- Date : 31/05/2019
- Read: 6 mins
The money spent on a lifetime of smoking, if invested, can make you a lakhpati several times over
Are you a smoker? How many cigarettes do you smoke in a day? Just four, and that too only after meals? Or maybe a few more, like 10…. spread over 24 hours, which may not seem too many. Perhaps even a double pack of 20 – “the tension at work is just too much, you know…”
Yes, yes, we know, we know… haven’t we all heard it before? But guess what? Smoking comes at a cost – and that does not only mean the printed price on the packet of cigarettes or cigars or whatever one smokes.
A research paper published in the Indian Journal of Public Health in 2017 estimated that in the year 2011, Indians as a group had spent over Rs 13,000 crore on treatment towards different four broad categories of diseases related to tobacco use.
The break-up estimated by the researchers were thus: Rs 3,600 crore for cardiovascular diseases), Rs 2,800 crore for respiratory illnesses, Rs 2,300 crore for tuberculosis, and Rs 1,400 crore for cancer. This apart, 'indirect costs' were pegged at almost Rs 15,000 crore, while that related to premature deaths from smoking was Rs 73,000 crore.
These are huge spends at the national level; what do they mean at the micro level for you if you are a smoker, or have a relative whose cigarettes you finance or whose medical bills you foot? How much do you think your contribution is to these numbers?
A few years ago, ET Wealth, the Economic Times supplement dedicated to personal finance, sought to answer the vexing question of what a smoker spends because of his/her addiction over a lifetime, or about 30 years of active smoking.
As per its calculations, a 30-year-old who smokes five cigarettes a day would lose over Rs 1 crore because of the habit by the time he or she turned 60. The main expense, the article argued, was the rising price of cigarettes each year, which it assumed at a constant 8% annually.
In this calculation, the analyst assumed Rs 12 per stick (implying a relatively costlier brand), entailing an expense of Rs 60 daily. To be noted is people usually spend around the same, on cheaper brands, but at a higher consumption level. The outgo per month: Rs 1,800; the total outgo over 30 years at an annual increase of 8% in prices: almost Rs 24.5 lakh.
As for the treatment of accompanying ailments, ET Wealth pegs it around Rs 400 a month, rising at 12% annually due to inflation. The outgo at the end of 30 years: almost Rs 12 lakh.
There are quite a few medical complications that can arise from smoking; according to the American Lung Association, 10 of the “worst” group of diseases are:
- Lung cancer;
- Over 10 other types of cancer, including colon, cervix, liver, stomach and pancreatic cancer;
- COPD (chronic obstructive pulmonary disease);
- Heart disease;
- Diabetes (type 2);
- Reproductive effects in women;
- Premature and low birth-weight babies;
- Blindness, cataracts and age-related muscular degeneration.
Time and again, medical practitioners have warned that cancer care can get prohibitively expensive on account of late detection, improper screening, or wrong diagnosis leading to incorrect treatment, and delaying the proper care at the right time. A treatment of six months with low priced generic drugs could cost Rs 2.5 lakh; a longer procedure involving novel drugs and targeted medicines can be as high as Rs 20 lakh.
Open heart surgery in a private hospital can cost between Rs 1.5 lakh to Rs 2.5 lakh, while in the case of a transplant, it will be significantly higher. The biggest cost component of COPD, which refers to a group of lung diseases that block airflow and make breathing difficult is productivity loss – which can mean loss of income/salary.
Daily: Rs 60;
Per month: Rs 1,800;
Over a lifetime (30 years, at an annual increase of 8% in prices): almost Rs 24.5 lakh.
Monthly: Rs 400 a month;
Annually: Rs 48,000;
Over a lifetime (30 years, at an annual increase of 12% annually due to inflation): Rs 12 lakh.
(NOTE: This is for regular smoking-related ailments).
Cost of treating cancer: Rs 20 lakh+
Cost of open heart surgery: Rs 1.5 lakh to Rs 2.5 lakh
Related: Cancer facts you should know
However, if you are young and a non-smoker, or have decided to quit smoking, you could invest the money saved on cigarettes and gain massively, both health-wise and financially. Given your age, you would have a couple of advantages to begin with:
* First, you would have time on your side – about 30-35 years of earning period over which you can accumulate wealth;
* Second, you would have the ability to take risks, the time to absorb volatility and handle fluctuations in the value of your investments.
ET Wealth calculates that if you invested the Rs 1,800 spent on cigarettes every month at 9% returns a year, it would balloon to a little under Rs 70 lakh in 30 years.
Select investments with specific goals in mind to begin with, and have a realistic expectation of returns; you are not going to make a killing of 50%-100% quickly. Investments in the stock markets yield about 16% over the long term, and that is about the maximum one can expect.
Here are few conservative avenues to bring you into the habit of saving and investments:
- Fixed deposits
- Mutual funds
- National Savings Certificates (NSC)
- National Pension System (NPS)
- Real estate
- Health insurance
Remember, the best investments are those that make you the most money in the long term; there is no single best way of investing. Select any from the numerous options available in the market, and if it meets your financial objectives, it is the best option for you.
Also, invest in yourself through learning skills that make you more productive, both at your job and while investing. Your entire life is ahead of you, don’t let it burn up in smoke. See how life insurance premium differs from a smoker to a non-smoker.