10M in 20 years is not 10M today

Setting a goal like "having 10 million by age 40" sounds very clear. But there is a critical question most people forget to ask: How much can that 10 million actually buy back then?

Inflation Works Quietly, Just Like Compound Interest

Just as compound interest accelerates the growth of your money, inflation accelerates the erosion of your purchasing power. At an average inflation rate of 3% per year:

• In 10 years: 10 million will have the purchasing power of ~7.4 million today.
• In 20 years: 10 million will have the purchasing power of ~5.5 million today.
• In 30 years: 10 million will have the purchasing power of ~4.1 million today.

So, How Should You Set Your Goal?

If what you truly want is "the purchasing power of 10 million today" in 20 years, the target you must actually set is approximately 18 million (assuming 3% inflation). This means your monthly investment must almost double.

In the DCA Calculator, turn on the "Adjust for inflation" switch to see the real value of your goal in your target year, and then decide whether to accept it or increase your target.

This article is for general knowledge only and does not constitute investment advice.