SIP Calculator with Inflation Adjustment

Future Value Formula:

\[ FV = P \times \frac{(1 + \frac{r}{n})^{n \times t} - 1}{\frac{r}{n}} \times (1 + i)^t \]

Periodic Investment (P):

USD

Annual Return Rate (r):

Compounding Periods (n):

per year

Time (t):

years

Inflation Rate (i):

Future Value (FV):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is a SIP Calculator with Inflation Adjustment?

Definition: This calculator estimates the inflation-adjusted future value of systematic investments (SIP) considering compounding returns and inflation.

Purpose: It helps investors understand the real purchasing power of their investments after accounting for inflation.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ FV = P \times \frac{(1 + \frac{r}{n})^{n \times t} - 1}{\frac{r}{n}} \times (1 + i)^t \]

Where:

$ FV $ — Future value (USD)
$ P $ — Periodic investment amount (USD)
$ r $ — Annual return rate (decimal)
$ n $ — Compounding periods per year
$ t $ — Investment duration (years)
$ i $ — Inflation rate (decimal)

Explanation: The formula calculates the compounded future value of regular investments and adjusts it for inflation to show real purchasing power.

3. Importance of Inflation Adjustment

Details: Inflation reduces purchasing power over time. This adjustment shows what your future investments will be worth in today's dollars.

4. Using the Calculator

Tips: Enter your regular investment amount, expected annual return (default 8%), compounding frequency (default 12 for monthly), investment period (default 10 years), and expected inflation rate (default 3%).

5. Frequently Asked Questions (FAQ)

Q1: Why include inflation in SIP calculations?
A: Inflation reduces purchasing power. $1,000 today won't buy the same in 10 years. This shows the real value of your investments.

Q2: What's a typical compounding frequency?
A: Most investments compound monthly (n=12), but some may compound quarterly (n=4) or annually (n=1).

Q3: How do I estimate future inflation?
A: Historical average is 2-3%. Use current economic forecasts or your own estimate.

Q4: Does this account for taxes?
A: No, for after-tax returns, reduce the annual return rate by your expected tax rate.

Q5: Can I use this for other regular investments?
A: Yes, it works for any regular investment plan, not just mutual fund SIPs.