5.

Dear Sir
I retired from a large PSU after holding a very senior position and am pr
1. Post Office Sr citizen scheme 30 Lk. ( 9% quarterly payment )
2. Post Office monthly payment deposit 09 Lk ( 8% monthly payment )
3. Bank FD - 2years 20 Lk
4. Bank FD - 1 year 20 Lk
5. Bank saving account 05 Lk
6. Mutual Funds debt oriented 04 Lk
7. Mutual Fund small/ mid cap 04 Lk
Assumptions
1. current age 64
2. life expectancy 80
3. Interest rate in savig bank is neglected
Investments as on date
Post Office Sr citizen scheme
Post Office monthly payment deposit

3000000
900000

Bank FD(2YRS)

2000000

Bank fd (1yr)
Mutual funds (debt)
Mutual funds (small/mid cap)
Bank saving account

Scheme

Post Office Sr citizen scheme

Post Office monthly payment deposit
Bank FD(2YRS)
Bank fd (1yr)
Mutual funds (debt)
Mutual funds (small/mid cap)
Bank saving account

Banksaving account
opening balance
Post Office Sr citizen scheme

2000000
400000
400000
500000
9200000

Initial Investment

3000000
900000
2000000
2000000
400000
400000
500000

quarterly@7.5%

Post Office monthly payment deposit

Bank FD(2YRS)
Bank fd (1yr)
Mutual funds (debt)
Mutual funds (small/mid cap)
closing balance
yearly expenses
transferred to savings bank @end of year

monthly@7.25%
yearly@7.5%
yearly@7.25%
yearly@11%
yearly@15%

or position and am presently serving a private sector company with annual package of
erly payment )
% monthly payment )

Requirement
Expenses
Yearly
Insurance

other
total

Assumptions
9% quarterly
8% monthly
7.50% yearly
7.25% yearly
11% yearly
15% yearly
neglected

year1

600000
602500

So
1. According to assumptions considered and explanation given below .

suplus of around 600000 in his bank account which can be used as a c

2. MIS, SCSS are renewed every 5 years after maturity

3. FD is renewed for 2years, 1years respectively
4. Using Systematic Transfer Plan(STP) every 1year 1 lakk is transferre

year2

2000000
2000000
400000
400000

year1

2500

year3
year4
year5
3000000
900000
2000000
2000000
2000000
2000000
500000
600000
700000
300000
200000
100000
2000000

year-2
year-3
year-4
year-5
500000
638500
773000
903500
270000
270000
270000
270000

2000000
2000000
800000
0

ever

1030000
270000

72000
150000
145000
44000
60000
1241000
602500
638500

72000
150000
145000
55000
45000
1375500
602500
773000

72000
150000
145000
66000
30000
1506000
602500
903500

72000
150000
145000
77000
15000
1632500
602500
1030000

Positive sign

72000
150000
145000
88000
0
1755000
602500
1152500

with annual package of approx INR 24 Lk ( taxable ). I will turn 64 in March' 2011 and wi

Solution
and explanation given below . The client is able to meet his expenses every year and had a

ount which can be used as a contingency reserve

after maturity

very 1year 1 lakk is transferred to Mutual funds (debt)

year6

000000
2000000
800000
0

year7

year8
year9
year10
year11
3000000
30000
900000
90000
2000000
2000000
2000000
2000000
2000000 2000000
2000000 2000000
800000
800000
800000
800000
800000
0
0
0
0
0
every year interest earned or income received gets credited as explained below

n March' 2011 and will not like to serve anymore. My children are well settled and me a

year12

year13
year14
year15
year 16
3000000
transferred to savings account
900000
transferred to savings account
2000000
2000000
2000000
2000000 2000000 2000000 2000000
2000000
800000
800000
800000
800000
800000
0
0
0
0
0
d as explained below

l settled and me and my wife stays in our own house. Our medical needs are taken care

eeds are taken care by a scheme fully for which I need to pay only Rs 2500 per year. Ou

s 2500 per year. Our monthly expenses are average Rs 50,000. At present we together

resent we together have following investments

scheme
Reliance Banking Fund
Rs 4,000
HDFC Top 200 Rs 4,000
DSP BR Top 100 Rs 3,000
Tata Infrastructure Rs 3,000
ICICI Tech Rs 2,000
Birla SL Div Yield Rs 2,000
IDFC Premier Equity Plan 'A' Rs 2,000
total

View on Mutual funds:

Mutual fund performance is not reliable

Average returns of good funds are 16-1
The risk is very high. Relying completel

Equities

Equities is also very risky market. Makin

Average return could be around 20%

Gold

This is also an area of investment. If inv

I request to invest in gold which is less

Public Provident Fund

This is more secure when compared to

Return will be 8.1%

Risky
Risky

Less risky

Less risky

Amount
4000
4000
3000
3000
2000
2000
2000
20000

performance is not reliable. It will be volatile in nature. Performance is entirely dependent on fund manager.
urns of good funds are 16-18%
ery high. Relying completely on this for retirement is not advisable.

lso very risky market. Making money is possible but it has its own risk involved.
urn could be around 20%

an area of investment. If invested using SIP for a period of more than 7 years an return of 12-13% could be expe
invest in gold which is less risky if someone is looking for retirement corpus

secure when compared to mutualfunds and less risky. If someone is looking for long term investing.

ent on fund manager.

of 12-13% could be expected.

rm investing.