The real value of money is calculated as: amount ÷ (1+annual inflation)^years. For example, 100,000 ₪ kept under the mattress for 10 years at 3% annual inflation is worth only about 74,409 ₪ in today's purchasing power — an erosion of roughly 26%.
How is it calculated?
The calculator takes three inputs: an amount, a number of years, and an assumed annual inflation rate in percent. It divides the amount by (1+inflation)^years to get the real value — what the money will be worth in today's purchasing power. It also shows the value lost in shekels and the erosion as a percentage. This is why cash sitting in a checking account or at home quietly loses value: the number on the bill stays the same, but what it can buy does not.
In the example: 100,000 ₪ for 10 years at 3% annual inflation → 100,000 ÷ 1.03^10 ≈ 74,409 ₪, a loss of about 25,591 ₪ (~26%). Important: the calculator does not pull the CPI in real time — you set the inflation assumption. A common reference point is the Bank of Israel's price stability target of 1%-3% per year. The same logic applies to salaries: a raise below the pace of inflation is effectively a real pay cut.
Frequently asked questions
What will 100,000 ₪ be worth in 10 years?
It depends on inflation. At 3% per year, 100,000 ₪ earning no interest will be worth about 74,409 ₪ in today's purchasing power — a loss of about 26%. At 2% inflation the result is about 82,035 ₪. The formula: amount ÷ (1+inflation)^years.
Why does cash lose value over time?
Because prices rise while the amount stays fixed. With 3% annual inflation, a shopping basket that costs 100 ₪ today will cost about 103 ₪ in a year — so the same 100 ₪ buys less. Over 10 years at 3%, money sitting with no return loses about 26% of its purchasing power.
What is the Bank of Israel's inflation target?
The Bank of Israel's price stability target is annual inflation of 1% to 3%. It is a common reference point for long-term inflation assumptions, but actual inflation varies from year to year — in the calculator you enter your own assumption.
This calculation is a general estimate for illustration only. It does not constitute tax, pension, or investment advice, nor a substitute for personal advice from a licensed professional, and should not be relied on for decisions.
