Chapter - 17
Case Study
Learning Objective;
Analyzing a case study for investment planning
Offering Investment planning solution
CASE STUDY = 1
SINGLE PERSON
Case History: After completing his engineering, 25 years old Sandeep has joined as an executive with a leading engineering company. His annual package is Rs.3.50 Lacs out of which Rs.25,000/- is deducted by the employer towards PF. His annual expense is Rs.1 Lac. He currently stays with his parents who are not dependent on him. He is planning to marry in the next 1 year. Sandeep, by nature is conservative when it comes to investment. Safety is his prime concern. He wishes to buy a house after 5 years and also wishes to save for his retirement.
Case Analysis
Sandeep’s case is a typical single young adult case with no financial backing and a new job. He is in a situation where he often has to make trade-offs between current expenses and need for future savings. While he wishes to maintain a decent lifestyle, he also needs to create a savings and investment corpus for various forthcoming expenses, as also unplanned emergencies. Being conservative may not help his cause of building wealth. With a promising job already in his hand, he needs to take some risks as he moves forward in life.
Current Finding
Risk Appetite : Conservative
Current Investments : Nil
Life Coverage : Nil
Emergency Fund : Nil
Goals : Marriage and House
Areas to work on
Creating an Emergency Fund
Deciding on Asset Allocation
Deciding on Products
Creating an Emergency Fund
Mr. Sandeep has been fortunate enough of starting his career at a decent annual package with a leading engineering company with a rosy future. But in today’s world nothing is secured and safe. Emergencies in terms of health problems, accident and loss of job can strike anytime and can derail any life plans. Thus it is suggested that Mr. Sandeep should consider building an emergency corpus equivalent to 4-6 months of his monthly expenses in cash or cash equivalent products, which will allow Mr. Sandeep to take care of any emergency needs without hurting his other plans in times of need. The emergency corpus can be created by putting savings in bank fixed deposits or mutual fund floater funds.
Bank Fixed deposits and Mutual fund floater funds are cash equivalent products, which offers high liquidity and can be converted into cash immediately.
Deciding on Asset allocation
Mr. Sandeep is young and has started his career with a good job and pay package. He also does not have any financial responsibility towards his parents and is not yet married. There are two ways of deciding on asset allocation, one simply going by the rule of thumb, 90 – age in equity and rest in debt and the second is based on risk profile, time horizon and goals. As Mr. Sandeep plans to marry next year and needs to save for buying a house in next 5 years, we would suggest him to allocate 50% of his savings in debt and 50% should be allocated to equity investments. Thus, the asset allocation suggested is 50:50 in debt and equity respectively. However this needs to be reviewed with every major event happening in Mr. Sandeep’s life.
Deciding on Product
To decide on products, we need to look at four important characteristics of any product.
Safety
Liquidity
Return
Post tax yield
Debt : As Mr. Sandeep is an employee with a leading engineering company, which has a provident fund for the benefit of its employee, in which Mr. Sandeep would be contributing, his employer would be matching the contribution of Mr. Sandeep upto the specified limit. Provident fund is one of the most secured scheme offering decent return, which is taxfree. The scheme also offers tax benefit u/s 80C. Our advice would be to continue with the provident fund scheme. For any surplus, consider mutual fund floating rate fund, which offers good return with tax efficiency.
PRE TAX RETURN TAX RATE POST TAX RETURN 11% 20% 8.80% 11% 30% 7.7% 8% 0% 8%
A return of 8% on Provident fund account is better than a return of 11% , which are taxable in the highest IT slabs.
He need to save for his own marriage expenses, yearly vacations and also for down payments for buying a house. At the same time he also needs to create an emergency fund. Balance allocation of his debt may be put into mutual fund floater schemes and bank fixed deposit with overdraft facility.
Equity :He should also start making investments in equities through mutual funds. Since he is a salaried individual with no existing investment portfolio, he should take the route of Systematic investment plan (SIP). He should target his SIP’s as long term savings and investment.
