The mathematics I have been taught throughout my life all comes down to this calculation and car is just a symbol of any over spending, at last take the philosophy out without jotting the blue line.
Also if you got a logically better deal feel free to comment.So the mathematics run down like this :
Most common commute: from home to office/college/any place
Number of days: 5 (out of 7 days)
Car travel: 5*4 = 20 = 20 days per month
Average cost of Uber/Ola (to and fro) = INR 300 (assuming INR 150 for one-time)
Monthly cost = INR 300*20 = INR 6,000
Yearly cost = INR 6,000*12 = INR 72,000
Now, the cost of the car (assume on-road price with taxes and everything) = INR 6,50,000
How many years do you need to drive by Uber/Ola to have it MORE EXPENSIVE than buying a car?
No. of years = 6,50,000/72,000 = approximately 9 years
But, let’s take it as 7 years (since the prices are going to increase every year due to inflation).
Now, what if you put the same INR 6,50,000 in a debt mutual fund that averages an 8% return per annum? How much will it be worth in 7 years?
First year = 0.08*6,50,000 = 52,000 + 6,50,000 = INR 7,02,000Second year = 0.08*7,02,000 = 56,160 + 7,02,000 = INR 7,58,160
Third year = 0.08*7,58,160 = 60,652 + 7,58,160 = INR 8,18,812
Fourth year = 0.08*8,18,812 = 65,505 + 8,18,812 = INR 8,84,317
Fifth year = 0.08*8,84,317 = 70,745 + 8,84,317 = INR 9,55,062
Sixth year = 0.08*9,55,062 = 76,404 + 9,55,062 = INR 10,31,466
Seventh year = 0.08*10,31,466 = 82,517 + 10,31,466 = INR 11,13,983
So, how much did our investment give us?
Initial amount = INR 6,50,000Final amount = INR 11,13,983
Profit = 4,63,983 or a WHOPPING 71.382% gain.
“Nope, I don’t need a car. I will travel by train/bus/auto/Uber/Ola.”