A Rs 1 crore corpus feels like a big number today and remains a financial goal for many people, but money loses value quietly over time. Year over year, that erosion can add up, significantly impacting the purchasing power of the same Rs 1 crore corpus.
What Rs 1 crore buys you today will not buy the same tomorrow. If inflation averages around 6% a year, the real worth of your corpus can shrink to less than a third of its original value in 20 years. It will still be Rs 1 crore on paper, but its purchasing power will be far lower.
This is why long-term financial planning cannot stop at building a corpus. It has to account for what that corpus will actually buy years down the line.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
Here is what the math shows:
Current cost: Rs 1 crore
Inflation rate: 6%
Time period: 20 years
Cost increase: Rs 2.2 crore
Future cost: Rs 3.20 crore
This means that while your money doesn't shrink in the bank, its buying power does. The same needs that cost Rs 1 crore now will cost around Rs 3.2 crore after 20 years. That is an increase of Rs 2.2 crore, purely because of inflation.
So if you are saving Rs 1 crore for a goal 20 years away, you are actually falling short by more than double. This is why when planning for long-term financial goals, it is important to consider the impact of inflation, not just tax implications, which are an additional burden on your savings.
This gives you a more realistic picture of how much you need to save today, so your money can comfortably cover the same needs when the goal finally arrives.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
