designing a portfolio for a customer. considering tax, benefits, good returns
DESCRIPTION
TRANSCRIPT
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