Forward Inflation
Forward inflation estimates how prices will grow in the future. It converts today’s cost into tomorrow’s expected price using projected inflation rates. It is the reverse of discounting.
Future Cost (FV)
The future cost is the nominal amount you will likely pay after compounding inflation. A ₹5,50,000 fee at 7.1% inflation over four years becomes roughly ₹7,23,981.
Inflation Spread
The inflation spread represents the difference between general inflation and the specific rate applied to your goal. A wider spread (e.g., medical inflation vs CPI) indicates higher savings pressure.
Purchasing Power Loss
Purchasing power loss is the amount of value your current money loses over the selected period. It highlights the gap between present funds and future needs.
Nominal vs Real
Nominal value reflects the future sticker price, while real value shows what the future amount is worth in today’s terms. Comparing both clarifies the true impact of inflation.
Scenario Analysis
Scenario analysis lets you test different inflation rates—such as 5%, 7%, and 9%—to see how savings requirements shift. It is a risk management tool for your finances.
Inflation Buffer
An inflation buffer is the extra amount you save to cover higher-than-expected inflation. Adding a 1-2% buffer is common for long-term goals like retirement.
Goal Horizon
The goal horizon is the time until you spend the money. Longer horizons magnify the effect of inflation and require larger contributions to offset the drag.
Real Rate of Return
The real rate of return adjusts your investment performance for inflation. Achieving 10% when inflation is 7% gives you 3% real growth, keeping your goal on track.
Inflation Indexation
Inflation indexation refers to linking expenses or investments to inflation so values adjust automatically. Understanding indexation helps you pick assets that safeguard purchasing power.