​

I was well aware of this scheme, because I get at least 2-3 messages every day from these 'well-wishers'. The message reads like this:

Now I must give credit where it's due. For a company whose objective is to target a simple salaried individual (with a lack of financial literacy) and ensure that he pays a meagre sum of Rs 3,000 monthly for the next 15-20 years, they are spot on with their marketing. Their sales strategy plays on the two most important psyche of a middleclass man, Fear and Greed.

First, by using the catchphrase like, 'Why depend on family?' they are activating his fear of loss of monetary freedom or independence. Then by assuring a decent pension plus a 60 Lakh corpus on retirement, they are feeding his greed.

[Read More: 8 Key Lessons On Financial Freedom From 'Rich Dad, Poor Dad]

These two powerful emotions can sway almost any individual, however financially literate and aware he/she might be.

Coming back to the morning walk, Mr Sharma excitedly exclaimed, 'This is an opportunity of a lifetime, imagine, paying Rs. 3000 per month for the next 31 years and getting a pay out of Rs 1.32 Crore! The money will grow 11 times! This simply cannot be missed'.

'I agree Sharma Ji, what do you think Mr. Khude, shall we invest in this scheme, after all its only Rs 3,000 per month?' Mr Agarwal enquired.

'I will ask my financial advisor' my father answered and turned to me.

'We know what Deepika will say, 'Papa, these schemes are bogus and are marketing traps for innocent investors like you, trust me, mutual funds are the best', said Mr Sharma mockingly.

I must admit, Mr Sharma correctly predicted my words and I couldn't help but laugh at his naivety.

But I had to show them the proof and out came by excel sheet (on my mobile phone) and the following calculation broke their hearts.

Let me show you the harsh truth behind a 'sure-shot-retire-rich-quickly' scheme.

Table 1: The hidden truth

Age	Years	Cash Inflow	Cash Outflow	Net flow
30	01/04/2019	-	36,000	-36,000
31	01/04/2020	-	36,000	-36,000
32	01/04/2021	-	36,000	-36,000
33	01/04/2022	-	36,000	-36,000
34	01/04/2023	-	36,000	-36,000
35	01/04/2024	-	36,000	-36,000
36	01/04/2025	-	36,000	-36,000
37	01/04/2026	-	36,000	-36,000
38	01/04/2027	-	36,000	-36,000
39	01/04/2028	-	36,000	-36,000
40	01/04/2029	-	36,000	-36,000
41	01/04/2030	-	36,000	-36,000
42	01/04/2031	-	36,000	-36,000
43	01/04/2032	-	36,000	-36,000
44	01/04/2033	-	36,000	-36,000
45	01/04/2034	-	36,000	-36,000
46	01/04/2035	-	36,000	-36,000
47	01/04/2036	-	36,000	-36,000
48	01/04/2037	-	36,000	-36,000
49	01/04/2038	-	36,000	-36,000
50	01/04/2039	-	36,000	-36,000
51	01/04/2040	-	36,000	-36,000
52	01/04/2041	-	36,000	-36,000
53	01/04/2042	-	36,000	-36,000
54	01/04/2043	-	36,000	-36,000
55	01/04/2044	-	36,000	-36,000
56	01/04/2045	-	36,000	-36,000
57	01/04/2046	-	36,000	-36,000
58	01/04/2047	-	36,000	-36,000
59	01/04/2048	-	36,000	-36,000
60	01/04/2049	-	36,000	-36,000
61	01/04/2050	3,60,000	-	3,60,000
62	01/04/2051	3,60,000	-	3,60,000
63	01/04/2052	3,60,000	-	3,60,000
64	01/04/2053	3,60,000	-	3,60,000
65	01/04/2054	3,60,000	-	3,60,000
66	01/04/2055	3,60,000	-	3,60,000
67	01/04/2056	3,60,000	-	3,60,000
68	01/04/2057	3,60,000	-	3,60,000
69	01/04/2058	3,60,000	-	3,60,000
70	01/04/2059	3,60,000	-	3,60,000
71	01/04/2060	3,60,000	-	3,60,000
72	01/04/2061	3,60,000	-	3,60,000
73	01/04/2062	3,60,000	-	3,60,000
74	01/04/2063	3,60,000	-	3,60,000
75	01/04/2064	3,60,000	-	3,60,000
76	01/04/2065	3,60,000	-	3,60,000
77	01/04/2066	3,60,000	-	3,60,000
78	01/04/2067	3,60,000	-	3,60,000
79	01/04/2068	3,60,000	-	3,60,000
80	01/04/2069	63,60,000	-	63,60,000
XIRR				8.27%