CASE STUDY = 2
YOUNG, MARRIED AND A KID
Case History : Abhishek Vohra, 29, has done his masters in computer. For the last three years he is employed with a top IT Company in India as a Senior Software engineer. His take home pay (after tax and compulsory deduction) is Rs.10 Lacs per annum. After his expenses he is able to save 6 Lacs per year. He is married and has a one year old daughter. Last year he has bought a house for Rs.25 Lacs for which he is paying an EMI of Rs.26,000/- per month. Abhishek is a hard worker and has already received two promotions in the last 3 years. Abhishek is seriously thinking about creating an investment corpus for his daughters higher education and his own retirement. He has a fund of Rs.7 Lacs in his bank savings account which he saved in the last 3 years.
Case Analysis : Abhishek is well settled in life with a good job and all he needs to do is to create a savings and investment program for his children education and his own retirement plan.
As he is married and has a kid, he should look at the life insurance planning along with investments.
Current Finding
Risk Appetite : Moderate
Current Investments : A house
Life Coverage : Nil
Emergency Fund : Rs 7 lacs in bank acount
Goals : Children education & retirement
Areas to work on
Formatting Emergency Fund
Deciding on Asset Allocation
Deciding on Products
Insurance coverage
Formatting Emergency Fund
Mr. Abhishek is well settled and has a family, which is dependant on him. He is earning well and has has been able to save Rs 7 lacs, which he is holding in his bank account, which can be withdrawn in case of emergency like medical treatment, accidental mishap and any other unplanned expenditure. Considering his expenses, it is advisable to hold Rs 2 lacs being 6 month expenses in bank fixed deposits or mutual fund floater schemes, which apart from being liquid also gives good returns on investments. This creation of emergency fund will allow him to take care of any emergency needs without hurting his other plans like children education or retirement.
Bank Fixed deposits and Mutual fund floater funds are cash equivalent products, which offers high liquidity and can be converted in cash immediately.
Deciding on Asset allocation
Mr. Abhishek is well settled and has already bought a house and saved some amount. He has a bright career in front of him in a sun rise industry. He has already bought a house, for which he is making payment on a monthly basis, which is almost 30% of his earning. His two other goals are long term in nature, major education expenses after 15 years and retirement which is 25 – 30 years far. As he has time on his side, he can plan for moderate aggressive equity investments, which gives better inflation adjusted returns in long term. It would be suggested to allocate 40% of his savings in debt and 60% should be allocated to equity investments. Thus the asset allocation suggested is 40: 60 in debt and equity respectively. However this needs to be reviewed with every major event happening in the life of Mr. Abhishek.
Deciding on Product
To decide on products, we need to look at four important characteristics of any product.
Safety
Liquidity
Return
Post tax yield
Debt : As an employee, he is subscribing to the company sponsored provident fund. Provident fund is one of the most secured scheme offering decent return, which is tax free. The scheme also offers tax benefit u/s 80C. It is advised to continue with the provident fund scheme. For any surplus, consider mutual fund floating rate fund, which offers good return with tax efficiency.
PRE TAX RETURN TAX RATE POST TAX RETURN 11% 20% 8.80% 11% 30% 7.7% 8% 0% 8% A return of 8% on Provident fund account is better than a return of 11% , which are taxable in the highest IT slabs.
His current saving after creating an emergency fund worth Rs 5 lacs may be invested in mutual fund floater or fixed maturity plans, to take care of his housing loan repayment in case of emergencies like loss of job etc.
Equity :He should start making investments in equities through mutual funds. Since he is a salaried individual with no equity portfolio, he should take the route of Systematic investment plan (SIP). He should target his SIP’s as long term savings and investment.
He need to save for his daughter’s education and his own retirement corpus. Equity can yield better inflation adjusted return with high tax efficiency.
He should buy life insurance for himself. He may consider a unit linked investment plan with maximum exposure to equity. While the mortality charges will be low, maximum allocation will go towards savings. He may choose a limited premium payment option in the policy.
CASE STUDY = 3
NEAR RETIREE
Case History : Dr.Chandra, 50, is a doctor. He has been doing his own practice for the last 20 years. All these years he concentrated hard on his practice and did not give attention to utilizing his savings properly. With little knowledge of investments, his savings are wayward.
