Out of curiosity, I asked ChatGPT a simple question:
“If I keep ₹10 lakh in an FD at 5% interest for 20 years, while inflation averages 6%, what happens to my money?”
Illusion of growth
On paper, my ₹10 lakh grows to about ₹26.5 lakh after 20 years at 5% annual interest. That looks like a win, right? Almost tripling your money without lifting a finger.
But here’s the catch: with inflation at 6%, the cost of everything doubles roughly every 12 years. In 20 years, the same ₹10 lakh worth of goods today will cost about ₹32.1 lakh.
So while my fixed deposit shows ₹26.5 lakh, in today’s terms, that’s worth only about ₹8.2 lakh of current purchasing power, less than what I started with. My so-called “safe” money actually lost value.
The math behind it
Here’s how I got that ₹32.07 lakh figure:
Future value = Present value × (1 + inflation rate) ^ years
Present Value = ₹10,00,000
Inflation rate = 6% (0.06)
Time = 20 years
So,
10,00,000 × (1.06 ^ 20)
= 10,00,000 × 3.207135
≈ ₹32,07,000
This means the same basket of goods worth ₹10 lakh today will cost ₹32.07 lakh after 20 years if inflation averages 6%.
Real value loss
- Starting savings: ₹10,00,000
- Value after 20 years at 5% FD: ₹26,53,000
- But with 6% inflation, I would need ₹32,07,000 just to stay even.
- Real value left: ₹8.26 lakh (yes, that means my future FD will buy me even less than my original ₹10 lakh could today).
In other words, my fixed deposit not only failed to protect me, but it also quietly eroded my wealth.
Why this matters
We don’t feel this erosion daily because it’s slow and invisible. But over decades, inflation is like termites in your wooden cupboard, it eats away silently until one day you see the hollow remains.
Indians love fixed deposit investments because of the security, but when your “secure” money buys less every year, is it really secure?
The smarter play
I’m not saying dump fixed deposits altogether. They work for short-term goals and emergency funds. But for wealth creation over decades, you need inflation-beating instruments:
- Equity mutual funds (historically 11–12% returns)
- Index funds (low cost, long-term compounding)
- Even real estate or gold, in some cases
The point is simple: your money should work harder than inflation. Otherwise, you’re running on a treadmill, sweating but going nowhere.
“Even if FD interest rates are lucrative, do not get tempted to lock a major chunk of your money in FDs. They are taxable and, in the long run, they lack the ability to generate inflation-hedged returns. So take a proper call as per the required asset allocation of your financial goals,” says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services.
Takeaway
Asking ChatGPT this one simple question changed how I look at money. My “shocking” discovery wasn’t that fixed deposits investments are bad; it’s that relying only on them for long-term growth is financial self-sabotage.
Disclaimer: This article is based on my personal experience using ChatGPT and is meant for learning and awareness, not as financial advice. Please do your own research or consult a qualified financial advisor before making any investment decisions.
