I Thought I Did Everything Right… Until Inflation Shocked Me.

NEGI RK Sunday, August 10, 2025

I Thought I Did Everything Right… Until Inflation Shocked Me.

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Here’s a story I often come across in mutual fund circles — and as an expert, I encounter it frequently.

A young investor, awakened by financial awareness through social media and self-reflection, decides it’s time to start investing.
He calculates that his current monthly expense is ₹50,000.
He plans to retire in 20 years, and believes ₹2 Crore will be enough to generate ₹1 lakh/month post-retirement.

So he runs the math, chooses mutual funds, and starts a ₹20,000 monthly SIP.
Everything seems sorted.

But there’s a problem — inflation.

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The Invisible Snack-Eater

While we often say, “The longer you invest, the more you benefit from compounding,”
no one warns you that over long periods, inflation compounds too — and eats into your dreams silently.

At just 7% inflation, your ₹50,000 monthly expense today will become ₹1.9 lakhs in 20 years.

That means, instead of ₹1 lakh/month, you’ll need at least ₹2 to ₹2.5 lakh/month to maintain your lifestyle.

And suddenly, that ₹2 crore goal falls short.

You’ll now need ₹4 crore or more to live comfortably.

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The Real Game-Changer? It’s Not Just SIP or Lumpsum

Yes, mutual fund investors know the terms:

✅ SIP – Systematic Investment Plan
✅ Lumpsum – One-time large investments

But there’s one powerful tool that most people ignore:

💡 Step-Up SIP

A Step-Up SIP means you increase your SIP amount every year – say by 10% – in line with your income growth.

Let’s compare:

💡 Current vs Ideal SIP Plan – See the Difference

📍 Current Plan

Monthly SIP: ₹20,000
Step-Up: ❌ No
Target Corpus: ₹2 Crore
Expected Monthly Withdrawal (Post-Retirement): ₹1 Lakh

📍 Ideal Plan

Monthly SIP: ₹20,000
Step-Up: ✅ 10% Every Year
Target Corpus: ₹4 Crore+
Expected Monthly Withdrawal (Post-Retirement): ₹2–2.5 Lakh

🚀 Insight: Just adding a Step-Up of 10% annually can double your retirement corpus — and your future monthly income.

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The Takeaway

✅ Don’t underestimate inflation — it's the biggest enemy of long-term planning.
✅ Start early, yes — but also increase your SIP as your income grows.
✅ ₹20,000 SIP today may look big, but in a few years, it’ll feel light.
✅ Use Step-Up SIP to fight inflation and secure your financial future.

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💬 Have you accounted for inflation in your retirement planning?
Have you set a Step-Up in your SIPs?
Share your thoughts or questions below – let’s talk wealth, not just returns.

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