The Ant and Grasshopper : 21st Century

Almost all of us have either read or listen the old story of Ant and Grasshopper. Many of us are now a days aware of jokes created around this simple yet beautiful story. In this blog post, I’m trying to take the old background to convey the point, I want you to understand.

Once upon a time, there were 2 friends – Miss Ant and Mr. Grasshopper. Both belonged to same neighborhood. Both went to same schools and colleges and ended up earning same university degrees. After finishing their college education, both landed into similar job profile but in different companies but in same city.

Mr. Grasshopper was also aware of the FAMILY HISTORY of his forefather, generations ago and the misadventures of that forefather, so from his first paycheck, he started investing for a Goal.

Miss Ant on the other hand was also aware of her family history and to continue the family reputation, legacy, she was equally hard working and laborious like her older generations. She also started saving from her first paycheck, for a financial Goal.

Both were having a common Goal – To create a Corpus of Rs. 10000000 (One Crore) in next 15Y. The readers are thinking till this point, each and everything is common the life of these 2 characters of our story. Where is the difference? Please hold on with me. Here is the difference.

For their future Goal – the expected return figure, Miss Ant opted for was 10% (Post Tax).

Mr. Grasshopper was true to his family legacy and thus opted for 15% (Post Tax) figure.

With the help of so many calculators, excel sheets and more, both came to a conclusion, if no increment is made in these 15 years, the fixed monthly amount to be invested in, to reach the corpus of 1 Crore is as below.

Miss Ant            Rs. 25081

Mr. Grasshopper Rs. 16424.

Real twist in the story comes here on wards. Although these friends were investing their money on monthly basis, regularly but the performance of Market was not in their control and hence the corpus created was as below.

Case-1

Actual performance of market was just 8%. Yes, you read it right – 8% only. So the Corpus value for both friends after 15Y was as below.

Miss Ant            Rs. 8472852

Mr. Grasshopper Rs. 5548348

Case-2

Actual performance of market was 12%. So the Corpus value for both friends after 15Y was as below.

Miss Ant            Rs. 11839590 or 1.18 Crore

Mr. Grasshopper Rs. 7753018 or 

Case-3

Actual performance of market was 18%. So the Corpus value for both friends after 15Y was as below.

Miss Ant            Rs. 19845327 or 2 Crore (almost)

Mr. Grasshopper Rs. 12995481 or 1.3 Crore (almost)

Story ends here but readers of this blog, needs to introspect on their financial life. Are you having Traits of Mr. Grasshopper or you are more similar to Miss Ant?

The lesson – Instead of chasing RETURN from Market, start putting more money to work.

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