Inflation Calculator
Inflation is the silent erosion of purchasing power: every year, with the same amount of money, you can buy a little less. €50,000 left sitting in a bank account loses value year after year — not because it disappears, but because prices rise. Understanding inflation is the first step to stop 'losing' money without noticing. Use the calculator to see how much your savings are really worth in real terms after years of inflation.
Key takeaways
- ▸Historical average inflation in the Eurozone: around 2–3% per year under normal conditions, with a peak of 10%+ in 2022
- ▸€50,000 at 2% annual inflation: in 20 years it will be worth about €33,600 in real terms — a loss of over €16,000
- ▸Cash accounts don't protect: deposit interest rates rarely cover real inflation
- ▸Investing beats inflation: historically equity ETFs have delivered 4–6% real return per year
- ▸Rule of 70: divide 70 by the inflation rate to find out how many years it takes to halve your purchasing power
Real value after 20 years
30.514 €
Total loss of value
-19.486 € (39.0%)
Min. return to break even
2.5% per year
How is the loss of purchasing power calculated?
Purchasing power decreases each year by a percentage equal to the inflation rate. A rate of 2% may seem negligible, but over 20 years it reduces real value by about 33%. The formula is the mirror image of compound interest: same mathematics, opposite direction.
The calculator also shows what would happen if you invested the same amount at 5% per year: the green line represents the return needed not just to preserve purchasing power, but to grow it. The gap between the red line (inflation loss) and the green line (investment) is the opportunity cost of leaving money idle.
What happens to €50,000 left in a current account for 20 years?
With an average inflation rate of 2.5%, €50,000 today will have the purchasing power of about €30,500 in 20 years — a real loss of almost €20,000 without spending a cent. The same amount invested in a diversified portfolio at 5% per year would instead grow to about €132,000. The difference is not luck: it is the difference between leaving money idle and putting it to work.
Frequently asked questions
What has the inflation rate been in Europe in recent years?
Eurozone inflation remained below 2% for most of the 2010–2020 decade. In 2022 it spiked above 10% due to the post-pandemic energy crisis, then fell back towards 2–3% in 2023–2024. For long-term projections, the ECB target of 2% is the standard reference.
Do savings accounts protect against inflation?
Partially. The best fixed-term savings accounts offer rates of around 3–4% gross. After tax, the net return is close to average inflation but rarely exceeds it significantly over the long term.
Which assets protect best against inflation?
Historically: equities (positive real return over the long run), real estate (especially during high-inflation periods), inflation-linked bonds like TIPS (direct protection), gold (store of value in crises). Global equity ETFs remain the most efficient solution for most investors.
Does inflation affect bonds?
Yes, directly. A fixed-rate bond pays fixed coupons: if inflation rises, the real value of those coupons falls. This is why long-term portfolios favour equities over fixed-rate bonds during periods of high inflation.
How do I know if my portfolio is beating inflation?
You need to calculate the real return: the nominal return of your portfolio minus the inflation rate for the period. DonkyCapital calculates the TWRR return of your portfolio, which you can compare against inflation to see whether you are genuinely preserving and growing your purchasing power.
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