Why You Need To Break Free From The iPhone Cult: Financially Speaking
Think about this the next time you line up for the launch of the next iPhone. Perhaps, it's time to jump off the wagon altogether - and join the less exciting but cannier lot of those who opt for less expensive phones
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Some blame it on the magic of cult branding. Some hypothesize that Apple has 'neurologically hooked' it's customers. Some say that they're in love with the product itself. Whichever school of thought you subscribe to; it's a known fact that once you're an iPhone user, it's difficult to trace your steps back and hold an Android or Windows phone ever again.
If your coffers are overflowing with dough and an expense of Rs. 70,000 is nothing more than a painless swipe of an AmEx for you, skip this story. If, however, you belong to the vast majority of us who often end up with 'too much month left at the end of our money', read on; this may just prove to be an eye-opener.
I, for one, belong to the old school of thought which says that as long as your phone provides you with a basic set of features and fulfils its core purpose well, it's good enough. So when the launch of the iPhone 7 was announced at a monumental cost of Rs. 70,000 - I balked. While I agree that it's a fine piece of machinery, I would take a long hard look at the long term cost of being an 'august iPhone user' before jumping to purchase it.
While iPhone enthusiasts are well represented across age groups, it is the ones who are in the early to mid-stages of their careers who are likely to be impacted the most by the iPhone habit; financially speaking. There are many in this particular life stage that I know of who finance their iPhones each year and pay off EMI's subsequently. The actual cost of ownership of an iPhone (interest included) for these hapless individuals jumps 10-20 per cent instantly, depending on the tenor and type of the loan taken.
Ironically, it is also these very individuals who typically have other pressing financial burdens to consider - such as a home loan, car loans or planning for critical goals such as an education for their kids or their retirement plans.
For maths' sake, let us assume that you've avoided the interest hit and purchased the machine cash-down and not financed it. Consider two facts here: first, you could purchase a fairly good Android phone (or an older iPhone model!) at Rs. 15,000 instead. Second, the price of any new iPhone model usually drops by 40-60 per cent within 12-18 months of launch. Essentially, you're paying this 'premium' of Rs. 55,000 for just about a year and a half's usage.
Assuming that the price of your unostentatious Android device and the grander iPhone both inflate at 10 per cent per annum, the 'gap' cost of owning a spanking new iPhone is likely to widen year on year; from Rs. 55,000 today to Rs. 88,000 five years hence, to Rs. 1.42 Lacs within 10 years. (This, of course, is wildly speculative when you consider that there could be one of more disruptions in the next decade that change the face of mobile telephony altogether - but let's stick with this straightforward comparison for now)
How would you fare if you invested this 'gap' money in a high return, recurring savings instrument each month (for instance, a monthly SIP)? What's your best guess?
Under a reasonable set of assumptions, you'd likely be richer by Rs. 17-20 Lacs in 2026. This money could be used to provide a better education for your child, to put a down payment towards a new flat, or simply be stacked away for your retirement for another 15 years; which could, by the way, add over Rs. 1 Crore to your retirement kitty at a reasonable assumption of a 12 per cent CAGR.
Think about this the next time you line up for the launch of the next iPhone. Perhaps, it's time to jump off the wagon altogether - and join the less exciting but cannier lot of those who opt for less expensive phones.