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Inflation calculator

Over time, the average cost of goods and services tends to increase. As a result, you will need more money to buy the same – that is Inflation. The opposite of inflation is deflation, where the prices of goods and services fall over time. However, over the past hundred years, inflation has been the more common phenomenon. On average, the inflation rate between the beginning of the 20th century and today was around 2-3% or so.

Why is inflation important? Inflation affects the prices of everything from everyday necessities to luxury goods and services. When inflation rates are high and wages stagnate, it can become a serious problem for people trying to make ends meet. If you are curious about how much money was worth in the past, or if you want to get an idea of ​​how much it could be worth in the future, it helps to try our inflation calculator.

Inflation calculator

Calculate the inflation adjustment for a certain amount of money fill in the fields below.

Starting amount:

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Select starting year:

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Select last year:

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0.00%

Average inflation rate

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Cumulative inflation

Dollar ($) value over time

Learn more…

That's what we'll cover in this post:

How to use our free inflation calculator

Follow these simple steps below to see how inflation is affecting your income and investments.

Step 1: Enter the starting amount

First enter your starting amount. This could be the amount you have in savings, the amount you put in an investment account, or your retirement. Note that inflation not Take into account factors such as the interest accruing or the investor who is adding more money to the account.

Step 2: Select the year from which you want to start measuring inflation

In the section labeled Select starting year, you have two options:

Select the current year to see how much your starting amount will be worth in the future.
Or enter the year you first started investing for a more cumulative estimate of the amount that inflation affected your investments.

Step 3: Choose the most recent year you want to measure inflation for

In the section labeled Select last year, add the year you want to withdraw your investment – or just a year in the future that you are curious about. This could be the date you want to retire, or it could be a year in the future that you estimate you are interested in a big purchase like a home or a new car.

Step 4: review your results and plan accordingly

Lastly, just look at your results. With these results in mind, you can better plan future expenses, investments, and savings. Inflation isn't the only factor that goes into financial planning, but many people often forget to take it into account when making long-term plans for their money. Keeping an eye on the inflation rate and using an inflation calculator can be a great addition to your current planning habits.

Frequently asked questions about the inflation calculator

Inflation is confusing – we get it. After you've used our free inflation calculator, check out the most common questions Minters ask about inflation to see if we can answer anything that pops into your mind.

1. How has inflation behaved throughout history?

Inflation has changed a lot over the course of US history. Major economically significant events like the Depression, World War II, and even the moon landing all have an impact on the inflation rate. The rate of inflation often depends on how well the economy is doing. Most economists estimate that around 2% are healthy; lower, and the economy may not grow enough. Faster, and people may have trouble keeping up with rising prices.

The US inflation rate reached a All-time high of 23.7% in June 1920, early in the roaring 20s, when economic output was high. One of the lowest periods of inflation was a period of deflation during the Great Depression in the 1930s. Over the past decade, inflation has been around 2% – although it has risen significantly since 2021.

2. How does a rising inflation rate affect my income?

The wage increase should be equal to or higher than the inflation rate in order to maintain stable purchasing power.

If your salary increase rate is below the inflation rate, They lose purchasing power year after year. High inflation puts a strain on companies to pay their workers more and puts an even bigger burden on working people, who need stable purchasing power to make ends meet.

If your wage increases are not in line with inflation, you may need to add extra income to your salary. This can be done through a second job or through investments. You may also want to look for a job where the salary increases with the rate of inflation (or better, faster).

3. How can I budget with inflation in mind?

Rising inflation can make everything more expensive. Unless your purchasing power increases with the rate of inflation, it can be more difficult to buy the same things that you bought easily just months ago.

Lately, many people have noticed that the prices of everything from used cars and rentals to a cup of coffee and a sandwich have gone up. According to the latest figures, the consumer price index rose by 5.3% over the course of the year to August 2021.

What does that mean? It's time to add inflation to your budget considerations. As you plan your future expenses, keep in mind how much more money you are likely to need in a few months or years to purchase the same product.

Pro tip: Use an inflation calculator to see how much something worth a certain dollar amount will be worth in the future – and use ours Budget calculator for quick insights into your finances.

4. How is investment affected by inflation?

All investments are affected differently by inflation. Money in a savings account with a lower interest rate than the actual inflation rate Lose value. That is why it is often important to invest some of your savings in an account or investment that is growing in value faster than the rate of inflation.

However, some investments are can increase in value with inflation. For example the Effects of inflation on housing is different. Real estate can get more expensive over time, which means that an investment in real estate actually increases in value as inflation progresses. This is good for homeowners, but bad for home buyers looking for a deal.

5. Which types of investments do best when inflation rates rise?

As mentioned earlier, there are some investments that do well under inflation and others that don't. Here are some of the best assets to invest in to protect yourself from a period of high inflation:

Precious metals (like gold): When the price of everything goes up, so does the gold price. Also, when inflation rises, many people may be looking for a stable commodity, which makes gold a useful asset. It can also be lucrative to invest in precious metals like silver, platinum, and palladium.
Real Estate Investments: Real estate also tends to increase in value along with inflation, making it a pretty safe choice as long as you can afford to maintain it.
Commodities: Many commodities can be a sound investment during inflation. Because when the price of the goods rises, the costs of the parts that are required for them also rise.
Treasury inflation-protected securities (TIPS): These securities issued by the US Treasury Department are indexed to the rate of inflation; H. as inflation rises, so does their value. You are fully protected against inflation. The bad news? Compared to other forms of investment, they do not generate any significant profit.

Depending on your returns, other types of investments like mutual funds, government bonds, or dividend stocks can also outperform inflation and make a profit. Ultimately, it is important to research or speak to a broker about the best choice for your portfolio.

6. How can you prepare for retirement based on forecast inflation?

The best preparation for retirement is to start saving early. Most retirement accounts, like IRAs and 401ks, use mutual funds or ETFs that are indexed to the stock market to increase your savings. With the power of compound interest, this can result in a higher value that outperforms the rate of inflation.

In addition to an early start, it is wise to move into safer, more stable investments that can protect against inflation, such as real estate. You can also receive a labor pension as well as an inflation-adjusted social security income.

Easily manage your budget and investments

It can be difficult to keep track of your budget and investments – especially when you factor in inflation as well. Mint can help. Whether you use an inflation calculator like the one on this page or just want to keep track of your various investment accounts, using Mint is a great way to manage your finances. the Mint app makes it easy to see all of your assets on an intuitive dashboard, track your net worth, and plan a budget for each month. So regardless of the rate of inflation, you can make sure you have the data you need to plan ahead.

More articles and resources on inflation:

Find out more about what inflation is ..

How to calculate the rate of inflation.

Review the basics of inflation and how it works.

Learn how inflation is affecting home buying.

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