What will be value of Rs 1 crore in 2050? Check its real value after inflation

A sum of Rs 1 crore might sound like a lot of money today, and you may feel that achieving this amount through investments over 25 years will ensure financial security. However, due to inflation, this might not be entirely true. Inflation reduces the purchasing power of money over time, meaning what costs Rs 1 lakh today could cost Rs 2-3 lakh in 15-20 years. So, if the inflation rate stays at 5%, how much will Rs 1 crore be worth in 2050?

How Inflation Affects Your Savings
Suppose you are investing in savings schemes like Fixed Deposits (FDs), Public Provident Fund (PPF), National Pension Scheme (NPS), or Employees' Provident Fund (EPF). In that case, it is essential to consider whether their returns can beat inflation. In the past few years, India's inflation rate has hovered between 4% to 6%. Assuming an average inflation rate of 5% for the next 25 years, the real value of your savings will decrease over time.

Investment Options vs. Inflation
Fixed Deposit (FD) – Estimated Return: 6.5%
FDs are considered safe investments, but their returns are only slightly above inflation. With a 6.5% return and 5% inflation, your wealth effectively grows by just 1.5% per year. To accumulate Rs 1 crore in 25 years, you would need to invest Rs 20 lakh in 2025 at a 6.5% return. However, since the maximum tenure for an FD is 10 years, you would need to reinvest your funds twice over the 25 years.

Public Provident Fund (PPF) – Estimated Return: 7.1%
PPF offers slightly better returns than FDs, but the margin over inflation is still not significant. To build a Rs 1 crore corpus in 25 years, you must invest Rs 1,46,000 annually.

Employees' Provident Fund (EPF) – Estimated Return: 8.25%
EPF is a safe option with an 8.25% return, but with 5% inflation, your real gains are limited. To reach Rs 1 crore in 25 years, you need to invest Rs 7,080 monthly as an employee contribution, along with Rs 2,165 as the employer’s contribution. This requires a salary (basic + DA) of Rs 59,000 per month.

The Real Value of Rs 1 Crore in 2050
Considering a consistent 5% inflation rate over the next 25 years, the actual purchasing power of Rs 1 crore will be approximately Rs 29.36 lakh in 2050. This significant reduction shows how inflation can weaken your savings.

What Should You Do?
To ensure your savings maintain their real value, focus on investments that offer returns higher than inflation. Instead of just saving, emphasize growth by exploring options like:

Stock Market and Mutual Funds: These options often provide higher returns over the long term, helping to combat inflation.
Balanced Asset Allocation: Diversify investments across FDs, PPF, NPS, and equity to manage risk and returns effectively.
Monitor Inflation Impact: When choosing an investment, consider not just the returns but also how inflation will affect them.

While Rs 1 crore might seem substantial today, its real value could diminish significantly by 2050 if inflation remains at 5%. Only with the right planning and smart investments can you preserve the strength of your savings in the long run.