DIFFERENT TYPES OF RETURN

FINtastic Women Your Pathway To Be The Household CFO

जय श्री राम FINtastic Women Program International College of Financial Planning

• Q1. If you want Rs.5 crore after 30 years from now , how much should be invested per month in equity mutual fund which generates 12% p.a. comp monthly. FINtastic Women Program International College of F5in/ a2 n4 c/ 2ia0l2P1lanning3

• Q2. If you invest Rs.20000 p.m. for 30 years in equity mutual fund which generates 12% p.a. comp monthly, how much corpus after 30 years? FINtastic Women Program International College of F5in/ a2 n4 c/ i2a0l2P1lanning4

• I am calling from SBI , there is a scheme in which you need to deposit Rs.50000 p.a. for 5 years thereafter no need to pay for next 5 years. • At the end of 10 years from now you will get Rs.7.5 lacs. FINtastic Women Program International College of Financial Planning

• There was a super plan of LIC in which you needed to invest Rs.10000 p.a. for only 3 years, you would receive Rs.16 lacs* after total tenure of 20 years. FINtastic Women Program International College of Financial Planning

• Invest Rs.1 lac for 10 years, thereafter you will get Rs.1.85 lacs p.a. for next 10 years FINtastic Women Program International College of Financial Planning

DIFFERENT TYPES OF RETURN 1. Holding Period return 2.CAGR 3.IRR 4.XIRR 5.RRR 6.Tax adjusted Return 7.Tax and Inflation Adjusted Return FINtastic Women Program International College of Financial Planning

Q1. X invested Rs.100, 5 years BACK in mutual fund, right now fund value is Rs.200 , • Calculate • HPR • CAGR FINtastic Women Program International College of Financial Planning

• HPR = ( END VALUE – BEGIN VALUE)/ BEGIN VALUE • CAGR = (end value/start value)^(1/periods)-1 • OR • =RATE FINtastic Women Program International College of Financial Planning

Q2. X has following cashflows: Year cashflow 1 -100 2 -400 3 -500 4 400 5 1200 Calculate yield? FINtastic Women Program International College of Financial Planning

• EX1. I am calling from SBI , there is a scheme in which you need to deposit Rs.50000 p.a. for 5 years thereafter no need to pay for next 5 years. • At the end of 10 years from now you will get Rs.7.5 lacs. FINtastic Women Program International College of Financial Planning

• EX2. There was a super plan of LIC in which you needed to invest Rs.10000 p.a. for only 3 years, you would receive Rs.16 lacs* after total tenure of 20 years. FINtastic Women Program International College of Financial Planning

• EX3. Invest Rs.1 lac for 10 years, thereafter you will get Rs.1.85 lacs p.a. for next 10 years FINtastic Women Program International College of Financial Planning

Q3. X has following cashflows: 2-2-2016 -100 3-3-2017 10 7-7-2017 20 5-5-2019 30 6-6-2020 150 Calculate YIELD? FINtastic Women Program International College of Financial Planning

• RATE OF INTEREST = 12% P.A. • INFLATION = 5% P.A. Q4. CALCULATE INFLATION ADJUSTED RETURN • RRR = 1+ROI _ 1 • 1+INF FINtastic Women Program International College of Financial Planning

• Ex. My age is 60, life expectancy 90. my current household expenses right now Rs.200 • How much I should invest in debt mutual fund if ROI is 7% p.a. • But if inflation is 5% p.a. then how much?

Q5. X is in 30% tax bracket , if interest rate is 10% p.a. • What is tax adjusted return? • TAX ADJUSTED RATE OF RETURN = ROI(1-TAX RATE) FINtastic Women Program International College of Financial Planning

Q6. If a client ask you to give him the minimum return which adjust inflation and tax rate. • Inflation 10% p.a. • Tax rate 30% • TAX & INFLATION ADJUSTED RETURN = INFLATION/(1- TAX RATE ) FINtastic Women Program International College of Financial Planning