Mr. Samit, aged 29 years, is working with a Pharma company. His wife Aruna, aged 27 years, is self-employed. His Gross Income is Rs.1, 50,000 per month. Monthly family expenses are 60% of gross income. Other Information: Samits life expectancy is 78 years Arunas life expectancy life: 82 years Retirement age of Samit 60 years Retirement expenses 75% of pre-retirement expenses till Samits lifetime

Thereafter 50% of pre-retirement expenses till the lifetime of Aruna and Samits death

The investment for accumulation of retirement corpus will be made in a Hybrid Mutual fund, which is expected to generate post-tax returns of 12% p.a.

Inflation 5.50%p.a. The risk-free rate of return is 6.50%p.a.

The retirement corpus is to generate inflation-adjusted monthly income after investing in risk-free investments post-retirement.

The annuity/pension after retirement is required at the end of every month. Expected PPF accumulation by retirement age is 135 lacs and Gratuity is estimated to be accumulated to 20 lacs.

You are required to ascertain: i. What is the monthly income needed when Samit retires? (1 mark)

ii. What is the monthly income needed by Aruna after the death of Samit?

iii. What is the real rate of return required post-retirement?

iv. What is the balance retirement corpus to be accumulated?

v. What is the effective monthly interest rate on the investment during the accumulation stage?

vi. How much is to be set aside in SIP monthly in a balanced mutual fund to reach the goal? Assume that the investment is made at the beginning of every month.

You can round off your answers to the nearest rupee.