Should You Buy iPhone 14? A Financial Perspective

It’s a well-known fact that once you’re an iPhone user, it’s difficult to go back to an Android Phone! And with the launch of the iPhone 14 around the corner at an estimated price tag of around Rs. 1 Lakh, you may want to consider the financial ramifications of upgrading your phone before taking the plunge.

You’re not alone if you’ve balked at the price tag – that’s a steep price to pay for a product that is becoming more and more commoditized with each passing month. While nobody denies that the iPhone 14 is a fine piece of machinery, you should take a long hard look at the long-term cost of being an ‘iPhone user’ before jumping to purchase it.

While iPhone enthusiasts are well represented across age groups, it is the ones who are in the early to mid-stages of their careers who are likely to be impacted the most by the iPhone habit; financially speaking. There are many in this particular life stage that I know of who finance their iPhones each year and pay off EMI’s subsequently. The actual cost of ownership of an iPhone (interest included) for these hapless individuals jumps 10-15 per cent instantly, depending on the tenor and type of the loan taken.

Ironically, it is also these very individuals who typically have other pressing financial burdens to consider – such as a home loan, car loans or planning for critical goals such as an education for their kids or their retirement plans.

For maths’ sake, let us assume that you’ve avoided the interest hit and purchased the machine cash-down and not financed it. Consider two facts here: first, you could purchase a very high-end Android phone – or an older iPhone model - at Rs 45,000 instead. Second, the price of any new iPhone model usually drops by 40-60 per cent within 12-18 months of launch. Essentially, you’re paying this ‘premium’ of Rs 55,000 for just about a year and a half’s usage.

Assuming that the price of your plain but trusty Android device and the grander iPhone both inflate at 10 per cent per annum, the ‘gap’ cost of owning your new iPhone is likely to widen year on year; from Rs 55,000 today to Rs 88,000 five years hence, to Rs 1.42 Lakh within 10 years. (This, of course, is speculative when you consider that there could be one of more disruptions in the next decade that change the face of mobile telephony altogether – but let’s stick with this straightforward comparison for now)

How would you fare if you invested this ‘gap’ money in a high return, recurring savings instrument each month (for instance, a monthly SIP)? What’s your best guess? 

Under a reasonable set of assumptions, you’d likely be richer by Rs 17-20 Lakhs in 2029 – ten years from now. This money could be used to provide a better education for your child, to put a down payment towards a new flat, or simply be stacked away for your retirement for another 15 years; which could, by the way, add over Rs 1 crore to your retirement kitty at a reasonable assumption of a 12 per cent CAGR for a further 20 years.

Think about this the next time you line up for the launch of the next iPhone. Perhaps, it’s time to jump off the wagon altogether - and join the less exciting but cannier lot of those who opt for less expensive phones! Or not. But make sure your decision is a well-considered one.