Mutual Fund Investment vs Inflation: Creating an estimated Rs 1,50,00,000 corpus from a Rs 5,00,000 mutual fund lump sum investment can look promising on paper—growing your investment amount by 50 times. But there is one powerful force that is working against such wealth creation—inflation. At an average inflation rate of 6 per cent, the real value of your Rs 1,50,00,000 corpus could be far lower than you think.
Will your return hold real value in the future?
We present different scenarios of how different investment returns and inflation can affect your wealth in times to come.
Value of Rs 5,00,000 investment in 30 years (at 6%-20% annualised return)
We hear that the power of compounding can convert a small investment into a giant corpus in the long run.
It’s true, but the rate of return is also important to convert a modest corpus to an outstanding corpus.
Here, see how your Rs 5,00,000 mutual fund investment will look if you get a 6 per cent to 20 per cent annualised return on it in 30 years.
| Annualised rate of return | Real value of corpus in 30 years |
| 6% | ₹ 28,71,745.59 |
| 7% | ₹ 38,06,127.52 |
| 8% | ₹ 50,31,328.44 |
| 9% | ₹ 66,33,839.23 |
| 10% | ₹ 87,24,701.13 |
| 11% | ₹ 1,14,46,148.29 |
| 12% | ₹ 1,49,79,961.06 |
| 13% | ₹ 1,95,57,948.98 |
| 14% | ₹ 2,54,75,079.29 |
| 15% | ₹ 3,31,05,885.98 |
| 16% | ₹ 4,29,24,938.45 |
| 17% | ₹ 5,55,32,325.01 |
| 18% | ₹ 7,16,85,319.22 |
| 19% | ₹ 9,23,37,656.08 |
| 20% | ₹ 11,86,88,156.90 |
Value of Rs 5,00,000 investment in 30 years (when inflation is 4%)
Now suppose, if the average inflation in 30 years is 4 per cent, here’s how the same return will look.
| Annualised rate of return | Inflation rate | Real rate of return | Real value of corpus in 30 years |
| 6% | 4% | 1.923% | ₹ 8,85,412.77 |
| 7% | 4% | 2.885% | ₹ 11,73,500.17 |
| 8% | 4% | 3.846% | ₹ 15,51,252.48 |
| 9% | 4% | 4.808% | ₹ 20,45,336.48 |
| 10% | 4% | 5.769% | ₹ 26,89,988.23 |
| 11% | 4% | 6.731% | ₹ 35,29,061.19 |
| 12% | 4% | 7.692% | ₹ 46,18,601.64 |
| 13% | 4% | 8.654% | ₹ 60,30,080.78 |
| 14% | 4% | 9.615% | ₹ 78,54,442.51 |
| 15% | 4% | 10.577% | ₹ 1,02,07,162.67 |
| 16% | 4% | 11.538% | ₹ 1,32,34,559.85 |
| 17% | 4% | 12.500% | ₹ 1,71,21,652.48 |
| 18% | 4% | 13.462% | ₹ 2,21,01,922.13 |
| 19% | 4% | 14.423% | ₹ 2,84,69,423.13 |
| 20% | 4% | 15.385% | ₹ 3,65,93,774.44 |
Value of Rs 5,00,000 investment in 30 years (when inflation is 5%)
If the inflation rate is 5 per cent, here’s the real value of your returns in 30 years.
