FREEDOM / WISE
Worked Example

Disciplined-investor vs Panic-seller: which builds more wealth over 20 years?

Scenario

Rohit, age 30, software professional in Pune, ₹12 lakh annual income, ₹50K monthly expenses, exploring this question for his financial plan

Inputs

Years
20
Amount INR
5,00,000
Panic-seller tax %
12.5
Panic-seller return %
8
Disciplined-investor tax %
12.5
Disciplined-investor return %
12

Calculation

  1. 1.

    Disciplined-investor effective post-tax rate

    12% × (1 − 12.5% tax) → 10.5%

  2. 2.

    Panic-seller effective post-tax rate

    8% × (1 − 12.5% tax) → 7%

  3. 3.

    Disciplined-investor corpus at year 20

    ₹5L × (1+0.105)^20 → ₹36.83 L

  4. 4.

    Panic-seller corpus at year 20

    ₹5L × (1+0.070)^20 → ₹19.35 L

  5. 5.

    Wealth difference

    |3683117 − 1934842| → ₹17.48 L

Conclusion

Disciplined-investor wins by approximately ₹17.5 lakh over 20 years — driven by return rate.

Tradeoffs

Post-tax real returns matter more than nominal headline rates. Panic-seller loses more to taxation. Risk profiles differ too — guaranteed vs market-linked. Adjust for risk tolerance.

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