Project the future cost of today's money

Headline CPI inflation: around 5-6% (2025 average). Long-term (last 20 years): ~6.5%. Goal-specific inflation: education 10-12%, healthcare 12-15%, food and lifestyle 5-8%.

A savings account at 3% with inflation at 6% means your money loses 3% real purchasing power per year. Over 20 years that compounds to nearly 50% loss in real terms. Beat inflation by investing.

Long-term: equity mutual funds, index funds (10-14% returns easily beat 6% inflation). Medium term: corporate bonds, hybrid funds (8-10%). Short term: liquid funds, FDs barely beat inflation post-tax.

Always future money. If a college degree costs ₹20L today, in 10 years at 10% inflation it'll cost ₹52L. Plan investments to hit ₹52L, not ₹20L.

Nominal return = headline return (e.g., 12% p.a.). Real return = nominal − inflation. If your SIP earns 12% with 6% inflation, real return is 6% — your actual purchasing power gain.

Specialized treatments, hospital costs, medical equipment, and insurance premiums all rise faster than general inflation. Plan medical corpus with 12-15% inflation assumption.

Mixed. Over very long periods (30+ years), gold has roughly matched inflation. Over shorter periods, gold is volatile and may underperform. Hold 5-10% in gold as portfolio insurance, not as primary inflation hedge.

EMIs are fixed in nominal terms. As your salary rises with inflation, the EMI becomes a smaller share of income — effectively cheaper over time. This is why housing is often called an "inflation-friendly" debt.