Inflation Calculator for Investments & Savings

Inflation is the average amount that the cost of goods and services rises over time. If things cost more, but the amount of money you have to spend remains the same, your effective spending power is reduced. You can get less with your money.

But what difference does it make when you save or invest? If you were to put all your available money under your mattress in cash it wouldn’t grow in value at all. But put it into an interest bearing savings account, and your money could grow year on year, softening the impact of any inflationary pressures.

If you’re interested to see how far your money might go in future, based on different inflation and interest rates, our future inflation calculator is for you. See how you might weather the effects of inflation with our easy to use tool.

This guide is intended for information only. The value of any investment can go down as well as up. Consider all your options when it comes to saving and investing, based on your own personal risk appetite and timescales - get professional advice if you need it to make sure your investments work optimally for you.

It can be tricky to visualise how the constant battle between inflation vs savings will impact you. If inflation means things get more expensive, but at the same time you’re growing your money with something like a savings account, where does that leave you in terms of real terms spending power?

Our future inflation calculator helps you map out projections of potential growth vs reductions in spending power thanks to inflation, so you can see how far your money might go in different scenarios.

To use our investment inflation calculator:

• Enter your savings or investment amount in pounds
• Enter how long you want to run the calculation for
• Enter the inflation rate you want to model (you can choose from common presets in the dropdown)
• Enter your projected growth rate (i.e. the interest rate on your cash, or expected return on your investments)

You’ll see a projection based on the data entered - in the form of a graph and then a table, so you can visualise the value of your money changing over time in whichever way suits you best. The data the table and graph can show you:

• Your balance: in other words, how much your money will have grown based on your chosen growth rate (ignoring any effects of inflation). By setting your growth rate to 0%, you'll see this line remains flat.
• Your rate of real return: your growth rate adjusted for inflation - this is the rate you're effectively getting once change in purchasing power are taken into account.
• Your buying power (inflation adjusted): the buying power of your savings at the end of your chosen period, taking into account the effects of inflation.

Inflation is the amount that the cost of buying goods and services goes up over time. It’s a pretty simple concept - and one we all see in daily life. Buying a chocolate bar today probably costs a lot more than you remember it doing on a Saturday morning when you were a child.

As we can't always know where inflation will go, what can you do to help protect your money and make sure you’re still able to buy all the things you need? There’s no simple way to beat inflation - but thinking carefully about how you optimise the growth and return of your savings is key here. To get higher (inflation busting!) returns, you’re likely going to have to accept a higher level of investment risk.

You may need professional advice to help you pick the right places to save and invest, but by making sure your money is working harder for you now, you could find in future you have more to play with - no matter what inflation does.

Nobody can fully predict what will happen in future to inflation - or to investment returns. However, you can use our investment inflation calculator to easily visualise different projections and scenarios and to help you play around with models which may suit your risk tolerance. By maximising the potential return on any investments you have you give yourself the best possible chance to build a cushion against inflation - so you can trust that you’ll have enough money to buy and do all the things you want to later in life.