TAKE away the terms asset allocation, long term and compounding from a financial advisor's vocabulary and he is pretty much tongue-tied," remarks a friend.

But those are the exact three words that can help you retire with Rs 40 a day. Let me show you exactly how. Say you can set aside Rs 40 every day for your retirement. Where do you get Rs 40 a day? Why not cut down on those cigarettes? Then, let's see what could happen.

Let's also make some assumptions (do allow for the fact that all may not be valid). Let's also suppose that these are valid for the next 30 years.

Instrument Yield (%pa)

PPF       8 %

Sensex 18 %

Equity  21 %

Money saved per day  Rs 40        Rs 80        Rs120

Money saved per year Rs 14,600 Rs 29,200 Rs 43,800

Money earned if invested over the next 30 years

Sensex               Rs 11,547,841     Rs 23,095,681       Rs 34,643,522

Equity               Rs 21,099,200      Rs 42,198,399       Rs 63,297,599

PPF                    Rs 16,53,935         Rs 33,07,870         Rs 49,61,805

Nice chunk of change, eh?! Doesn't that make your retirement look so comfortable?

Of course, if you spend Rs 120 per day on cigarettes, you probably won't live for 30 years!

Ah, now you are saying you don't smoke? Maybe you're a frequent restaurant-hopper? That would easily mean Rs 2,000 per week. Keep at it for 30 years and you would have said goodbye to Rs 15 crore. Think of the holidays you could have afforded with that kind of moolah!