| Annualised rate of return | Inflation rate | Real rate of return | Real value of corpus in 30 years |
| 6.00% | 5.00% | 0.952% | ₹ 6,64,457.17 |
| 7.00% | 5.00% | 1.905% | ₹ 8,80,652.08 |
| 8.00% | 5.00% | 2.857% | ₹ 11,64,135.94 |
| 9.00% | 5.00% | 3.810% | ₹ 15,34,920.80 |
| 10.00% | 5.00% | 4.762% | ₹ 20,18,699.09 |
| 11.00% | 5.00% | 5.714% | ₹ 26,48,380.59 |
| 12.00% | 5.00% | 6.667% | ₹ 34,66,025.17 |
| 13.00% | 5.00% | 7.619% | ₹ 45,25,268.34 |
| 14.00% | 5.00% | 8.571% | ₹ 58,94,358.85 |
| 15.00% | 5.00% | 9.524% | ₹ 76,59,955.43 |
| 16.00% | 5.00% | 10.476% | ₹ 99,31,862.74 |
| 17.00% | 5.00% | 11.429% | ₹ 1,28,48,927.68 |
| 18.00% | 5.00% | 12.381% | ₹ 1,65,86,366.27 |
| 19.00% | 5.00% | 13.333% | ₹ 2,13,64,851.28 |
| 20.00% | 5.00% | 14.286% | ₹ 2,74,61,762.93 |
Value of Rs 5,00,000 investment in 30 years (when inflation is 6%)
If the average inflation in 30 years is 6 per cent, the values of your investment will be as follows:
| Annualised rate of return | Inflation rate | Real rate of return | Real value of corpus in 30 years |
| 6.00% | 5.00% | 0.952% | ₹ 6,64,457.17 |
| 7.00% | 5.00% | 1.905% | ₹ 8,80,652.08 |
| 8.00% | 5.00% | 2.857% | ₹ 11,64,135.94 |
| 9.00% | 5.00% | 3.810% | ₹ 15,34,920.80 |
| 10.00% | 5.00% | 4.762% | ₹ 20,18,699.09 |
| 11.00% | 5.00% | 5.714% | ₹ 26,48,380.59 |
| 12.00% | 5.00% | 6.667% | ₹ 34,66,025.17 |
| 13.00% | 5.00% | 7.619% | ₹ 45,25,268.34 |
| 14.00% | 5.00% | 8.571% | ₹ 58,94,358.85 |
| 15.00% | 5.00% | 9.524% | ₹ 76,59,955.43 |
| 16.00% | 5.00% | 10.476% | ₹ 99,31,862.74 |
| 17.00% | 5.00% | 11.429% | ₹ 1,28,48,927.68 |
| 18.00% | 5.00% | 12.381% | ₹ 1,65,86,366.27 |
| 19.00% | 5.00% | 13.333% | ₹ 2,13,64,851.28 |
| 20.00% | 5.00% | 14.286% | ₹ 2,74,61,762.93 |
Value of Rs 5,00,000 investment in 30 years (when inflation is 7%)
Here’s what a 7 per cent inflation rate means for your investment return in 30 years.
| Annualised rate of return | Inflation rate | Real rate of return | Real value of corpus in 30 years |
| 6% | 7% | -0.93% | ₹ 3,77,252.94 |
| 7% | 7% | 0.00% | ₹ 5,00,000.00 |
| 8% | 7% | 0.93% | ₹ 6,60,951.11 |
| 9% | 7% | 1.87% | ₹ 8,71,468.34 |
| 10% | 7% | 2.80% | ₹ 11,46,138.84 |
| 11% | 7% | 3.74% | ₹ 15,03,647.50 |
| 12% | 7% | 4.67% | ₹ 19,67,874.30 |
| 13% | 7% | 5.61% | ₹ 25,69,271.37 |
| 14% | 7% | 6.54% | ₹ 33,46,587.73 |
| 15% | 7% | 7.48% | ₹ 43,49,024.80 |
| 16% | 7% | 8.41% | ₹ 56,38,925.42 |
| 17% | 7% | 9.35% | ₹ 72,95,121.44 |
| 18% | 7% | 10.28% | ₹ 94,17,093.73 |
| 19% | 7% | 11.21% | ₹ 1,21,30,131.68 |
| 20% | 7% | 12.15% | ₹ 1,55,91,721.01 |
Conclusion
You can see the actual value of your investment return at different annualised return and inflation rates.
If you are targeting a corpus, you should base it on the actual value of your corpus in the future.
The value of Rs 10 crore in today’s time can be just Rs 2 crore by the time you retire.
If you want to achieve a large corpus in future terms, either you may go with a larger investment amount, or, if it is periodic, you may increase the investment amount as your income increases.
(Disclaimer: These are projections. Actual calculations may vary slightly.)
