ET FINPRO MODULE- 4

Design a portfolio for a investor aged 30yrs Planning to retire at 60yrs. His monthly income is Rs 40000 and wants more than Rs Rs 50000 after retirement and corpus of more than Rs 50,00,000.

Names Roll numbers Amit Kumar E130031000147

Bhavana E130031000126

Raja Sekhar E130031000127

Farah Nikhat E130031000133

Faculty Name:Vishwanathan R Date: 27-12-2013Batch Code:

HYD01AA0213

CONTENT

S. NO DESCRIPTION1 Importance Of Retirement

2 What is a Portfolio Management

3 Tax Slabs

4 List of Retirement Products

RD,FD, POMIS

Monthly Income Plan

Unit Linked Insurance Plan

5 Entire Portfolio

6 BIBLIOGRAPHY

7 CONCLUSION

Importance of planning for Retirement

Two components of retirement Financial Planning Personal Planning

Follow this step Identify & compare your income and expenses to determine any

shortfalls or surpluses. Review & analyse the various retirement income strategies. Review & compare the retirement income options available. Develop an action plan

The art and science of making decisions about investment mix and policy, matching investments to objectives Evaluate and select program to fund. Evaluate and select programes to fund. Determine the availability and sources of fund. Monitor and report on portfolio performance

Portfolio Management

Tax Slabs

ICICI Bank's Recurring Deposits are the ideal way to invest small amounts of money every month and end up with a large saving on maturity.

FEATURES Encourages savings without stress on your finances. High rates of interest (identical to the fixed deposit rates). Non-applicability of Tax Deduction at Source (TDS)Can avail loan on deposit till 90% of the amount.

MINIMUM BALANCEThe minimum balance of deposit is Rs. 500 per month and thereafter, in multiples of Rs. 100.

PERIOD OF DEPOSITThe minimum period is 6 months, and thereafter in multiples of 3 months.Maximum 10 years

NOMINATIONThe facility of Nomination is available for relationships in the names of individuals.

EligibilityResident Indian

Years

Amount/Yearly

w/o Compounding

with Compounding the amount

Interest

1 60000 62817 28172 60000 131147 111473 60000 205472 254724 60000 286319 463195 60000 374260 742606 60000 469917 1099177 60000 573969 1539698 60000 687151 2071519 60000 810264 270264

10 60000 944180 344180

Withdraw 944180

Calculation

Interest amount = 344180As he comes in 10% tax bracket so he is liable to pay 14418 as tax.Education cess =288Secondary and Higher education= 144Total tax Liability = 14850Total Amount = 9,29,330

Tax Calculation

Features

A wide range of tenures, ranging from 7 days to 10 years, to suit your investment plan. Partial withdrawal is permitted in units of Rs 1,000 with penalty charges. Safe custody of your fixed deposit receipts. Auto renewal is provided. Loan facility is available up to 90% of principal and accrued interest

Amount = 9,29,330 Tenure = 10 years ROI = 8.50% Interest = Simple Interest Interest Amount = 7,89930 10,000 and above interest amount is taxable @10%Tax amount for 10 years = 69000Total interest = 72,0930Total amount = 16,50,260

Calculation

Documentation

Identity proof

1. Passport2. PAN card3. Voter ID card4. Driving licence5. Government id 6. Photo ration

card

Address proof

1. Passport2. Telephone bill3. Electricity bill4. Bank Statement

with cheque5. Certificate/ ID card

issued by Post office

Post Office Monthly Income Scheme

Guaranteed returns investment instrument available at post office

On the deposits made with P.O one gets an assured monthly income

It provides capital protection Risk free Liquid

Features

Maturity period:5 years Interest rate:8.4 % p.a.