(For Illustration purpose only)

If an individual were to start investing Rs 3,000 per month from age 30 years till he is 60 years, as per the scheme he will start receiving a pension of Rs 30,000 per month till 80 years and at the end of 80 years, he will end up with an additional corpus of Rs 60 Lakhs. To a naive investor, this means a return of 11% every year, but in reality the return is 8.27%!

Needless to say, Mr Sharma and Mr Agarwal looked shocked and a bit betrayed. Their hopes for a return of 11% went down the drain.

'Only 8.27%?' enquired Mr Sharma, 'but I pay Rs 11 Lakh and get Rs 1.32 Crore!' are you saying that this is just 8.27% return?' he enquired.

'Yes', I replied.

'Wow, I'm glad we met, otherwise, I was going to subscribe to the scheme tomorrow morning. It was on my agenda', remarked Mr Sharma.

'Well, you should always be questioning each and every investment opportunity. Like if you would have looked closely at the message, you would have noticed that you can't call back on the number, the message itself says, that you cannot send message to special number! Did you not wonder why the special number? Also, if you open the link, it specifically states that only people within 30-45 years age group can invest. The linked website looks gimmicky at best. No details, no about us, no past, nothing. 'The website (if we can call it that) is superficial and a trap at best', I explained.

'So, we need to let go of our dream of creating wealth and a huge corpus?' enquired Mr Agarwal grimly.

[Read More: Step-By-Step Approach To Retirement Planning]

'No', I replied. 'You don't have to give up on your dreams of retiring rich, neither do you have to be a 100% invested in equities, if you aren't comfortable', I continued.

The returns that the scheme guaranteed can be achieved in reality without using equities also. Let me show you...

