2. Case Study 1
An investor chose to trust an 'investment expert'. The
investor is a 60-Yr old lady, while the investment expert
is a PMS (portfolio management service) offering from
one of the country's leading brokerage houses.
The facts of the case:
• The investor is a 60-Yr old lady who has recently retired.
She had office mediclaim policy for family.
• She received a retirement package of Rs 2 m (Rs 20
lakhs)
• Her husband (65) is a yoga consultant (earns around Rs
10000 pm)
• The couple largely depends on their savings to meet
their day-to-day needs
• They stay in their own 1BHK flat in Dadar.
3. Case Study 1 .. Contd
• In early 2008 at the height of the rally, the investor (the
60-Yr old lady) was advised by the brokerage house to
invest in a mid cap PMS.
• The brokerage house assured her (verbally of course!)
that her investments would yield a return of at least 15%
per annum.
• The bad market resulted in portfolio erosion by 30%.
• The couple approaches you to get them out of this mess.
• Looking at the above you would need to suggest to them
the plan to go ahead
4. Case Study 2
• Nitin is 26 and earns a salary of Rs 5.5 lakhs per
annum. He stays in a 1 room kitchen flat with his
parents.
• He currently has a credit card outstanding of Rs 250,000
of which he is paying 5% of balance pm.
• He has taken a motorcycle loan for which he is paying
an EMI of 5000 pm.
• His monthly house hold expenses are around 15000.
• He plans to get married in the next 2 years and wants to
get back his financial health and create a good
investment base
He wants to plan his finances and comes to you for
advice and for getting a detailed financial plan.
5. Case Study 3
• Sharon is 32 is a single mother and earns a salary of Rs 10 lakhs
per annum. Sharon has an 8 year old daughter Mini. She stays in a
house which has come as alimony from her husband.
• Sharon feels the need to accumulate funds for her daughter’s MBA
and her marriage.
• Her monthly expenses come to around Rs 35000 and she has a
mediclaim of Rs 4 lac for which she pays a premium of Rs 5500 pa.
and Life Insurance Policy of Rs 10 lac for which she pays Rs 75000
pa.
• Last year she took a personal loan of Rs 5 lakhs to have a foreign
tour with Mini for which she has 48 months of EMI pending. The
bank charges interest @19% p.a
• Minis current school & education expenses at present are around
8000 pm.
• Sharon has Rs 3 lacs in her super saver account with a bank.
• She seeks your advice regarding finance and investment planning
for the future. She does not have understanding of the finance
markets at all.
6. Case Study 4
• Nirgun is in the final year of MBA and he has got
placed with a leading company.
• His Gross CTC has been defined as Rs 10 lacs of
which he has been given the option of structuring
his salary component to the extent of Rs 5 lacs. The
balance Rs 5 lacs consists of company’s
contribution to PF /Gratuity / Superannuation/
personal allowances and variable incentive
component which the company cannot restructure.
His future goals include buying a house, car,
vacations, he is currently in Mumbai and stays with
his friends.
• He seeks your advice in structuring of salary and on
future financial planning.
7. Case Study 5
• Avinash is 37 and is a self employed professional.
His spouse is a housewife. He has current gross
receipts of Rs 9.6 lacs. His daughter is 3 years old.
His current savings & Investments are:
• Rs 50,000 in saving bank
• Rs 100,000 in Tax saving mutual funds
• Rs 150,000 in Bank FD
• He wants to grow his investments and plan for his
future expenses and retirement. He seeks your
advice on the matter. He wants you to give him
detailed guidance on his future plan
• His current outflows are given as under:
8. Case Study 5 - contd
Mediclaim cover of Rs 3
lac
Rs 5500 p.a
Life Insurance cover of
Rs 10 lacs
Rs 24000 p.a (Surrender Value – Rs
1.9 lacs)
Office Rent Rs 7500 pm
House EMI Rs 20000 pm ( Bal 150 Instalments)
Hotel Bills Rs 35000 p.a
Conveyance Rs 30000 p.a
Society Maintenance Rs 3000 pm
Office Expenses Rs 7500 pm
Household expenses Rs15000 pm
9. Case 6
• Ajay Bal is 34 and is sales manager has a monthly salary of Rs52900
including annual incentives,bonus etc. He comes from a conservative
family.