Nomination facility also available

There is no tax rebate No TDS Penalty on premature

withdrawal Depositors exempt

from wealth tax

Min- 1500Max in single a/c- 4,50,000

Joint a/c- 9,00,000 Multiples of -1500

Calculation

2 Joint a/c of 9,00,000 each Tenure = 5 years /eachROI = 8.40%Amount in hand = 16,50,2601,99,740 taken from savings Interest amount = Rs 1340800Total amount = Rs 2480400Monthly Returns=Rs 12600

1. Passport2. Telephone bill3. Electricity bill4. Letter from any

recognised authority

1. Passport2. PAN card3. Voter ID card4. Driving license

3 passport size photographs

Documentation

Identity proof Address proof

MONTHLY INCOME PLAN

MIP’s are debt oriented mutual funds, they invest heavily in debt instruments like debentures, corporate bonds and government securities etcGenerally it has 75 to 80 % of its money in debt and rest in equityThe income you can get from monthly income plan is not limited to monthly option. we can also choose to receive income quaterly,half-yearly or annually.

A type of investment that provides a specified monthly payment to the investor. It is intended to be a stable form of income and it is typically suited for retired persons or senior citizens

TYPES OF MONTHLY INCOME PLAN

DIVIDEND OPTION: In this option investor receives income monthly,quaterly andhalf-yearly,These can be declared only from profits not from capital.

GROWTH OPTION: In this option money is not paid out to investor in the form of dividends, instead it keeps growing in mutual fund

Features Of MIP

Low risk

No TDS for dividend option and as per tax slab for growth option

Moderate complexity

Return range on average (6-13%)

MIP’s returns are influenced by interest rates and stock market

TOP PERFORMING MIP SCHEMES:

Per month:15000/-1 year:180000

For 30 years:5400000Interest rate:12%

Interest amount:648000Total amount :6048000

Per month after retirment:25200/-

Calculation

ULIPS

Unit linked insurance plans (ULIPs) are a category of goal-based financial solutions that combine the safety of life insurance protection along with long term wealth creation opportunities

In ULIPs, a part of the premium goes towards providing you life cover &the remaining portion is invested in fund(s) which in turn is invested in stocks or bonds

Tax Benefits

ULIPs are an efficient tax saving instrument too .The tax benefits that you can avail in case you invest in ULIPs are described below:

Life insurance plans are eligible for deduction under Sec. 80CPension plans are eligible for a deduction under Sec. 80CCCThe maturity proceeds or withdrawals of life insurance policies are exempt under Sec 10(10D), subject to norms prescribed in that section

Staying for Long Term

Unit-Linked Insurance Plans (ULIPs) are meant to help you achieve your financial goals over the long-term

If you Invest in Short term, they will not give you considerable return on your investments, because of a product cost structure which is higher in the initial years

To get the best out of your ULIP, you should remain invested in the ULIP for the long-term of at least 8-10 years

Pension plans from insurance companies ensure that regular, disciplined savings in such plans can accumulate over a period of time to provide a steady income post-retirement. Usually all retirement plans have two distinctive phases

The accumulation phase when you are saving and investing during your earning years to build up a retirement corpus

The withdrawal phase when you actually reap the benefits of your investment as your annuity payouts begin

PENSION PLANS

Investment= 10,000/monthPeriod =30 yearsROI=7%Total Amount=1,13,35,249Annuity =40% of total amount is 45,34,117Monthly he can withdraw after retirement is 18,892.

CALCULATION

Asset Allocation

ExpensesRecurring Deposit/FD/POMISMonthly Income PlanULIP

10,000

15,000

10,000

5000

Total Accumulated Amount

Recurring Deposit Fixed Deposit POMIS16,50,260 9,29,330

24,80,400Annual Amt

12,600Monthly

Products Returns(Corpus) Returns(Monthly)

RD,FD,POMIS 24,80,400 12,600

MIP 60,48,000 25,200

ULIP 45,34,117 18,892

Total Amount(60yr) 1,30,62,517 56,692

“ People may live as much retired from the world as they like , but sooner or later they

find themselves debtor or creditor to someone “

-Johann Wolfgang

Conclusion

Bibliography

www.moneycontrol.com

www.myinvestmentidea.com

www.icicibank.com

www.indiapost.gov.in

www.iciciprudentiallife.co.in