His son, Yogesh is studying in the final year of graduation and his daughter, Manisha is studying in class X. Yogesh wish to go abroad for higher studies which will cost Dr. Chandra around Rs.15 Lacs. Dr. Chandra anticipates a cost of Rs.20 Lacs on Manisha’s marriage.
Dr. Chandra wish to retire after 10 years. He has a balance of Rs.25 Lacs in his PPF account. He has Rs.10 Lacs in GOI savings Bond and Rs.5 Lacs in Bluechip stocks. He has 50 Lacs of term insurance.
For the next 10 years he expects a savings of Rs.10 Lacs each year after expenses and taxes.
Case Analysis : Dr. Chandra faces two major challenges
To ensure sufficient savings for Children’s education and marriage planning
To create a retirement corpus in 10 years – big enough to sustain for his life.
Has a diversified portfolio tilted towards debt
Has enough life insurance coverage considering the two responsibility towards children.
Current Finding
Risk Appetite : Moderate
Current Investments : Mostly in Debt
Life Coverage : Suficient
Goals : Children education, daughter marriage & retirement
Areas to work on
Deciding on Asset Allocation
Deciding on Products
Deciding on Asset allocation
He is a near retiree as in the next 10 years, he plans to retire, so the investments should be structured accordingly. He has a decent savings, insurance coverage and has a good medical practice. Going by the rule of thumb, his asset allocation should be 40% equity & 60% debt. Since he is a near retiree, we can take a little more conservative asset allocation of 70% debt & 30% debt. As 30% equity will allow him to earn a positive real rate of return on his investment portfolio. However this needs to be reviewed on a periodic basis and also with every major event happening in the life of Dr. Chandra.
Deciding on Product
To decide on products, we need to look at four important characteristics of any product.
Safety
Liquidity
Return
Post tax yield
Debt : Dr. Chandra should continue with all his investments. However, since he is in the highest tax bracket, GOI savings bond is not a very good option for him. These bonds are taxable in nature. On maturity, Dr. Chandra should not invest in these bonds. He should rather invest in floater or fixed maturity plans of mutual funds which offers good returns with indexation benefits ( over 1 year FMP’s ). Debt investments will provide stability to his portfolio during retirement.
PRODUCT PRE TAX RETURN TAX RATE POST TAX RETURN PPF 8% 0% 8% GOI BOND 8% 30% 5.60% FLOATER 8% 10% 7.20%
Both PPF & GOI Bonds offer 8% return, but return from PPF is tax free, while return from GOI bonds are taxable as per an individual’s tax slab.
Equity :He should start making investments in equities through mutual funds. He can take the route of Systematic investment plan (SIP). He need to save for his daughter’s education and his own retirement corpus. Equity can yield better inflation adjusted return with high tax efficiency.
CASE STUDY = 4
EMPTY NESTER
Case History : Mr. Kamath, 60, is a retired government officer. He has recently retired and is living with his wife in Delhi. His son is independently settled in USA for last 10 years and is a computer professional. His daughter is married to a well settled engineer and they are living in Kolkata. He has received Rs 20 lacs as his provident fund accumulation. He is also entitled to a pension of Rs 15000pm. They have their own flat in Delhi. He doesn’t have any financial responsibility towards his children. The only wish they have is to live and enjoy life happily. They are not dependant on their children for any monetary support. He has a great passion for drawing.
Case Analysis : Mr. Kamath is now in his golden period of life, free from all responsibilities of life towards children and family. His goal in life is
To lead a happy retired life, which is self funded.
To enjoy teaching drawing to children.
To see world
Current Finding
Risk Appetite : Conservative
Current Investments : Iin Debt
Life Coverage : Not required
Goals : Retirement corpus to sustain life.
Areas to work on
Deciding on Asset Allocation
Deciding on Products
Post retirement working
Deciding on Asset allocation
He is a retiree, who will be receiving Rs 15000 as pension pm apart from other investments that he is holding and he hope to meet his expenses from the pension amount. These are days, when he should enjoy his life without worrying about his investment performances. He has a decent savings, his asset allocation should be 90% debt & 10% equity. However his equity exposure needs to be reviewed on a periodic basis.
