Would you believe if someone told you that if you smoked a pack of 10 cigarettes a day, you are not only doing your health a disservice but also squandering an amount of wealth that could have bought you a nice apartment in any metropolis of India? Sounds incredible? But it’s true. Let’s dive into the arithmetic right away.
To begin a very simple calculation, let’s make the following assumption.
Amount spent every month on cigarettes
A person starts smoking at the age of 18 and he continues his habit till 58, the age of retirement from service. He smokes just 10 cigarettes a day and the cost of a mass-market popular brand of cigarette is now about Rs 100.
Multiplying Rs 100 by 30 will give you Rs 3,000, the cost of smoking for a month. The person spends this amount every month for 40 years.
The power of mutual fund SIP
Now let’s assume he stops smoking and invests the same amount – Rs 3,000 – in a mutual fund SIP (Systematic Investment Plan). The mutual fund schemes where he invests bring him an average 12% return, which is easily possible in such a long term.
Let’s think the price of the pack of cigarettes does not rise for 40 years and therefore, he does not increase the SIP amount at all.
Amount without price rise
The SIP calculator will tell you that this person will make – hold your breath – a neat corpus of Rs 3,56 crore (Rs 3,56,47,261) when he turns 58 by simply investing the money he would have spent on cigarettes.
Now, let’s turn realistic. Prices of cigarettes inevitably go up every year since it is one of the industries the government wants to raise revenue from in order to discourage people from smoking. Let’s assume a very small annual price rise of just 2%.
Factor in a small price rise
Let’s take a step-up SIP calculator and factor in the 2% rise in SIP amount every year as well.
If the person continues investing in SIPs in this manner the amount that will be generated when he turns 58 is an astounding Rs 4.18 crore (Rs 4,18,86,648).
Now, in reality, most smokers go far beyond the age of 58 to keep on smoking merrily.
Smoking kills wealth
The real point embedded in the above scenario is that you can actually amass wealth by just quitting smoking. It involves no extra effort to save money. Saving further only raises the amount your can generate. Therefore, it is no exaggeration to say that smoking actually kills your chances of becoming rich.
So, throw away your pack and consult a qualified investment advisor to find out which mutual funds you can invest in for the very long term.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
Smoking not only damages your health but also robs you of jaw-dropping wealth over the years. You could be easily smoking away the price of a decent apartment in India’s metro cities in less than a lifetime. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
