How Free Advice can cost you Rs 1 Crore

by Vpalkar CA V Paalkar & Co.

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