Deciding on Product
To decide on products, we need to look at four important characteristics of any product.
Safety
Liquidity
Return
Post tax yield
Debt: As he is a retired person, he should continue with all his investments in debt offering good return with safety. He should rather invest in Post office monthly income scheme, Senior citizen savings scheme, bank fixed deposits, floater or fixed maturity plans of mutual funds which offers good returns with indexation benefits (over 1 year FMP’s ). Debt investments will provide stability to his portfolio during retirement.
PRODUCT PRE TAX RETURN TAX RATE POST TAX RETURN Bank Deposits 10% 0% 10% SSSS 9% 0% 9% FLOATER 8% 0% 8%
Equity: He should put 10% of his investments in equities through mutual funds. Equity can yield better inflation adjusted return with high tax efficiency.
c. Post retirement working
He has a passion for drawing and should consider taking up part time assignment for teaching drawing in schools or privately at home. This will serve dual purpose, He will enjoy as well as earn from the same.
Personal Investment Plan
Plan prepared for
Mr. Amrit Singh
Plan prepared by
ABC Advisory Services Pvt. Ltd.
(Suite #A05, 10A Clive Row, Kolkata – 700001,
Tele – 033-2222 0000, Fax – 033 – 2233 0000)
Disclaimer
This is a long term plan. Many things may change going forward. As such regular review of this plan is important. We suggest you to review this plan at-least once a year.
Actual performance / returns generated may be different than projected returns. This may have an adverse impact on the plan, if actual returns are lower.
ABC-ASPL has prepared this plan as per the information received from the client. ABC-ASPL do not take responsibility that the desired objective of the client will be achieved by implementing the above plan. The client himself will be responsible for acceptance and execution of this plan.
Index
Particulars Page No.
Case History xx
Assumptions xx
Asset Allocation xx
Retirement Goal
Scenario 1 – Retirement age 55 xx
Scenario 2 – Retirement age 60 xx
Post retirement expenses and corpus (graphical representation) xx
Recalculations – for monthly expenses Rs. 40,000/- p.m. xx
Children’s higher education expense planning xx
Children’s marriage expense planning xx
Children’s annual education expense planning xx
Medical insurance planning xx
Trade off required in buying Life Insurance xx
Product recommendations
Snapshot xx
Product details xx
Disclaimer xx
Case History
Name Mr. Amrit Singh Age 30 years Profession Business Risk appetite Moderate to Low Monthly expenses Rs. 20,000/- p.m.
Retirement planning –
You want to retire at the age of 55 years (alternatively at 60 years) and want to create a corpus, which is sufficient to fund you and your spouse’s retirement expenses till the age of 75 years (alternatively till 80 years of age). Currently you have a life insurance policy with a sum assured of Rs. 5 lacs only.
Child’s higher education expense planning*1:-–
You want to create a corpus for your child’s higher education expense. You expect to spend Rs. 10 lacs in today’s value. This amount will be needed after 25 years, when the child attains an age of 22 years.
Child’s marriage expense planning*1:-
You want to create a corpus for your child’s marriage expenses. You expect to spend Rs. 20 lacs them in today’s value. This amount will be needed after 28 years, when the child attains an age of 25 years.
Child’s basic education expense planning*1:-
You want to create a corpus for your child’s basic education expenses. You expect to spend Rs. 1 lac annually in today’s value. This amount will be needed when the child attains an age of 5 years and till the time they attain an age of 22 years.
*1 Mr. Amrit will get married in next 6 months time and expects to have one child 3 years from now.
Assumptions
Inflation is assumed @ 5% p.a.
Net returns (after tax) expected from debt portfolio – 7% p.a.
Net returns (after tax) expected from equity portfolio – 12% p.a.
Retirement corpus post retirement is assumed to grow at 7% p.a.
