Retirement Planning

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:: Retirement Planning ::
• Investor: ‘Do you know
how old I will be when I
become wealthy using
your plan?’
•Advisor: ‘The same age
as you will be if you do
not use this plan.’

About Mr. Mehta

• Mr. Mehta is a businessman
aged 40 years. He is from
middle class family. Who do
not have monthly fixed income.
• He is married and his wife is a
housewife. He has two children
and both are studying.
• He is paying two loan
installment right now: Housing
loan & Car Loan.
• His worry: Need to save for
children’s marriage and his
retirement.
• He is planning to retire at the
age of 60 years.

Retirement Planning
• He is a risk averse investor.
• His current investments includes
Bank Fixed deposits, PPF/ NSC,
Insurance policies, SIP in mutual
funds.
• His current investment fulfills his
short term needs.
• Now, he is worried about his post
retirement finances. Wants to live
with current standard of living after
retirement.
• He approached Mr. Joshi, a
financial advisor for advise.

Retirement Planning


Mr. Joshi after studying Mr. Mehta’s
current average cash flow and his liability
over next 15 years, he feels still there is
some gap for long term planning.



He advice him to invest only Rs. 29,950/for 15 years. (Which is not even Rs.
2,500/- per month.)
Further he said two things:










He will receive Rs. 9,500/- monthly for life
time after 15 years.
He will be having strong capital base of
Rs.16,38,000/- after 15 years.

Mr. Mehta ask him do you think I am a
fool? Just by investing only Rs. 4,49,250/in 15 years I will get this much? (Rs.
16,38,000 + Rs. 9,500 monthly for life
time)
Mr. Joshi said it is very much possible, let
me share with you more on this with the
help of presentation:

Retirement Planning


Just two easy step to follow:








Make an investment of Rs.
29,950/- every year in equity
oriented mutual fund for 15
years.
After 15 years invest Rs.
16,38,000/- in to liquid fund or in
Bank fixed deposit.
Let me show you in detail…
Assumptions:
Equity Mutual fund give you return of 15%
per annum for 15 years.
You must get at least 7.00% per annum
return on Rs. 16,38,000.

Invest Rs. 29,950/- every months for 15 years in Mutual Fund
Installment

29,950

Interest

15.00%

Final Amount

1,638,788

No of Years

Installment
Amount

Amount B/f

Total Amount

Interest

Total at the end
of the month

A

B

C

D=(B+C)

E=(D*Interest)

F=(D+E)

1

29,950

0

29,950

4,492.50

34,443

2

29,950

34,443

64,393

9,658.88

74,051

3

29,950

74,051

104,001

15,600.21

119,602

4

29,950

119,602

149,552

22,432.74

171,984

5

29,950

171,984

201,934

30,290.15

232,224

6

29,950

232,224

262,174

39,326.17

301,501

7

29,950

301,501

331,451

49,717.60

381,168

8

29,950

381,168

411,118

61,667.73

472,786

9

29,950

472,786

502,736

75,410.39

578,146

10

29,950

578,146

608,096

91,214.45

699,311

11

29,950

699,311

729,261

109,389.12

838,650

12

29,950

838,650

868,600

130,289.99

998,890

13

29,950

998,890

1,028,840

154,325.99

1,183,166

14

29,950

1,183,166

1,213,116

181,967.39

1,395,083

15

29,950

1,395,083

1,425,033

213,755.00

1,638,788

Invest Rs. 16,39,000/- in Mutual Fund or Bank FD
Installment

-9500

Interest

7.00%

Final Amount

1,639,088

1,638,788
No of Months

Withdrawal
Amount

Amount B/f

Total Amount

Interest

Total at the end of the
month

A

B

C

D=(B+C)

E=(D*Interest/12)

F=(D+E)

1

-9,500

1,638,788

1,629,288

9,504.18

1,638,792

2

-9,500

1,638,792

1,629,292

9,504.21

1,638,797

3

-9,500

1,638,797

1,629,297

9,504.23

1,638,801

4

-9,500

1,638,801

1,629,301

9,504.26

1,638,805

5

-9,500

1,638,805

1,629,305

9,504.28

1,638,809

6

-9,500

1,638,809

1,629,309

9,504.31

1,638,814

7

-9,500

1,638,814

1,629,314

9,504.33

1,638,818

8

-9,500

1,638,818

1,629,318

9,504.36

1,638,822

9

-9,500

1,638,822

1,629,322

9,504.38

1,638,827

10

-9,500

1,638,827

1,629,327

9,504.41

1,638,831

11

-9,500

1,638,831

1,629,331

9,504.43

1,638,836

12

-9,500

1,638,836

1,629,336

9,504.46

1,638,840

13

-9,500

1,638,840

1,629,340

9,504.48

1,638,845

14

-9,500

1,638,845

1,629,345

9,504.51

1,638,849

15

-9,500

1,638,849

1,629,349

9,504.54

1,638,854

16

-9,500

1,638,854

1,629,354

9,504.56

1,638,858

17

-9,500

1,638,858

1,629,358

9,504.59

1,638,863

18

-9,500

1,638,863

1,629,363

9,504.62

1,638,867

19

-9,500

1,638,867

1,629,367

9,504.64

1,638,872

Retirement Planning


Wow, it is wonder full.



Mr. Joshi thank you very
much for your advice.
Now I am relaxed.
Just tell me in which mutual
fund equity scheme we
should invest.




:: Remember ::
“We do not need to be wealthy to be an investor ….
But we can be wealthy if we are investors”
Moral of the story




Start early.
Invest regularly.
Plan your investment and play
your plan. Do not delay.

Think of each yearly payment as lying a brick. One by one, you
can lay the foundation of a secured financial future.

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