Table 2: Creating a corpus with 100% Debt

Age	Cash Inflow	Cash Outflow	Net flow	Corpus	Withdrawal	Balance Corpus
30	-	36,000	-36,000	37,701	-	37,701
31	-	36,000	-36,000	78,735	-	78,735
32	-	36,000	-36,000	1,23,396	-	1,23,396
33	-	36,000	-36,000	1,72,004	-	1,72,004
34	-	36,000	-36,000	2,24,909	-	2,24,909
35	-	36,000	-36,000	2,82,490	-	2,82,490
36	-	36,000	-36,000	3,45,161	-	3,45,161
37	-	36,000	-36,000	4,13,372	-	4,13,372
38	-	36,000	-36,000	4,87,611	-	4,87,611
39	-	36,000	-36,000	5,68,413	-	5,68,413
40	-	36,000	-36,000	6,56,357	-	6,56,357
41	-	36,000	-36,000	7,52,074	-	7,52,074
42	-	36,000	-36,000	8,56,252	-	8,56,252
43	-	36,000	-36,000	9,69,638	-	9,69,638
44	-	36,000	-36,000	10,93,047	-	10,93,047
45	-	36,000	-36,000	12,27,364	-	12,27,364
46	-	36,000	-36,000	13,73,553	-	13,73,553
47	-	36,000	-36,000	15,32,664	-	15,32,664
48	-	36,000	-36,000	17,05,839	-	17,05,839
49	-	36,000	-36,000	18,94,321	-	18,94,321
50	-	36,000	-36,000	20,99,463	-	20,99,463
51	-	36,000	-36,000	23,22,737	-	23,22,737
52	-	36,000	-36,000	25,65,748	-	25,65,748
53	-	36,000	-36,000	28,30,238	-	28,30,238
54	-	36,000	-36,000	31,18,106	-	31,18,106
55	-	36,000	-36,000	34,31,420	-	34,31,420
56	-	36,000	-36,000	37,72,427	-	37,72,427
57	-	36,000	-36,000	41,43,577	-	41,43,577
58	-	36,000	-36,000	45,47,533	-	45,47,533
59	-	36,000	-36,000	49,87,195	-	49,87,195
60	-	36,000	-36,000	54,65,719	-	54,65,719
61	3,60,000	-	3,60,000	59,30,305	3,60,000	55,70,305
62	3,60,000	-	3,60,000	60,43,781	3,60,000	56,83,781
63	3,60,000	-	3,60,000	61,66,902	3,60,000	58,06,902
64	3,60,000	-	3,60,000	63,00,489	3,60,000	59,40,489
65	3,60,000	-	3,60,000	64,45,430	3,60,000	60,85,430
66	3,60,000	-	3,60,000	66,02,692	3,60,000	62,42,692
67	3,60,000	-	3,60,000	67,73,320	3,60,000	64,13,320
68	3,60,000	-	3,60,000	69,58,453	3,60,000	65,98,453
69	3,60,000	-	3,60,000	71,59,321	3,60,000	67,99,321
70	3,60,000	-	3,60,000	73,77,264	3,60,000	70,17,264
71	3,60,000	-	3,60,000	76,13,731	3,60,000	72,53,731
72	3,60,000	-	3,60,000	78,70,298	3,60,000	75,10,298
73	3,60,000	-	3,60,000	81,48,673	3,60,000	77,88,673
74	3,60,000	-	3,60,000	84,50,711	3,60,000	80,90,711
75	3,60,000	-	3,60,000	87,78,421	3,60,000	84,18,421
76	3,60,000	-	3,60,000	91,33,987	3,60,000	87,73,987
77	3,60,000	-	3,60,000	95,19,776	3,60,000	91,59,776
78	3,60,000	-	3,60,000	99,38,357	3,60,000	95,78,357
79	3,60,000	-	3,60,000	103,92,517	3,60,000	100,32,517
80	63,60,000	-	63,60,000	108,85,281	63,60,000	45,25,281

(For Illustration purpose only)

'As you can see from the above table, if you invest in a PPF/EPF/VPF fetching you around 8.5% per annum, you can earn a corpus of Rs 1.08 crore on the same investment, without taking any market risk! This money will be kept with your government backed company (my father and his friends work in a government undertaking), so zero chance of fraud' I explained.

'What happens if we split this between equity and PPF?', my father asked with a twinkle of greed in his eyes.

'Well, then you become super-rich, here's how...