Asset Allocation
Proper asset allocation is an important area of personal financial planning. While higher exposure to equity can result in higher returns, it is exposed to high volatility. Any future expense planning is inevitable and must be planned carefully. Investment made to achieve the goals should not be very aggressive. Since your risk appetite is low, we have planned your goals with two different asset allocations;
A. with a debt-equity in the proportion of 80:20 (as requested by you) &
B. with a debt-equity in the proportion of 50:50 (our suggestion).
Plan A Plan B.
We, however, advise you to review the asset allocation on an annual basis. Due to lower return expectation in debt schemes and higher returns expectation in equity schemes, the asset allocation (in market value terms) may tilt in favor of equity schemes over a period of time. While this has been a prime reason of recommending an initial asset allocation of 50:50, annual reviews are important so that you remain in control of the situation.
Retirement Goal – Calculations
Scenario 1 – Taking retirement age as 55
Particulars Details Current age 30 years Retirement Age 55 years Number of years left before retirement 25 years
Life Expectancy (Years) 75 80 Current monthly expenses (Rs.) 20,000 20,000 Monthly exp. Post retirement (Rs.) 67,727 67,727 Corpus needed at the time of retirement(Rs. Crs) 1.35* 1.62 Investment required to be made Asset Allocation(Debt:Equity) 0.8 : 0.2 0.5 : 0.5 0.8 : 0.2 0.5 : 0.5 Expected portfolio return** 8.00% 9.50% 8.00% 9.50% Monthly(for next 25 yrs) 14,789 11,759 17,687 14,064 Annually (for next 25 yrs) 171,358 135,410 204,936 161,945 Limited pay – for next 5 yrs - Monthly 39,539 28,903 47,287 34,567 Limited pay – for next 5 yrs - Annually 458,136 332,824 547,911 398,043 * Meaning of Retirement corpus:-
If you invest Rs.1.35 crores with an anticipated return of 7% pa. (net of taxes) and inflation is assumed @ 5% p.a., then the retirement corpus will provide for your living expenses for the next 20 years. The value of the retirement corpus at the end of 75 years will become Nil.
** Expected portfolio return is the weighted average of the two asset class.
Note – Expected portfolio return is the effective annual rate. So in case of monthly investments, the monthly rate has been taken into consideration which gives the same annual effective return, instead of just dividing the given annual rate by 12.
Post retirement expenses and corpus (graphical representation)
(As per scenario 1 – Taking retirement age as 55)
Note – Annual expenses increase @ 5% p..a. (inflation rate), Retirement corpus grows @ 7% p.a.
Scenario 2 - Taking retirement age as 60
Particulars Details Current age 30 years Retirement Age 60 years Number of years left before retirement 30 years
Life Expectancy (Years) 75 80 Current monthly expenses (Rs.) 20,000 20,000 Monthly exp. Post retirement (Rs.) 86,439 86,439 Corpus needed at the time of retirement(Rs. Crs) 1.35 1.73 Investment required to be made Asset Allocation(Debt:Equity) 0.8 : 0.2 0.5 : 0.5 0.8 : 0.2 0.5 : 0.5 Expected portfolio return 8.00% 9.50% 8.00% 9.50% Monthly(for next 30 yrs) 9,555 7,177 12,181 9,149 Annually (for next 30 yrs) 110,718 82,643 141,136 105,348 Limited pay – for next 5 yrs – Monthly 26,942 18,383 34,344 23,433 Limited pay – for next 5 yrs – Annually 312,178 211,676 397,944 269,830
Child’s higher education: - Calculations
Cost of higher education in today’s term - Rs. 10 Lacs. This amount will be needed after 25 years, when child attain an age of 22 years.
Cost of higher education in today’s term (Rs. Lacs) 10.00 Amount needed after (Years) 25 Expected inflation rate (%) 5 Actual inflation adjusted amount needed after 25 yrs (Rs. Lacs) 33.86 Investment required to be made Asset Allocation(Debt:Equity) 0.8 : 0.2 0.5 : 0.5 Expected portfolio return 8.00% 9.50% Monthly(for next 25 yrs) 3,702 2,943 Annually (for next 25 yrs) 42,890 33,893 Limited pay – for next 5 yrs – Monthly 9,896 7,234 Limited pay – for next 5 yrs – Annually 114,669 83,304
Life insurance requirement - To protect this goal, you need to take a Life insurance coverage of Rs. 10 lacs at least for next 20 years.
