Purchasing Power Calculator
Your balance can grow while your wealth shrinks. See how inflation quietly erodes cash, the return you need just to break even, and whether investing actually keeps your money ahead - all in real, after-inflation terms.
Assumes a constant inflation rate and, if entered, a constant nominal return, compounded annually. "Real" values are in today's purchasing power. Judge every return in real terms - a growing balance can still be a shrinking fortune. Not financial advice.
Frequently asked
What is purchasing power?
Purchasing power is what your money can actually buy, not its face value. Inflation quietly erodes it: a sum that covers your costs today buys less every year as prices rise. This calculator shows how much a fixed amount of cash will really be worth in the future, and how much you would need then to match what it buys today - the number that actually matters for your standard of living.
How much does inflation erode cash over time?
More than most people expect, because it compounds. At 3% inflation, money loses about a quarter of its purchasing power in 10 years and nearly half in 20. At higher rates the damage is brutal: at 8%, cash loses more than half its value in under a decade. Holding large sums in cash is not "safe" in real terms - it is a slow, silent loss that never shows up as a number on a statement.
What return do I need to beat inflation?
To simply preserve your purchasing power, your after-tax return has to at least equal the inflation rate - that is your break-even. Anything above it is real growth; anything below it, including most cash and many "safe" accounts, is a real loss even when the balance goes up. This tool shows your break-even rate and, if you enter an expected return, whether it actually beats inflation and by how much.
Nominal vs real return - what is the difference?
Nominal is the headline number your account shows; real subtracts inflation to reveal your true gain in purchasing power. A 6% nominal return with 4% inflation is only about 2% real. It is entirely possible to watch your balance grow every year while your wealth, measured in what it can buy, shrinks. Investing decisions should be judged in real terms - which is exactly what Alvest is built around.
Is cash ever the right place for money?
Yes - for your emergency fund and money you will spend within a couple of years, where stability matters more than growth. The mistake is holding far more than that in cash for years, where inflation guarantees a real loss. Beyond your buffer, the goal is to earn at least your break-even rate so your long-term savings keep their purchasing power.
Does Alvest track my real, inflation-adjusted returns?
Yes - it is the core of what Alvest does. Every return, projection and net-worth figure can be shown in real, after-inflation terms, so you always know whether your wealth is genuinely growing or just keeping up with prices. You can start free.