CONSTANT RUPEE PLAN

The objective of this plan is to balance the division between the conservative and aggressive components of the portfolio in terms of the target value. The target value could be fixed initially by the investor in a desirable proportion. For instance, a constant Rupee plan could consider the initial value of Rs 10,000 each between conservative and aggressive portfolios. There can also be an initial value of Rs. 15,000 and Rs. 5,000 in the aggressive

CONSTANT RUPEE PLAN

Subsequently, changes in the portfolio components would cause a revision or shift of funds from one component to the other. The target portfolio value in the aggressive component could be fixed to the initial value and the excess shifts to the conservative portfolio. Similarly, a shortfall in the aggressive component is set right using the funds in the conservative portfolio. The purpose of this plan is to maintain

CONSTANT RUPEE PLAN

Quarte r Mkt Price (Rs.) No. of Share Value of Value of Share conservati component ve s componen (Rs.) t (Rs.)
10,000 8,500 10,000 10,000 10,000 8,000

Total (Rs.)

1 Year 1 2 3

100 85 80

100 100 125

20,000 18,500 18,000

Rs. 2000 shifted from conservative component to buy 25 shares

4 1 Year 2 2 85 95 97 125 125 104 10,625 11,875 10,088 8,000 8,000 10,037 18,625 19,875 20,125

Rs. 2,037 shifted to conservative component by selling 21 shares

CONSTANT RATIO PLAN

In this plan, we maintain a ratio between the aggressive and conservative components of a portfolio. The initial ratio is FIXED by the investor and could be, say, 1:1 or any other desirable ratio. The fixed ratio is maintained until portfolio reaches the target price level, say, 20% rise or fall.

CONSTANT RATIO PLAN

Mkt No. of Price Share (Rs.) Value of Value of Ratio of Aggressive conservativ share to components e conservati (Rs.) component ve (Rs.)

componen t
1:1 0.85 : 1 1.01 : 1

100 85 80

100 100 113

10,000 8,500 9,040

10,000 10,000 8,960

Rs. 1,040 shifted from conservative component to buy 13 shares

85 95 97 113 113 103 9,605 10,735 9,991 8,960 8,960 9,930 1.07 : 1 1.20 : 1 1.01 : 1

10 shares are sold and invested into conservative component to make ratio equal to 1:1 (appx)

VARIABLE RATIO PLAN

This plan gives more flexibility to the investors to revise the portfolio components. When share price falls, the investor may shift major component of the conservative and aggressive components The desired ratio of investment holding between aggressive and conservative components of a portfolio, hence, may vary according to the flexibility that an investor wishes to incorporate in the portfolio revision decision. When the share price rises back, the

VARIABLE RATIO PLAN

Mkt No. of Value of Value of Total Share as Price Share Aggressiv conservati Portfoli a % of (Rs.) e ve o Value portfolio componen componen (Rs.) ts t (Rs.) (Rs.)
100 85 80 100 100 158 10,000 8,500 12,640 10,000 10,000 5,360 20,000 18,500 18,000 50.00 45.95 70.02

Rs. 4,640 shifted from conservative component to buy 58 shares

85 95 97 158 158 107 13,430 15,010 10,379 5,360 5,360 10,307 18,790 20,370 20,686 71.47 73.69 50.17

51 shares are sold and shifted Rs. 4,947 into conservative component