Today, I was speaking to my uncle on phone for quite some time vis-a-vis on the upcoming IPOs and which one were good to invest or not. It was a general talk with little or no brain.
In between, my uncle mentioned that he had read a book (couldn't re-collect the name) which said a salaried class person couldn't become rich due to inflation, de-valuation and tax.
After the phone conversation, I gave a thought on the said conversation.
Inflation : If I stick to a single company my salary will rise by about 10% on average yearly given a scenario that the company is not doing re-structure of salary, the current average inflation is around 5-6% (the price of the cabbage flower is Rs 60 per Kg and Tur dal is Rs 100 per Kg for you information right now) so a part of the salary goes to balance out that inflation.
De-Valuation : Secondly, the investment which I did with the hard earned is de-valuated to the depreciation of money. So, the return on the hard-money investment is less than expected value even though they look and appear to be same. A 10 rupee note in hand today has more value than t’row.
Tax : Third and most important, the Income Tax department is always around to levy tax as much as possible. Because of TDS (Tax Deduction at Source) for salaried class nothing can be hidden from their eyes. For, every 100 rise, I ended up paying 30 bucks in returns. Moreover, there is indirect tax on everything which I buy. With the already taxed money, I'm again giving tax through indirect tax. It’s tax on tax. But, the most painful part comes when you have to pay when your investment from hard-earned money gets matured at the same rate after such a long and painful wait.
So, at the end whatever the rise is nullified. Rich and Salaried Class goes go together seldom.
No wonder many of the salaried class ended up in small flat (or a large flat in faraway places) and a small car by the time of retirement which they manage with the entire EPF and gratuity fund.
This is the price every salaried class is paying at the end. This is the reality of being salaried class.
PS : I’m also a ‘salaried class’.
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