Child’s marriage expense planning: - Calculations
Expected expenses to be incurred for marriage in today’s term – Rs. 20 lacs per child. This amount will be needed after 28 years, when child attain an age of 25 years.
Expected Marriage expenses in today’s term (Rs. Lacs) 20.00 Amount needed after (Years) 28 Expected inflation rate (%) 5 Actual inflation adjusted amount needed after 28 yrs (Rs. Lacs) 78.40 Investment required to be made Asset Allocation(Debt:Equity) 0.8 : 0.2 0.5 : 0.5 Expected portfolio return 8.00% 9.50% Monthly(for next 25 yrs) 6,572 5,051 Annually (for next 25 yrs) 76,144 58,167 Limited pay – for next 5 yrs – Monthly 18,189 12,757 Limited pay – for next 5 yrs – Annually 210,753 146,900
Life insurance requirement- Again, to protect this goal, you need to take a Life insurance coverage of Rs. 20 lacs at least for next 25 years.
Child’s annual education expenses: - Calculations
In this case it is assumed that you need Rs. 1 lac every year (in today’s term) for child’s basic education from the time when the child attain an age of 5 years till the time they attain 22 years of age. Hence, you need this amount every year for seventeen (17) years beginning nine (9) years from now.
Expected annual education expenses in today’s term (Rs. Lacs) 1.00 Amount needed after (Years) - every year for next 17 years 8 Expected inflation rate (%) 5 Actual inflation adjusted amount needed after 8 yrs (Rs. Lacs) - 1.48
Investment required to be made Asset Allocation(Debt:Equity) 0.8 : 0.2 0.5 : 0.5 Expected portfolio return 8.00% 9.50% Monthly- starting today for next 24 yrs. 12,262 11,137 Annually - starting today for next 24 yrs 142,082 128,238 Limited pay - for 5 years starting today.(Monthly) 25,336 21,212 Limited pay - for 5 years starting today.(Annually) 293,563 244,256
Product recommendations
Snapshot
Product Category Expected post tax return Risk PPF Debt 8% Low PO MIS + PO RD Debt 8.74%*1 Low HDFC Fixed deposit Debt 9.2% to 9.8%*2 Low Debt Mutual Funds Debt 7% to 8% Low to Moderate Equity Mutual Funds – Diversified Equity 12% High Equity Mutual Funds – ELSS Equity 12% High Equity Mutual Funds - Hybrid Equity 10% Moderate
*1 – Assuming investment is done in the name of family member having nil tax liability.
*2 – depends on the tenure of the FD and assuming investment is done in the name of family member having nil tax liability.
Product details:-
A. Public Provident Fund (Regular investment scheme)
Return 8% p.a. Lock-in period 15 years Min Investment Rs. 500 p.a. Max Investment Rs. 70,000 p.a. Loan facility Yes Partial withdrawal Yes (after 6 years) Tax benefit Deductions u/s 80C Tax on interest Exempt
B. Post Office Monthly income scheme + Post office recurring deposit
Open a POMIS a/c with a lump sum deposit and transfer the monthly income to PO recurring deposit a/c.
Example – Invest Rs. 1 lacs in PO MIS. Interest income per month will be Rs. 666.67. Transfer the same to PO RD a/c for next 6 years. At the time of maturity, the final proceeds including bonus will be around Rs. 1.65 lacs (i.e. a pre-tax return of 8.74% p.a.). To save taxes, this can be done in the account of the family members whose income does not fall under taxable bracket.
