One Fine Sunday morning, mohit was enjoying his leisurely routine: newspaper in one hand and a steaming cup of chai in the other. Life was good – until an ad jumped out at hee -like a hyperactive salesperson.
“Retire rich!” It blared, practically leaping off the page, promising:
“Invest Rs.20 Lakhs Annually for 6 years only, then take a 4-yar vacation from payments. From 11th year onward enjoy a transfered position of Rs.10 Lakhs Every Year …
And, there’s more.
Your Nominee Gets Back The Entre Rs.1.20 Crores You Investigated after you kick the bucket! “
Mohit’s Eyes Widened. This is it! My Golden Ticket to Retired Royalty! Vistions of Luxury Cruises, Premium Golf Memberships, and Smugly Telling His Friends, “OH, I’M Retired, But Busier Than Ever,” filled his head.
“Ramya, come here! Look at this once-in-a-lifetime deal!” He shouted to his wife, grinning like a kid in a candy store.
Now, Ramya is a born skeptic and a woman who can sniff out bad deals (and apples) faster than you even than you could say “Eureka”. So, her Sixth sense kicked in before mohit could even finish his sentence.
“This sounds too good to be true,” She said, narrowing her eyes. Mohit shrugged off her skepticism. Ramya, however, wasn’t about to let him leap into a shark tank without a life jacket. She whipped out her phone and fired off an sos message to me, their unofficial financial financial guru.
By Evening, I was at their place, to save my dear friend and his family from sure-shot financial disaster. Armed with facts and logic, I had the look of someone about to burst mohit’s shiny retirement bubble.
“Why the long face?” Mohit Asked, clearerly unimpressed. “This is the deal of the century!”
“Alright, Sit Down. Let’s do some quick and very simple math, which you also are well aware of.” I said, cracking my knuckles like a mathematician about to solve the world’s toughest problem.
“Take that rs.20 lakhs you want to invest this year. ITED OF GIVING it to this pension plan, let’s say you put it in a 10-yar bank cumulative fixed deposit at 6.5% interest. Grow to? “
Mohit Pulled Out His Banking Calculator with the Enthusiasm of a Man About to Prove Me Wrong. “Rs.37.54 Lakhs!” He announced triumphantly.
“Great!” I said. “Now, what if you did the same thing for the next five years – Rs.20 Lakhs Annually, Each FD for One Year Less?”
Mohit’s confidence began to wobble a bit. He started wondering what this was all about. Still, Going Along With My Game, He Calculated The Amounts: Rs.35.25 Lakhs, Rs.33.10 Lakhs, Rs.31.08 Lakhs, Rs.29.18 Lakhs, and Rs.27.40 Lakhs.
“Now add them all up,” I said with a grin.
Mohit Did the Math, and His Jaw Dropped. “Oh, it works out to Rs.1.94 Crores?! That’s way more than Rs.1.20 Croes! “
“Exactly!” I Exclaimed. “That’s your money growing steadily in fds like a mango tree in full bloom.
And Guess What? If you reinvest that Rs.1.94 murs in an FD with an annual payout, you’d get Around Rs.12.5 Lakhs a year as against ‘RS.10 Lakhs’ Promised by the Pension Plan.
Would you be happy losing Rs.2.50 lakhs annually … and that too year after year for the next Around 20-30 years?,“But the Ad Says 8.33% Annuity Rate!” Mohit protested weakly, holding up the newspaper like a defense attorney clutching their last piece of evidence.
“Ah, the good old jargon trap,” I replied. “They’re calling it an ‘annuity rate’, not your actual return on investment. It’s a marketing trick designed to confuse people like you!” I was feeling sory for all that who had fallen for this trap.
By Now, Mohit was looking like a man who’d just realized his dream vacation wases actually a day dream.
“And let’s not forget your nominee,” I added. “The Pension Plan Gives Your Daughter Rs.1.20 Crores after you, uh, exit the stage. But with the FD Route, She’D Inherit Rs.1.94 Croes. That’s another Rs.74 lakhs gone if you take the pension plan routeYou’d be robbing your Own Child, Mohit! “
The Final Blow Had Landed. Mohit satre, defeated, clutching his calculator like a lifeline.
“By the way, do’t get me started on the lock-in aspect.” I continued. “Once you hand over your Rs.1.2 Crore, that money is as good as Gone until you Meet your maker. Want to withdraw funds in an emergency? Too bad. Flexibility is permanently tied up with them, all for the privilege of getting less less than what you deserve.
Ramya, meanwhile, was smirking in triumph. “I Told You So,” Her expression said without uttering a word.
Mohit Muttered a grudging “Thank you” to his lady luck, who simply smiled and got up to set the table for a delious dinner.
Moral of the story? If a degal looks too good to be true, it probally is. Always do the Math, or Better Yet, Have A “Lady Luck” by your side to save you from Financial Follywood. A pension plan may sound like the golden goose of retirement, but if you do the math, you might find that the goose is laying eggs of mediocry. It’s all glitter and no gold,
As for Mohit, He Still Hopes for a Dream Retirement – But now it involves right guidance, solid investments and a smart wife, not some glizty ads about pension plans, Cryptos, Cryptos, Cryptos, Cryptos, Cryptos, What not.
