Investment pattern of individuals under 10% tax bracket:
Assume the salary of the person is Rs. 5, 00,000 and he falls under the tax bracket of 10% and the slab of 1, 80,001 to Rs. 5, 00,000. Calculation of tax payable: Income from salary of the individual Slab limit Total taxable income 5, 00,000 1, 80,000 3, 20,000

Out of the total taxable amount of Rs.3,20,000 the individual can claim exemption of Rs.1,00,000 under sec 80C. Tax liability = taxable income * 10% = 3,20,000 * 10% = 32,000. Exemption claimed under sec 80C: Tax liability = Exemption limit * 10% = 1,00,000 * 10% = 10,000. If an individual wants to save Rs: 1 lakh from his income he will get a benefit of Rs:10,000 towards tax liability. Remaining 22,000 he needs to pay the tax. The tax assesse wants to earn more from his Rs: 1 lakh investment that will be an added return on his savings. Hence the individual need to make a care full investment of his hard earned income in a tax saving schemes to earn more returns from it. So it is very vital stage for an individual to assess the investment avenues to get good returns from his savings. He has to create portfolio by using tax savings schemes in such a way that he will be benefited in future earnings/capital appreciation on his investment.

000 as tax liability where as the remaining amount i.000 * 8% = 8.e. Here in this case where the individual has to pay Rs. The different types of investment options considered are. 1) NATIONAL SAVING CERTIFICATE.971.000 2nd ± 1.000 * 8% = 8.2 4th ± 1.10.70 5th ± 1.687. 3) RBI RELIEF BOND Schemes NSC ELSS i) HDFC Tax Saver Fund ii) Sundaram Tax Saver Fund RBI Relief Bond Calculation: (compound interest method) Interest Rate Maturity Period (%) (years) 8 6 9. b) SUNDARAM TAX SAVER FUND.754.37 11 8.16.331.5 5 5 5 Maturity value in case of individual investing the whole amount in the N.08.2 * 8% = 10.PORTFOLIO: Generally these individuals go for short term tax free investing options say 5-6 yrs in order to save tax and there by getting moderate returns.077.883. And they will be capable of taking less or moderate risk while investing. Rs.91 6th ± 1.00.43 . yr . 22.36. 2) EQUITY LINKED SAVINGS SCHEME a) HDFC TAX SAVER FUND.048.25.C at a rate of 8% and maturity period of 6 years.58.62 Maturity value = 1.640 3rd ± 1.00.81 * 8% = 11.Investment*rate of interest 1st ± 1. 1.90 * 8% = 10.000 in tax free investment options.46.640 * 8% = 9.S.000 he can save this tax by investing up to Rs.932.

000 * 8.82% = 9.08. Minimum amount required to counter inflation: Yr ± investment * inflation rate 1st ± 1.18.000.687.04 * 8.98 Total inflation amount = 1.52.14 Note.82%.444. 2nd ± 1.82% = 13.228.66 5th ± 1.597.365.00.82%.46 4th ± 1.28. Inflation rate to be 8.Current inflation rate is considered to be 8.000 * 10% = 10.15 * 8.14 = 2.11 6th ± 1.92 3rd ± 1.82% = 11.458.417. Benefit from the investment: Benefit = maturity value + tax saved ± inflation amount = 1.055.820 * 8. The income from salary of the individual remains the same.82% = 12.40.38 * 8.66.820. 3. 2.596. Income tax slab rates do not change.29 Assumptions : 1.055.Tax saved: Tax saved = Exemption limit * 10 % = 1.58.66.82% = 8.862.43 + 10.92 * 8.82% = 10.632.00.368. .000 ± 1.

56.66.000 0 N.43 1.51 180.67 TAX SAVED 10. Benefits from investing in single schemes TYPE OF INDIVIDUAL N.895.82 1.16 1.00.66 7769.000 60.055.909.00.000 INFLATION RATE 1.000 40.16 BENEFIT 2.S.687.45 25.52.000 10.000 140.52.16 1.S.C ELSS i HDFC TAX SAVER FUND ii SUNDARAM TAX SAVER FUND RBI RELIEF BOND     INVESTMENT AMOUNT 1.632.50.491.00.61 1.000 1.C i) HDFC TAX SAVER FUND ii) SUNDARAM TAX SAVER FUND RBI RELIEF BOND .505.000 1.596.14 1.596.29 13.000 100.000 20.00.POR OLIO MODELS: The calculati of other i est ent schemes and portfolio of different t pe of indi iduals are shown in tabulated form below.000 MATURITY VALUE 1.000 10.000 10.596.68.58.52.000 160.000 80.000 1.000 120.365.

