India, Aug. 6 -- A Rs.1 lakh smartphone is no longer sold as a Rs.1 lakh purchase. It is sold as an EMI of Rs.8,000 or Rs.9,000 a month. That smaller number makes the decision feel easier, even when the total cost is higher.

This is how many lifestyle purchases enter household budgets today. The product is bought first, while the payment continues for months. In the process, interest is paid on an asset that starts losing value almost immediately.

There is another way to make the same purchase. Instead of paying interest to own the phone today, you can invest a fixed amount every month, earn returns, and buy it once the required corpus is ready.

The popular saying, Compound interest is the eighth wonder of the world. She who understand...