Worked Example
Ponzi-promise-240pct vs Real-equity-12pct: which builds more wealth over 5 years?
Scenario
Investor evaluating a 'guaranteed 20%/month' scheme vs disciplined equity SIP
Inputs
- Years
- 5
- Amount INR
- 1,00,000
- Real-equity-12pct tax %
- 12.5
- Ponzi-promise-240pct tax %
- 0
- Real-equity-12pct return %
- 12
- Ponzi-promise-240pct return %
- 240
Calculation
- 1.
Ponzi-promise-240pct effective post-tax rate
240% × (1 − 0% tax) → 240%
- 2.
Real-equity-12pct effective post-tax rate
12% × (1 − 12.5% tax) → 10.5%
- 3.
Ponzi-promise-240pct corpus at year 5
₹1L × (1+2.400)^5 → ₹4.54 Cr
- 4.
Real-equity-12pct corpus at year 5
₹1L × (1+0.105)^5 → ₹1.65 L
- 5.
Wealth difference
|45435424 − 164745| → ₹4.53 Cr
Conclusion
Ponzi-promise-240pct wins by approximately ₹452.7 lakh over 5 years — driven by return rate.
Tradeoffs
Post-tax real returns matter more than nominal headline rates. Real-equity-12pct loses more to taxation. Risk profiles differ too — guaranteed vs market-linked. Adjust for risk tolerance.