The One Financial Mistake That I Made Early In My Career and Why You Shouldn’t Repeat It

by Vinaya HS on April 2, 2012

in Finance

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For the first six-years of my professional career, I think I paid credit-card bills in the five-figures each year! I bought huge quantities of stuff that I simply threw away later. If instead, over these early six-years, I had saved Rs 70,000 each year in the Public Provident Fund (PPF) account that my mother had opened in my name –

  • I would have been richer today by close to Rs 700,000 (even if I had just deposited the minimum Rs 500 per year post the six-years)! Let’s translate that number into something real. 700,000 @ 9% rate of return = 63,000 per year or more than 5,000 per month in passive/interest income alone. My early retirement graph would have looked very very different.

Here’s how the situation would have looked today but actually looks today –


I’ve already lost the magical power of compounding and no matter how much money I put-in today I can never catch up with the “could have been here” line. Compounding works best when you save the maximum you can as early as you can.

And here’s how the situation would have looked vs. will actually look upon maturity of the account –


A 2x difference! Seriously! Nothing that I bought on those credit-cards was worth this loss.

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{ 14 comments… read them below or add one }

Sam April 2, 2012 at 6:55 AM

I agree with most of your posts, but for your anti-credit-card stance :-)

Unless the convenience of credit cards vs. cash was making you spend the money or if you were borrowing on your credit cards to fund the purchases, I don’t think credit cards are to blame here: you could as well have missed the 2x difference by spending for the same items in cash.

Of course, I might be mis-reading your post, if credit cards are only a side-act in your message!

Vinaya H S April 2, 2012 at 10:09 AM

@Sam –

He he he…I do use a credit card. :-) But only when I have planned for a purchase and already have the cash sitting in my account to back that purchase. Earlier, it was more like “no planning AND no cash” and hence total misery.

Rakesh April 2, 2012 at 3:43 PM


Good one, thanks for sharing your personal experience. Very few people realize the power of compounding, it works like magic if we start early in life. I started investing late and have a lot of catching to do.

Vinaya H S April 2, 2012 at 3:57 PM

@Rakesh –

Yeah. That’s why I really liked the introductory chapter on compounding from my recent book review. It’s a must read for anyone just starting off with his/her career.

Girish April 2, 2012 at 7:15 PM

Hi Vinaya,
How much are u investing in PPF currently each year…
Remember seeing your blog related to limit raised to 1L…
I also have a PPF for 10+ years…
Initially I use to invest 30K+ each year for few years to get the 1 Lakh investment benefit…
Once the PF component increased, reduced the investment to 6K some years and 15 K some years…
Now have started monthly conributions from last year…so targetting for 1L per year from this year….


Nikhil Shah April 3, 2012 at 12:31 AM

Hi Vinaya,

Good , sharing your personal experience. Coming to main point. I do not like PPF Scheme – It is Totally Debt Or Fixed Instrument Product. Here you can not beat Inflation….

Instead PPF , I am Investing Rs.1,00,000/- Templeton India Pension Plan – Growth , Option , Since 1998……Currently CAGR is 13.80% .It’s Hybrid Or Balance Product..

So Result (1). I beat Inflation (2). Creating Wealth (3). Selecting A Good Balance Product for my retirement(4). Lastly Sec.80C Of IT Act Benefit..


Nikhil Shah

raghu April 3, 2012 at 10:24 AM

hi Vinaya,
I am very curious to read that Book.Really Compunding Power is a magic.


Vinaya H S April 3, 2012 at 11:11 AM

@Girish –

From the past couple of years, I am contributing the maximum permissible amount.

Vinaya H S April 3, 2012 at 11:14 AM

@Nikhil –

Cool! Thanks for sharing your personal experience with specific numbers and dates. It’s a good benchmark to have.

Vinaya H S April 3, 2012 at 11:15 AM

@raghu –

I received your contact details. Will courier the book to you in a day. :-) Thanks for your patience.

Shinu April 3, 2012 at 12:17 PM

Dear Vinaya

I too suffered this syndrome early in my career and when found the mistake corrected it and made the card limit to the basic minimum. Now every once in a while i enjoy the sadistic experience of saying NO THANKS to the “advisor” from the bank who call me to inform me that she can increase the credit limit to 2-3 times easily for me. :)

Nice day.

Vinaya H S April 3, 2012 at 12:29 PM

@Shinu –

Really feels good and liberating to say that doesn’t it? He he he…I’m imagining the sour face of the “advisor” on the other side.

I’ve been harassed by HSBC on this front. Trying to peddle me an upgrade to their useless Gold Card. Seems the present credit limit wouldn’t change but I need to pay a one-time upgrade fee of Rs 99. Guess what my response was???

Digamber April 11, 2012 at 1:54 PM

Hi Vinya,

thanks for wrtining on PPF investment, i think i also missed the chance like you to get good returns. anyway, we can stay invested with PPF account.

by any chance fo you know how to transfer the amount from HDFC using NEFT?

please let me know.


Vinaya HS April 11, 2012 at 8:41 PM


Unfortunately, I haven’t tried that myself. :-(

But here’s a very useful link —

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