are easily accessible because of the internet and are free to use. Just type in ‘inflation calculator in India’ in a search engine, and you will find multiple free-to-use online calculators.

  • No need to add details:

You may think that the online calculator will ask for personal data to use it. However, that’s not the case. You can use the free online calculator directly once you click the link.

  • These calculators save time:

Inflation calculators in India deliver answers in no time. They are more convenient than manual calculations and save time.

  • They are precise:

An inflation calculator helps you to analyze the potential worth of your savings in the future. They will also show you the potential value of money at your disposal if it is invested. For instance, you invest ₹ 1,00,000 for 20 years at an inflation rate of 12 % in equity funds. Your savings will be worth ₹ 9,64,629 in the future.

Conclusion:

Inflation will cause affect your savings adversely. It will minimize the cash flow in the economy and decrease your purchasing power. Hence, it is important to formulate a financial plan for a secure future. You can do so by determining the worth of your savings in the future. An inflation calculator can help you in doing just that.

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