Kaustav Das

IIPM, GURGAON

In the midst of nowhere...

Hi, I am Kaustav Das, presently the Head, Marketing (South), Travel Division, Saffron Media Pvt. Ltd. I am 39 years old and my annual pay package is Rs.7 lakhs.

“My aim at the moment is to reach a salary of Rs.10-12 lakhs per annum. For the same, I am reaching out to overshoot my targets at work by 100%.” Kaustav started investing 3-4 years ago, mostly in mutual funds. The ones that he presently has are Fidelity India Special Situations-G, Franklin India Taxshield-G, SBI Magnum Global-G, SBI Magnum Taxgain-G & Templeton India Equity Income-G. “I also bought a Kisan Vikas Patra worth Rs.40,000 just a month back and have even invested Rs.1,00,000 each in two businesses. I’m getting about 30% returns on these,” he adds. Now, Kaustav is planning to invest Rs.1,50,000 over the next 2-3 months in mutual funds. He has a flat in Bengalooru (he is paying Rs.6,000 as EMI). “Though I bought a Kisan Vikas Patra, I don’t quite like it. The time bound period of seven years is too long! I don’t like government securities and bonds,” he says. Kaustav is middle aged now and wants to make more money to treat himself to the best that life can offer!

Though in his late 30s, Mr. Das has aggressive plans for his future, with enough money to live it up in style! He needs an aggressive investment portfolio. After consulting Vineet Khurana and Mayur P. Shah, executives in Wealth Management Product of Anand Rathi, 4Ps B&M lists out the following investment options for him.

Medical insurance from a general insurance Co. worth Rs.2 lakhs, for Mr. and Mrs.Das (premium for which would be approx Rs.10,000 p.a.); term life insurance cover worth Rs.1.4 crores (as per the current income) from any life insurer for Mr. Das. This can also be taken in parts. Annual premium for a life cover of Rs.1.4 crores would be about Rs.36,000 p.a.. For taxation planning under section 80C, one should invest a minimum of Rs.1,00,000 in a financial year in the instruments listed U/s 80C. The amount should be invested in ELSS. If Kasutav is risk averse i.e. doesn’t want to invest in equity then he could go for PPF investment option.

If we assume that currently Mr. Das is having an annual expenditure of about Rs.3 lakhs, and if he wants to maintain this lifestyle post retirement too, then he needs to invest Rs.1,21,290 each year in Equity MF (assuming returns of 15% p.a.) up till retirement (with inflation at 5% p.a. & life expectancy of 80 years). This will create a corpus of Rs.67.58 lakhs on retirement. Anil Mascarenhas, Editor, India Infoline, recommends a combination of equity diversified mutual funds for Mr. Das. For an annual investment of Rs.1,50,000, he may perhaps invest Rs. 50,000 each in DSP Equity and Reliance Power; and Rs.75,000 in Reliance Vision.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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