Mutual Fund Return vs Inflation: How large inflation-adjusted corpus 25-year-old may generate on Rs 10 lakh investment by 60 years of age
Published on 05/08/2025 07:27 PM
Mutual Fund Return vs Inflation: A 1 lakh lump sum investment at a 12 per cent annualised return creates an estimated corpus of Rs 17 lakh in 25 years! But adjusted against a 6 per cent inflation, the estimated value of the same investment is just Rs 3,96,100 in today's terms. Investment eats up a large portion of your investment. Long-term investment returns that may look impressive on paper may appear to be faded realities of themselves when adjusted against inflation.
How inflation impacts your investment returns and how large a corpus a 25-year-old investor may generate through a Rs 10 lakh lump sum investment by 60 years of age when their annualised investment returns are 12 per cent to 15 per cent and inflation rates are 4 per cent to 6 per cent, see our estimates to know!
See the example of an Rs 5 lakh investment at a 12 per cent annualised return in 25 years without adjusting to a 6 per cent inflation and after adjusting to it.
Amount- Rs 5,00,000
Investment return- 12 per cent
Inflation- 6 per cent
Real rate of return= (1+investment return %)/(1+inflation rate%) X 100
=(1+12%)/(1+6%) X 100
= 5.66 per cent
Investment duration= 25 years
Investment value without inflation= Rs 85,00,032.20
Investment value with inflation= Rs 19,80,495.86
You can see the stark difference between the two figures.
When you calculate a corpus adjusted to inflation, you get the present value of that investment. It helps you target the exact amount you may require to achieve your financial goals.
Investment= Rs 10,00,000
Investment returns= 12 per cent-15 per cent
Inflation rate= 4 per cent-6 per cent
Corpus generated (without inflation)= ?
Corpus generated (inflation-adjusted value)= ?
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
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Deputy News Editor
Zee Business Digital (English) - zeebiz.com
shaghil.bilali@india.com
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