Table 3: Creating a corpus with 50% - Equity & 50% - Debt allocation

Age	Investment in MF	Investment in PPF	Total Corpus	Withdrawal	Balance Corpus	Corpus - Equity	Corpus - PPF
30	18,000	18,000	38,013	-	38,013	19,214	18,799
31	18,000	18,000	80,024	-	80,024	40,865	39,159
32	18,000	18,000	1,26,470	-	1,26,470	65,261	61,209
33	18,000	18,000	1,77,841	-	1,77,841	92,752	85,088
34	18,000	18,000	2,34,680	-	2,34,680	1,23,730	1,10,950
35	18,000	18,000	2,97,594	-	2,97,594	1,58,636	1,38,958
36	18,000	18,000	3,67,260	-	3,67,260	1,97,968	1,69,291
37	18,000	18,000	4,44,431	-	4,44,431	2,42,290	2,02,142
38	18,000	18,000	5,29,951	-	5,29,951	2,92,232	2,37,719
39	18,000	18,000	6,24,757	-	6,24,757	3,48,509	2,76,249
40	18,000	18,000	7,29,899	-	7,29,899	4,11,922	3,17,976
41	18,000	18,000	8,46,546	-	8,46,546	4,83,378	3,63,168
42	18,000	18,000	9,76,007	-	9,76,007	5,63,897	4,12,110
43	18,000	18,000	11,19,741	-	11,19,741	6,54,627	4,65,114
44	18,000	18,000	12,79,382	-	12,79,382	7,56,864	5,22,518
45	18,000	18,000	14,56,753	-	14,56,753	8,72,067	5,84,686
46	18,000	18,000	16,53,895	-	16,53,895	10,01,881	6,52,014
47	18,000	18,000	18,73,089	-	18,73,089	11,48,159	7,24,930
48	18,000	18,000	21,16,886	-	21,16,886	13,12,988	8,03,898
49	18,000	18,000	23,88,143	-	23,88,143	14,98,722	8,89,421
50	18,000	18,000	26,90,053	-	26,90,053	17,08,011	9,82,042
51	18,000	18,000	30,26,194	-	30,26,194	19,43,844	10,82,350
52	18,000	18,000	34,00,570	-	34,00,570	22,09,586	11,90,984
53	18,000	18,000	38,17,665	-	38,17,665	25,09,031	13,08,634
54	18,000	18,000	42,82,502	-	42,82,502	28,46,453	14,36,050
55	18,000	18,000	48,00,709	-	48,00,709	32,26,668	15,74,041
56	18,000	18,000	53,78,589	-	53,78,589	36,55,104	17,23,485
57	18,000	18,000	60,23,209	-	60,23,209	41,37,877	18,85,332
58	18,000	18,000	67,42,491	-	67,42,491	46,81,877	20,60,613
59	18,000	18,000	75,45,313	-	75,45,313	52,94,871	22,50,443
60	18,000	18,000	84,41,635	-	84,41,635	59,85,607	24,56,028
61	-	-		3,60,000	84,41,635	65,02,280	24,58,110
62	-	-		3,60,000	109,20,366	70,80,953	24,60,359
63	-	-		3,60,000	117,36,194	77,29,068	24,62,788
64	-	-		3,60,000	126,49,807	84,54,956	24,65,411
65	-	-		3,60,000	136,72,932	92,67,950	24,68,243
66	-	-		3,60,000	148,18,699	101,78,504	24,71,303
67	-	-		3,60,000	161,01,816	111,98,325	24,74,607
68	-	-		3,60,000	175,38,753	123,40,524	24,78,176
69	-	-		3,60,000	191,47,956	136,19,787	24,82,030
70	-	-		3,60,000	209,50,083	150,52,561	24,86,192
71	-	-		3,60,000	229,68,271	166,57,268	24,90,687
72	-	-		3,60,000	252,28,432	184,54,541	24,95,542
73	-	-		3,60,000	277,59,586	204,67,486	25,00,786
74	-	-		3,60,000	305,94,234	227,21,984	25,06,449
75	-	-		3,60,000	337,68,776	252,47,022	25,12,565
76	-	-		3,60,000	373,23,976	280,75,064	25,19,170
77	-	-		3,60,000	413,05,493	312,42,472	25,26,303
78	-	-		3,60,000	109,20,366	347,89,969	25,34,008
79	-	-		3,60,000	117,36,194	387,63,165	25,42,328
80	-	-		63,60,000	126,49,807	362,91,545	25,51,314
Total Additional Corpus at 80 years					388,42,859

(For Illustration purpose only)

'By following a conservative approach of 50% Equity and 50% debt, you can take home a pension of Rs 30,000 per month plus Rs 60 lakh as additional corpus plus a whopping Rs 3.88 Crore!' I explained to my father and his friends.

'So, it is possible for anyone to grow and retire rich?' Mr Sharma asked this time with no sarcasm and sans the usual mocking.

'Yes, all you need is a strategy and an honest financial planner. When it comes to creating a corpus of crores, honest advisors should be at the helm of the plan and strategy', I remarked.

As we concluded the discussion, we all simultaneously received a message which read, 'Why Depend on your family at the age of 60....', and we all broke out laughing loudly. As they say, 'Fool me once, shame on you, Fool me twice, shame on me'.

If you too are thinking about falling into such marketing mails and traps and wish to have an honest wealth manager that takes into account your ideology with wealth and shares your vision, look no further and connect with PersonalFN's Certified Financial Guardian on 022-61361200 or write to info@personalfn.com. You may also fill in this form, and soon our experienced financial planners will reach out to you.

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Till then, Happy Investing!

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