How Free Advice can cost you Rs 1 Crore
What's the cost of having free lunch parties or free beer? Nothing, but a pot belly!! Jokes apart, let's do some maths to find out the cost of free advice. The following worksheet calculates the cost as Rs 1 crore, 5 lakhs, 47 thousand and more!(Rs 1,05,47,560/-)
Here are the assumptions. Imagine you invest Rs 15000 every month and that adds up to Rs 1,80,000/-. We have assumed the returns for 8% and 10%. Generally the commissions work out to just 2% of your investments and the difference between the returns @ 8% and 10% would be the cost of free financial advice. The difference of Rs 1,05,47,560 happens at the end of 30 years!
Here's the table: (We will also talk about the other costs like cost of buying a product you don't need, cost due to lack of holistic financial planning, cost of buying term insurance from an agent compared to buying it online, etc. Stay tuned for the updates on the cost of free advice)
Investment | Growth @8% | Investment | Growth @10% | Difference |
180000 | 194400 | 180000 | 198000 | 3600 |
374400 | 404352 | 378000 | 415800 | 11448 |
584352 | 631100.16 | 595800 | 655380 | 24280 |
811100.16 | 875988.1728 | 835380 | 918918 | 42930 |
1055988.173 | 1140467.227 | 1098918 | 1208809.8 | 68343 |
1320467.227 | 1426104.605 | 1388809.8 | 1527690.78 | 101586 |
1606104.605 | 1734592.973 | 1707690.78 | 1878459.858 | 143867 |
1914592.973 | 2067760.411 | 2058459.858 | 2264305.844 | 196545 |
2247760.411 | 2427581.244 | 2444305.844 | 2688736.428 | 261155 |
2607581.244 | 2816187.743 | 2868736.428 | 3155610.071 | 339422 |
2996187.743 | 3235882.763 | 3335610.071 | 3669171.078 | 433288 |
3415882.763 | 3689153.384 | 3849171.078 | 4234088.186 | 544934 |
3869153.384 | 4178685.655 | 4414088.186 | 4855497.004 | 676811 |
4358685.655 | 4707380.507 | 5035497.004 | 5539046.705 | 831666 |
4887380.507 | 5278370.948 | 5719046.705 | 6290951.375 | 1012580 |
5458370.948 | 5895040.623 | 6470951.375 | 7118046.513 | 1223006 |
6075040.623 | 6561043.873 | 7298046.513 | 8027851.164 | 1466807 |
6741043.873 | 7280327.383 | 8207851.164 | 9028636.281 | 1748309 |
7460327.383 | 8057153.574 | 9208636.281 | 10129499.91 | 2072346 |
8237153.574 | 8896125.86 | 10309499.91 | 11340449.9 | 2444324 |
9076125.86 | 9802215.928 | 11520449.9 | 12672494.89 | 2870279 |
9982215.928 | 10780793.2 | 12852494.89 | 14137744.38 | 3356951 |
10960793.2 | 11837656.66 | 14317744.38 | 15749518.82 | 3911862 |
12017656.66 | 12979069.19 | 15929518.82 | 17522470.7 | 4543402 |
13159069.19 | 14211794.73 | 17702470.7 | 19472717.77 | 5260923 |
14391794.73 | 15543138.3 | 19652717.77 | 21617989.54 | 6074851 |
15723138.3 | 16980989.37 | 21797989.54 | 23977788.5 | 6996799 |
17160989.37 | 18533868.52 | 24157788.5 | 26573567.35 | 8039698 |
18713868.52 | 20210978 | 26753567.35 | 29428924.08 | 9217946 |
20390978 | 22022256.24 | 29608924.08 | 32569816.49 | 10547560 |
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