Most of the people focus on doing financial planning for the future. But they often make a mistake while planning. People forget to take care of inflation while investing by making a goal.
Inflation Adjusted Return: In today’s era people have become very much aware about financials. Whether employed or self-employed, everyone’s attention is definitely on doing financial planning for the future. People save for the coming days, so that they can meet their needs comfortably after 20 years or 25 years. But here also a mistake is often made by people. People keep a target of raising a fund after 20 years or after 25 years and also invest for that by looking at the returns in different schemes. But the mistake is made, people forget to take care of inflation in it. Because of this, after 20 or 25 years, their target is not fulfilled. Therefore, whenever you do financial planning, definitely count inflation.
Savings is being hit by inflation
AK Nigam, director of BPN Fincap, says that at the present time, inflation is increasing at the rate of 5 to 6 percent. If you calculate the return and adjust inflation at the same rate, then after 20 years you will see that the value of Rs 1 crore will be halved. In such a situation, the one who has set a target of raising 1 crore after 20 years, he may get 1 crore. But looking at the inflation, if you compare it from today, then the real value of that amount will be around 50 percent at that time.
Understand the reality from the calculator
Let’s say your investment goal is 20 years. After 20 years, target to raise funds of Rs 1 crore. For this you are ready to invest 10 thousand rupees monthly through SIP. If you have estimated 12 per cent return for the next 20 years, then you can calculate it in 2 ways.
If you do calculations without adjusting inflation, then the value of a monthly SIP of Rs 10,000 at the rate of 12 percent per annum will be Rs 1 crore after 20 years. But if you calculate by adjusting inflation, then this value will be only Rs 46 lakhs.
Similarly, if we calculate the monthly SIP of 10 thousand rupees for 25 years without adjusting inflation at 12 percent per annum, then after 25 years the value of SIP will be 1.90 crores. Whereas after adjusting for inflation, this value will remain only 69 lakhs.
where can you invest
There are many such mutual fund schemes in the market, which have given 12 to 15 percent annual return over a long period. There are schemes like Tata Large and Midcap Fund, Nippon India Growth Fund, Franklin India Prima Fund, UTI Mastershare Fund, SBI Large and Midcap Fund and DSP Equity Opportunity Fund. All of them have given 12 to 15 percent or more returns during the last 20 years. (Source: Value Research)
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