889.I relief bond because the investor is assured of getting the returns without fail at the end of maturity period.500 22.66 3.MODERATE RISK TAKER PORTFOLIO WEIGHTAG E 35% INVESTMENT AMOUNT 35.85 4.23 7.000 2.168.S.6 TAX SAVE D 3.778.000 45.74 30.3 15% 15.500 3.889.000 46.32 9.611.39 SCHEMES N.20.85 30.000 INFLATIO N RATE 33.74 1.551.13 3.63 30% 20% 30.408.000 23.084.C ELSS: i)HDFC TAX SAVER FUND ii)SUNDARAM TAX SAVER FUND RBI RELIEF BOND PORTFOLIO WEIGHTAGE 20% HIGH RISK TAKER INVESTMENT MATURITY AMOUNT VALUE 20.3 SCHEMES N. 3.519.000 MATURITY VALUE 55.98 1.500 INFLATIO N RATE 58.9 14.42 2.87 52.C ELSS: i)HDFC TAX SAVER FUND ii)SUNDARA M TAX SAVER FUND RBI RELIEF BOND BENEFIT 921.42 53.119.886.000 20. .45 2.473.000 45.211.49 TAX SAVED 2.32 15% 35% 15.719.000 35.500 22.000 Total benefit 25.000 31.46 30% 30.947.073.C and R.88 Interpretation:  If the investor the entire Rs.B.772.03 BENEFIT 526.627.000 in individual schemes like the N.778.S.553.89 1.021.S.737.275.000 Total benefit 50.540.48 3.

Calculation of tax payable: Income from salary of the individual Slab Total taxable income 8.000+32.S.000.C and R. 8.000 under sec 80C. 00. Out of the total taxable amount of Rs.00.000. 00.B. Investing the entire Rs.000 in individual ELSS schemes like HDFC TAX SAVER FUND & SUNDARAM TAX SAVER FUND helps in saving the whole tax amount like the N.000 = 92.00. Investment pattern of individuals under 20% tax bracket: Assume the income from salary of the individual is Rs.8. 3. 00. The maturity value added with the actual tax saved should always be more than the inflation amount in order to get the benefit.000 the individual can claim exemption of Rs.I relief bond but in ELSS the return on investment is high associated with the high risk factor. 00. 00.000 3.  Individuals who are risk averse can invest majority of their amount in N.20.00.1.000 and he falls under the tax bracket of 20% and the slab of Rs.  In order to minimize the risk and maximize the returns the individuals can diversify their portfolio by investing in different tax saving schemes.C and R.I bonds.001 to Rs.I RELIEF BONDS issued by the government agencies as and a small portion can be invested in the ELSS funds. Total tax liability = 60.S. Tax liability = Exemption limit* 20% .3.000 5.B.000 * 20% = 60.C and the R.S.000.5.  Individuals who are ready to take risks can invest most of their amount in the ELSS funds because it gives far better returns compared to the N. 00.B.000 Tax liability = taxable income * 20% = 3.  The inflation amount is the minimum amount required to counter inflation.

So it is very vital stage for an individual to assess the investment avenues to get good returns from his savings.16 15 11. The different types of investment options considered are.000 towards tax liability.9 10.00. The tax assesse wants to earn more from his Rs: 1 lakh investment that will be an added return on his savings. . And they will be capable of taking more risk while investing. 72. Remaining 72.e.000 * 20% ¢ = 20 000 ¡ If an individual wants to save Rs: 1 lakh from his income he will get a benefit of Rs:20. 1) PUBLIC PROVIDENT FUND 2) EQUITY LINKED SAVINGS SCHEME a) LARGE CAP FUND :.69 10. 1.000 he needs to pay the tax. Hence the individual need to make a care full investment of his hard earned income in a tax saving schemes to earn more returns from it.CANARA ROBECO INCOME SCHEME Schemes PPF ELSS i) Reliance Regular Saving Fund ii) Sundaram Select Mid cap Fund DEBT FUND i) Canara Robeca Income Scheme PORTFOLIO MODELS: Interest Rate Maturity Period (%) (years) 9. Here in this case the individual has to pay Rs.20. Rs.000 in tax free investment options.34 10 10 10 The calculation of investment schemes and portfolio of different type of individuals are shown in tabulated form below.000 as tax liability where as the remaining amount i.000 he can save this tax by investing up to Rs. PORTFOLIO: Generally these individuals go for long term tax free investing options say 7-15 yrs in order to save tax and there by getting high returns.RELIANCE REGULAR SAVINGS FUND b) MID-CAP FUND :.SUNDARAM BNP PARIBAS SELECT MIDCAP FUND 3) DEBT FUND :.00.= 1.

