:: 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.