• He stays with his brother and his family of 4 in a rented apartment where his
share household expenses is Rs 10000. His sister in law is a housewife
• He is currently single and plans to get married soon. His parents stay in
their village and take care of their monthly expenses barely. He also sends
Rs 5000 a month for their expenses.
• His current financial position is as
• EPF 70000 , FD 50000
• MF (Debt) 16500, SB A/c 4 lac.
• Life Insurance - 87000 (Surrender Value) - ULIP - Annual Premium 8200
• He suddenly has got cold feet looking at the future and approaches you to
help him with a detailed financial plan and advise him on realistic
achievement of his goals.
10. Case 6- His wish list is as under
Goal Years to Achieve Expected Cost
Marriage 1 5 lakh
House 3 75 lakh
Car 5 20 lakh
Foreign Holiday 5-8 20 lakh
Child education 20 50 lakh
Child Marriage 25 50 lakh
11. Case 7
• Hemant Raj is 26 a software professional lives in a rented apartment
in Pune. His wife (25) is a home maker. Monthly salary is Rs 40000
and his household expenses are Rs 22000.
• He has booked a flat worth Rs 48 lakhs and have paid 23lakhs from
own resources including taking of personal loans. He has to pay rest
of the house amount after 2.5 years on possession. He has no
investible surplus
• His current position is as under
• EPF 70000, PPF 85000, Insurance - 50000(Surrender Value) (20
lakhs Sum Insured)
• FD 1lakh, Real Estate 23 Lakhs
• Personal Loan @ 19% -2 lakhs , Employer Loan @ 5%– 1 lakhs
• His Principal Repayment for Personal Loans – Rs 40000 over the
year and Employer Principal Repayment over 5 years
12. Case 7- His wish list is as under
Goal Years to Achieve Expected Cost
Car Second Hand 2 2.5 lakh
House Possession 2.5 25 lakh
Child Education 21 35 lakhs
Child Marriage 25 50 lakh
Retirement 35 3.5 crore
13. Case 8
• Mr. Vishal , age 42 has just retired after playing cricket for over 20
years at the highest level. Over the years he has accumulated
capital amounting to Rs 25 crores. While during his playing days he
had a steady source of income, he would now like to invest his
portfolio such that he can lead a comfortable post retirement life.
• He has a wife and 3 children (age 15, 11 and 8). He calculates that
he spends Rs 1 crore each year and would like to continue leading
his current lifestyle. This expense would grow at an average rate of
inflation, around 5% per year. Along with that he would like his
portfolio to grow as much as possible to fund his kids' college
education and pay for any future luxuries.
• He estimates that he would require Rs 2 crores for each of his
child's college education. As soon as his children pass out of college
he plans to make a lump-sum payment of Rs 5 crores to each of
them, after which they would be on their own
14. Case 8
• He may have a sudden need of capital to the tune of Rs 5 crores
any year if he feels the need to buy a new home or a new car
though it is expected to be a one off thing. He also supports his
younger brother (age 30) by paying him Rs 50 lakhs per year. Vishal
has no debt and doesn't own any other asset of significant value. He
is taxed at 30% on income and capital gains are at actuals as and
when.
• Vishal has been extremely conservative till now and doesn't want
more than 60% of his capital to be invested in equities at any given
time. Among equities he wants the allocation to any one sector to be
capped at a maximum of 20% of his total portfolio value and
investment in stocks of any single company to be not more than 5%
of the total portfolio value. He is also highly conscious about the
environment and would like at least 5% of his portfolio to be invested
in eco-friendly companies
• Prepare a detailed plan for Vishal. Please clearly describe the
assumptions
15. Case 9
• Arjun 23 works in a BPO and has annual income of Rs 240,000 p.a .
• He stays in a PG accommodation and pays rent of Rs 6000 pm.
• He has no investments nor any surplus. He spends whatever he
earns.
• He has inherited Rs 25 lakh on death of his parents.
• He comes to you for advice to help him in detailed financial planning
and tax planning
16. Case 9- His wish list is as under
Goal Years to Achieve Expected Cost
Marriage Does Not Know Does Not Know
House Does Not Know Does Not Know
Fancy Car Does Not Know Does Not Know
Foreign Holiday Does Not Know Does Not Know
Any other Does Not Know Does Not Know
