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In an era where financial literacy is increasingly becoming a necessity, a recent online debate has sparked interest and controversy in equal measure. The debate was initiated by Sourav Dutta, an investor and trader, who took to social media platform X (formerly Twitter) to share his financial advice.
Dutta suggested that people should consider investing in Systematic Investment Plans (SIPs) rather than purchasing a car. His post, shared on October 15, 2024, quickly gained traction, accumulating over a million views and sparking a widespread discussion.
Dutta’s argument was based on a hypothetical scenario involving a character named Ravi. According to Dutta, Ravi was burdened with a monthly EMI of ₹20,000 for five years after purchasing a car.
Dutta proposed that Ravi would have been in a better financial position had he invested the same amount into mutual fund SIPs. He explained that an SIP of ₹20,000 per month in Nifty ETF would grow to a bank balance of ₹17 lakh at the end of five years. In contrast, a car, which would have cost ₹10 lakh, would depreciate to a value of ₹4 lakh by 2030.
Life Choices and Financial Planning
Rs 20000/mo is the 5 year EMI of a 10L car for Ravi. Instead, Ravi puts ₹20000/mo for 5 years in Nifty ETF SIP. First decision gives him a car worth ₹4L in 2030. Second decision gives him ₹17L of bank balance in 2030. Life is about the choices we make, Dutta wrote.
However, Dutta’s advice was met with mixed reactions. While some agreed with his financial perspective, others argued that life is not solely about investment and financial returns. They emphasized the value of enjoying life and the conveniences a car provides, such as family time and emergency transportation.
One user commented, Life is also short for some enjoyment. Look beyond SIP and market returns. And enjoy life for yourself and for the family you got. This sentiment was echoed by others who pointed out that not everyone can forgo the immediate benefits of car ownership for future financial gains.
Another user argued, “Not everything in life is about saving money. Also, if everyone thinks like Ravi, then the economy won’t grow, and the stock market won’t perform, and Ravi will not even make FD returns!”
This comment highlights the broader economic implications of Dutta’s advice, suggesting that if everyone were to follow this advice, it could potentially stagnate economic growth.
Practicality Experiences
The debate took an interesting turn when users began to question the practicality of Dutta’s advice. One user quipped, The problem here is that, when Ravi wants to go somewhere with his family at his convenient time without bargaining with the Ola or Uber fellow, he can’t print the ETF papers, sit over it and ask it to fly.
It will not take him anywhere. This comment underscores the limitations of relying solely on public transportation or ride-hailing services, and the convenience and independence that owning a car provides.
In response to the criticism, Dutta argued that the expenses on petrol for the car would have been similar to cab fares over five years, and the difference in the end would still be a significant amount in favor of investing in SIPs (Rs 13 lakh more in savings).
This debate is reminiscent of similar discussions in the past where financial advisors have advocated for investment over consumption.
