CASE I

Assumptions in the case of the 25 year-old....................

• Current Monthly Expenses: Rs 10, 000
• Monthly contribution to PF: Rs 1,500
• Annual estimated increment: 10 per cent
• Annual return on PF: 11 per cent
• Annual return on debt funds: 12 per cent
• Annual return on equity funds: 20 per cent
• Annual rate of inflation: 8 per cent

• A recommended debt to equity ratio of 40:60. For this, a mix of debt and equity based funds should be selected.
• Estimated current value of monthly expenses of Rs 10, 000 would inflate to Rs 100, 627 on retirement after 30 years.
• To generate such an amount of regular income Rs 12,075,188 would need to be invested in financial instruments giving a steady annual return of 10 per cent.
• A major chunk (86 per cent) of this would be financed through accumulated PF balance which would have grown to Rs 1, 03, 71, 655.
• Therefore, the balance amount of Rs 17, 03, 534 would need to be saved over a period of 30 years.
• With a debt to equity mix of 40:60,, the person needs to begin with a total monthly of only Rs 143. This monthly saving/contribution would could keep on increasing every year.

Year	No.	Equity Fund (Rs)	Debt Fund (Rs)	Total	Yearly	Income	Cumm. Balance**
2000	1	86	57	143	1,713	133	1,846
2001	2	94	63	157	1,884	417	4,147
2002	3	104	69	173	2,073	768	6,988
2003	4	114	76	190	2,280	1,200	10,468
2004	5	125	84	209	2,508	1,727	14,703
2005	6	138	92	230	2,759	2,367	19,829
2006	7	152	101	253	3,035	3,139	26,002
2007	8	167	111	278	3,336	4,066	33,404
2008	9	184	122	306	3,672	5,175	42,251
2009	10	202	135	337	4,044	6,500	52,795
2010	11	222	148	370	4,440	8,074	65,308
2011	12	244	163	407	4,884	9,940	80,133
2012	13	269	179	448	5,376	12,149	97,658
2013	14	296	197	493	5,916	14,756	118,330
2014	15	325	217	542	6,504	17,829	142,663
2015	16	358	238	596	7,152	21,441	171,256
2016	17	394	262	656	7,872	25,683	204,811
2017	18	433	289	722	8,664	30,657	244,132
2018	19	476	318	794	9,528	36,481	290,140
2019	20	524	349	873	10,476	43,290	343,906
2020	21	576	384	960	11,520	51,242	406,669
2021	22	634	422	1,056	12,672	60,520	479,861
2022	23	697	465	1,162	13,944	71,334	565,139
2023	24	767	511	1,278	15,336	83,927	664,402
2024	25	844	562	1,406	16,872	98,579	779,853
2025	26	928	619	1,547	18,564	115,612	914,029
2026	27	1,021	680	1,701	20,412	135,399	1,069,839
2027	28	1,123	748	1,871	22,452	158,368	1,250,659
2028	29	1,235	824	2,059	24,708	185,015	1,460,382
2029	30	1,358	906	2,264	27,168	215,909	1,703,460

CASE II

Assumptions in the case of the 30 year-old....................

• Current Monthly Expenses: Rs 20, 000
• Monthly contribution to PF: Rs 2,000
• Annual estimated increment: 10 per cent
• Annual return on PF: 11 per cent
• Existing PF balance: Rs 100,000
• Annual return on debt funds: 12 per cent
• Annual return on equity funds: 20 per cent
• Annual rate of inflation: 8 per cent

• Recommended debt to equity ratio of 50:50. For this, a mix of debt and equity based funds should be selected.
• Estimated current value of monthly expenses of Rs 20, 000 would inflate to Rs 136, 970 per month on retirement after 25 years.
• To generate such an amount of regular income Rs 1, 64, 36, 340 would need to be invested in financial instruments giving a steady annual return of 10 per cent.
• About 50 per cent of this would be financed through accumulated PF balance which would have grown to Rs 76, 73, 755.
• Therefore, the balance amount of Rs 87, 62, 586/- would need to be saved over a period of 25 years.
• With a debt to equity mix of 50:50, the person needs to begin with a total monthly of Rs 1,740. This monthly saving/contribution could keep increasing every year.

CASE III

Assumptions in the case of the 35 year-old....................

• Current Monthly Expenses: Rs 30,000
• Monthly contribution to PF: Rs 2,500
• Annual estimated increment: 10 per cent
• Annual return on PF: 11 per cent
• Existing PF balance: Rs 300,000
• Annual return on debt funds: 12 per cent
• Annual return on equity funds: 20 per cent
• Annual rate of inflation: 8 per cent

• Recommended debt to equity ratio of 50:50. For this, a mix of debt and equity based funds should be selected.
• Estimated current value of monthly expenses of Rs 30, 000 would inflate to Rs 139,829 per month on retirement after 20 years.
• To generate such an amount of regular income Rs 1, 67, 79, 446 would need to be invested in financial instruments giving a steady annual return of 10 per cent.
• About a third of this would be financed through accumulated PF balance which would have grown to Rs 56, 37, 516.
• Therefore, the balance amount of Rs 111,41, 930 would need to be saved over a period of 20 years.
• With a debt to equity mix of 50:50, the person needs to begin with a total monthly of Rs 4,927. This monthly saving/contribution could keep increasing every year.

Next: • Saving for a home