34 59.27 TAX SAVED 4.11.00.233.065.7 30% 30.598.847.394.33 TAX SAVED 20.000 INFLATION RATE 3.53 100% 1.855.32.278.000 1.22 MODERATE RISK TAKER SCHEMES PPF ELSS: RELIANCE REGULAR SAVING FUND SUNDARAM SELECT MID CAP FUND DEBT FUND: CANARA ROBECO INCOME SCHEME PORTFOLIO WEIGHTAGE 30% INVESTMENT AMOUNT 30.000 69.1 7.000 INFLATION RATE 71.Benefits from investing in single schemes SCHEMES PPF ELSS: RELIANCE REGULAR SAVINGS FUND SUNDARAM SELECT MIDCAP FUND DEBT FUND: CANARA ROBECO INCOME SCHEME PORTFOLIO WEIGHTAGE 100% INVESTMENT AMOUNT 1.14 BENEFIT 37.238.855.000 2.000 MATURITY VALUE 1.470.329.05.022.00.32.4 TAX SAVED 6.73 20% 20.647.000 INFLATION RATE 1.77 16.02.394.72.106.68 100% 1.67.856.000 60.351.88 54.66 20% 20.571.11 6.81.094.000 Total benefit 2.56 20.000 46.000 2.000 MATURITY VALUE 3.000 56.56 31.91 4.55.855.707.000 46.000 Total benefit 80.82 2.000 2.00.000 2.000 MATURITY VALUE 74.41 20.538.44 .056.7 20.00.18 17.19 100% 1.88 89.83 BENEFIT 7.733.88 68.74 BENEFIT 11.418.43 HIGH RISK TAKER SCHEMES PPF ELSS: RELIANCE 35% 35.000 81.503.571.32.54 PORTFOLIO WEIGHTAGE 20% INVESTMENT AMOUNT 20.18 13.447.06.49.251.705.000 3.404.499.88 4.

000 23.284.  Individuals who are risk averse can invest more in the PPF as it is offered by the government and so the returns will be assured but where as in case of ELSS even though it provides good returns on the investment in the long term the returns are not secured as ELSS is offered by the private parties.REGULAR SAVING FUND SUNDARAM SELECT MID CAP FUND DEBT FUND: CANARA ROBECO INCOME SCHEME 35% 35.e Rs.000 Total benefit 26.000 81. 4.  And the individual being an aggressive investor if he invests the whole amount i. .  Individuals who are high risk takers can have 80% of their investment in the ELSS and Debt Funds in order to get good returns out of it.988.60.60.285.911.78 67. 4.750.499.2 Interpretation:  The individual without diversifying his portfolio if he invests the whole amount i.56 23.59 5.04 7.e Rs.000 in the PPF he will get less returns but the returns are secured as PPF is offered by the government.  Debt funds as they are mainly diversified in the money market instruments the individual should not consider keeping more than 15% of his investment in his portfolio.37 2.000 98.  The individual if he invests in the Debt Funds he can avoid paying the STCG (short term capital gains)  Individuals who are moderate risk takers can invest most of their money in the PPF as they look to secure their invested money and they can get secured returns.48 10% 10.000 in the ELSS funds he will enjoy more benifits but the risk factor involved will also be more.488.

000 Tax liability = total taxable income * 30% = 2.000 2. 10.000 . 00. 00. 00.000 + 60. The income falls under the slab of more than Rs.000 * 30% ¤ = 60 000 £ Total tax liability = 92. 00. Calculation of tax payable: Income from salary of the individual Slab Total taxable income 10. 00.8. The risk involved with the ELSS and Debt funds are such that the investor needs to be ready for the fluctuations of the returns and even for the investment to go negative in the short-term. Investment pattern of individuals under 30% tax bracket: Assume the income from salary of the individual is Rs. 00.000 8.000 and the tax payable by him is 30% on his income.000.

