Fore thought

perfectatdat By perfectatdat, 6th Jun 2013 | Follow this author | RSS Feed
Posted in Wikinut>Money>Loans

"Pay me back all the money that I have spent on bringing you up", could be the meanest statement that can be ever made by parents. But, if at all they say so, by when do you think you can manage to return all that money. Well, here lies your answer.

Lifetime Value

Ever wondered how much have you spent since the time you were born. Wait! even before you were born your parents had started spending on you. How much do you think you are worth after say 23-25 years of investment? How much is your return on investment? This is a very valid question for most of those who are in to their first jobs & for others as well. So approximately, how many years will it take to reach break even? How much will the size of loan be, if our parents started charging interest on our upbringing costs. I did some calculations on mine & came out with some startling results. Approximately 38 lacs rupees (nearly 65,000 USD) were spent on me since the time I was born. The values have been adjusted to current rates considering 10% average annual inflation. Considering an average annual salary of say 4-5 lacs (10,000 USD) with savings ratio of 20% & interest rates accumulating at 10% annually, on my upbringing loan(say, banks come up with such plans in future) I shall be able to pay back the loan in a period of 29-30 years after I start working, assuming my salary increments by 12% annually (Industry wise average) . So, I shall be say, 53-55 years old when finally I shall be ridden of all life loans, provided I don't take additional ones like home, vehicle loans etc.. However, by then the average salary at current rates would become close to 2.4 crores rupees p.a.(400,000 USD) & the net life earnings at the end of my worklife (assuming 60 years) would be close to 13 crores rupees (2.2 m USD).

So, the Return on Investment stands at = 13 crores/38lacs x100 = 3421 % or nearly 35 times of the invested amount in 60 years.

The Annual ROI (Distributed over 60 years) = 3421/60= 57%

Two things can be inferred out of this analysis.
One, thank god our parents aren't banks & charge interest rates.
Two, human capital investment is one of the best long term investments which can be ever made.

Remember the customer lifetime value we used to calculate, here's some of ours.


Bank, Capital, Earning, Expense, Human, India, Inflation, Investment, Job, Loan, Margin, Money, Parent And Kids, Profit, Return, Roi, Rupees, Salary, Savings

Meet the author

author avatar perfectatdat
Of the myriad thoughts that occur, a worthy few are expressed by me. I have been educated in Business Management & I look for non-verbal avenues to express myself.

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author avatar Cristiana
4th Aug 2013 (#)

A parent who tell us to return back the money is not a good parent. To have education is our right .That is their responsibilities but as a child we must do our responsibilities too give what we want to give. As for me, i want my kids to finish their education so that I can have my own life too but if they give what they want to give to me, I will be happy to receive it.

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author avatar perfectatdat
8th Aug 2013 (#)

Ideally no parent would do that. Its just a hypothetical assumption so that we can value the resources & the effort that our parents spend on us.

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author avatar Mark Gordon Brown
4th Aug 2013 (#)

Good money tips for people in India and even other areas too.

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