Post Office Monthly income scheme (One time investment scheme)
Return 8% p.a. Lock-in period 6 years Min Investment Rs.1 500 Max Investment Rs. 4.5 lacs (single a/c) or Rs. 9 lacs (joint a/c) Bonus 5 % (at maturity) Premature closure After 1 year with penalty Tax benefit Nil
Post office recurring deposit (Regular investment scheme)
Return 7.5% quarterly compounded. Lock-in period 5 years Min Investment 60 monthly investment with min. Rs. 10 p.m. Tax benefit Nil Loan facility Yes Premature closure After 3 years Rs. 10 invested per month for 5 years gives back Rs. 728.90 at the time of maturity.
C. HDFC Fixed deposits.
a. HDFC Premium Deposits
Period (months) Rate of interest (% p.a.) Individuals Senior Citizens 30 9.55 9.80 45 9.30 9.55 b. HDFC Regular Deposits
Period (months) Rate of interest (% p.a.) Individuals Senior Citizens >12 upto 35 9.45 9.70 36 - 60 9.20 9.45
Note – In both the above cases -
Interest income will be taxable
TDS will be applicable in case where annual interest income is more than Rs. 5000.
Minimum deposit amount is Rs. 10,000.
Additional interest of 0.1% on a single deposit of Rs. 1 lac and above.
D. Debt Mutual Funds.
Fund Name Fund Size* Past Performance (%)** Portfolio Rs. Crs. 1 yr 3 yrs 5 yrs Debt (%) Cash (%) Canara Rabeco Income-Growth 413 29.5 13.1 10.3 73.8 26.2 IDFC D B F- Plan A - Growth 343 19.2 12.2 8.4 93.4 6.6 Kotak Bond Regular Plan - Growth 437 13.8 11.1 8.1 86.1 13.9 Birla Sunlife Income-Growth 688 11.1 11.8 8.1 78.3 21.7 Reliance Income Fund - Retail - G P - Growth 2159 12.8 10.3 7.8 93.5 6.5 ICICI Pru Income Fund-Growth 1480 15.7 11.3 7.7 89.4 10.6 Birla Sun Life Income Plus - Growth 2420 13.3 11.6 7.6 86.3 13.7 *as on 31st Jan ’09.
**as on 12th Feb’09.
Note- Income in bond mutual fund is treated as capital appreciation and is eligible for indexation benefit.
E. Equity Mutual Funds
a. Equity Diversified funds
Fund Name Fund Size* Past Performance (%)** Portfolio Rs. Crs. 1 yr 3 yrs 5 yrs Equity(%) Debt(%) Cash(%) Reliance-Growth 3213 -46.2 -0.2 22.2 69.8 - 30.2 DSP Top 100 Equity-Growth 982 -32.1 6.7 18.1 89.5 13.6 -3.1 HSBC Equity-Growth 1019 -39.1 3.1 17.0 78.7 5.5 15.9 HDFC-Growth 806 -41.2 2.7 16.2 82.6 - 17.4 Note- Long term (above 12 months) gain in equity mutual fund is fully tax-exempt.
b. Equity linked savings scheme (ELSS)
Fund Name Fund Size* Past Performance (%)** Portfolio Rs. Crs. 1 yr 3 yrs 5 yrs Equity(%) Debt(%) Cash(%) Sundaram BNP Tax Saver-Growth 515 -38.2 0.5 23.2 78.5 - 21.5 HDFC Tax Saver-Growth 956 -42.5 -6.3 19.2 95.2 - 4.8 Note-
These funds qualify for sec 80C deductions.
Lock-in period of 3 years.
Long term (above 12 months) gain in ELSS is fully tax-exempt.
c. Hybrid Funds – Equity-Debt
Fund Name Fund Size* Past Performance (%)** Portfolio Rs. Crs. 1 yr 3 yrs 5 yrs Equity(%) Debt(%) Cash(%) SBI-Magnum Balance 301 -35.9 0.1 16.3 65.5 12.6 21.8 HDFC-Prudence 1791 -36.4 0.2 14.1 74.0 23.6 2.5 Note - Long term (above 12 months) gain in hybrid (where min. 65% is equity) is fully tax-exempt.
*as on 31st Jan ’09.
**as on 12th Feb’09.
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Investment Planning
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Case Study
Rs. 33.86 lacs