How Inflation Destroys Wealth

Inflation is the erosion of the purchasing power of your money. At 6% average CPI, ₹1 crore today buys roughly ₹31 lakh of goods in 20 years. That is not a projection — that is India's actual long-run experience.

Where it hurts most is where Indian families still keep most of their money: savings accounts and fixed deposits. A 6.5% FD, after 30% tax and 6% inflation, yields a real return close to zero. Every additional year in that instrument is a year of standing still.

The defence is threefold. Real assets — equity, real-estate rental yields, gold in measured allocation — historically outpace inflation over a 10-year horizon. Tax-efficient wrappers — ELSS, NPS, PPF, arbitrage funds — compound the after-tax number, which is the only number that matters. And escalation clauses — SIP step-ups, salary-linked contributions — keep your saving rate rising as fast as your cost of living.

Inflation is invisible in the short term and unforgiving in the long term. Every family's plan should be stress-tested at 7% inflation, not 5% — and every corpus should be quoted in today's rupees, not tomorrow's.