Time Value of Money Calculator
Understand how inflation erodes purchasing power over time. Calculate the future or present value of money adjusted for inflation.
FAQs
The time value of money is the concept that money available today is worth more than the same amount in the future. This is because money today can be invested or earn interest, and inflation reduces purchasing power over time.
At Germany's average inflation rate of around 2%, €10,000 today would have the purchasing power of roughly €8,200 in 10 years. This means you need your investments to grow faster than inflation to maintain real value.
For basic purchasing power calculations, use the expected inflation rate (around 2% in Germany). For investment comparisons, use your expected rate of return. The calculator uses 1.84% — close to the ECB's long-term target.
Understanding time value helps you set realistic savings targets. A goal of €100,000 in 20 years requires saving more than you might think, because that €100,000 will buy less than it does today.
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