000 the individual can claim exemption of Rs.000 he needs to pay the tax.52. Tax liability = Exemption limit* 30% = 1. 1. Out of the total taxable amount of Rs.000 under sec 80C. 1) INFRASTRUCTURE BONDS: PFC INFRASTRUCTURE BONDS(power finance infrastructure) 2) PUBLIC PROVIDENT FUND 3) ELSS i) HDFC TOP 200 FUND ( large-cap fund) ii) Sundaram BNP Paribas Tax Saver Fund (tax saving fund) iii) Reliance Growth Fund (small-cap fund) 4) DEBT FUND: BNP Paribas Debt Fund Schemes PPF ELSS i) Interest Rate Maturity Period (%) (years) 9.2.000.000 * 30% ¦ = 30 000 ¥ If an individual wants to save Rs: 1 lakh from his income he will get a benefit of Rs:30.000 he can save this tax by investing up to Rs. .000 towards tax liability. Hence the individual need to make a care full investment of his hard earned income in a tax saving schemes to earn more returns from it. Rs.000 as tax liability where as the remaining amount i. Remaining 1.1. 1.22.e. So it is very vital stage for an individual to assess the investment avenues to get good returns from his savings.000 in tax free investment options The different types of investment options considered are.00.= 1. PORTFOLIO: Generally these individuals go for long term tax free investing options say more than 15 yrs in order to save tax and there by getting high returns.16 15 10.22.30.00. Here in this case the individual has to pay Rs.98 15 HDFC TOP 200 FUND .00.00. The tax assesse wants to earn more from his Rs: 1 lakh investment that will be an added return on his savings.

14 1.23 100% 1.000 3.209.14 43.55.022.801.000 MATURIT Y VALUE 1.77.14 3.000 INFLATIO N RATE 3.47.329.000 30.09 .66 TAX SAVE D 15.329.55.838.00.55.17.000 3.456.167.329.175.000 1.68.00.37 30.000 4.78.00.57 4.61 1.785.86.000 INFLATIO N RATE 1.31 100% 100% 1.511.77.329.55.28 15 15 15 PORTFOLIO MODELS: The calculation of investment schemes and portfolio of different type of individuals are shown in tabulated form below.000 MATURIT Y VALUE 3.329.57 SCHEMES PPF ELSS: BENEFIT 23.327.538.00.14 SCHEMES PPF ELSS: HDFC TOP 200 FUND SUNDARAM BNP PARIBAS TAX SAVER RELIANCE GROWTH DEBT FUND: BNP PARIBAS FLEXI DEBT FUND BENEFIT 47.71 Total benefit 30.91 MODERATE RISK TAKER PORTFOLIO WEIGHTAG E 50% INVESTMEN T AMOUNT 50.5 9.19 100% 1.45 30.ii) Sundaram BNP Paribas Tax Saver Fund iii) Reliance Growth Fund DEBT FUND: BNP Paribas Flexi Debt Fund 9.000 3.51.000 3.000 3.21.33 TAX SAVED 30.75 4.72.00.14 53.55.130.09 10.664. Benefits from investing in single schemes PORTFOLIO WEIGHTAG E 100% INVESTMEN T AMOUNT 1.351.

500 INFLATIO N RATE 53.37 SCHEMES PPF ELSS: HDFC TOP 200 FUND SUNDARAM BNP PARIBAS TAX SAVER RELIANCE GROWTH DEBT FUND: BNP PARIBAS FLEXI DEBT FUND BENEFIT 7.33 25% 25.852.832.91 5.862.707.196.500 88.000 10.66 2.59 7.44 1.864.000 MATURIT Y VALUE 55.58 25% 25% 25.16 30.053.91 5.96 91.HDFC TOP 200 FUND SUNDARAM BNP PARIBAS TAX SAVER RELIANCE GROWTH DEBT FUND: BNP PARIBAS FLEXI DEBT FUND 10% 10.500 88. .57 34.180.000 35.450.87 3.532.74 6.04 3.91 4.62 HIGH RISK TAKER PORTFOLIO WEIGHTAG E 15% INVESTMEN T AMOUNT 15.000 1.782.853.000 35.7 TAX SAVED 4.000 92.000 71.11.86 7.000 Total benefit 37.13 20% 20.320.28 88.648.91 35.713.000 3.959.000 25.74 3.183.500 7.299.000 37.832.83 10% 10% 10.83 10.28 37.28 10.000 36.19.716.31 10% 10.532.91 45.641.065.878.532.345.532.34 Interpretation:  The individual in the 30% bracket has many options where he can invest his money into.291.832.000 Total benefit 75.000 35.

e. Individuals who take more risk can diversify their portfolio by choosing to invest 6070% of their portfolio in the core funds i.  The individual being in the high income group category can allot 20% of their portfolio for Debt Funds.  For the high income group individuals in order to get good returns they can go for open ended funds where in they can keep investing additional money whenever they wish to. FINDINGS:-  .  As these individuals have so many options for investing they can create a portfolio such that they can maximize the returns by minimizing the risk.  High income group individuals having long term investment horizon can invest part of their money in the infrastructure bonds depending upon their risk taking capacity. one each from large-cap. multi-cap and tax saving fund in order to get good benefits.

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