CRGP Case Study

Ref date : 31 May 2021

Mr Rahul Mehta aged 46 years is working in TISCO Ltd. He and his family resides in
Mumbai.

Income :

Rahul Take home pay : Rs. 1,00,000 per month.

Other Dependent family members

Aditi, Rahul’s wife is 43 years of age and works as home maker.

They have two children Arav , aged 16 years and preeti aged 11 years.
The life expectancy of Rahul and Aditi is 85 years.

Goals as communicated by the client :

• Planning for Arav’s higher education at the age of 18. He requires Rs. 5 lakhs in
the beginning of first yr , 5 lakhs in 2nd year , 5 lakhs in 3rd year , 6 lakhs in
fourth year and 10 lakhs in the 5th Year.
• Preeti’s education expenses estimated to be around 50 lakhs at the age of 18.
• Planning for his own retirement (under various circumstances)

Additional Information

Household expenses of Mr. Rahul and his family are approx 50,000 per month. They
do not envisage much drop in post retirement expenses.

Home loan which had an initial amount of Rs. 25 Lakhs . Total tenure of loan is 20
yrs(balance tenure -10 yrs ) . Loan has prepayment facility with no penalty on
outstanding balance.. He wants to pay the Loan after 5 Years i.e. in 2026 then the
principal outstanding will be 9,00,000/- and Current value of house is Rs. 35,93, 300.

He also has an Insurance cover of Rs. 50,00000.

Assets of the family

• The house in which family is residing is owned by Rahul but has a home laon
on it .
 • He has a Real estate property worth Rs. 50 lakhs in Noida which he would like
to leave as a legacy to his son.
• Savings of Mr. Rahul
o He has a investment portfolio in Financial Assets worth 1 Crore as on
date 50% Equity and 50% Debt.

Assumptions

• Inflation Next 10 Years: 6%

• Inflation after 10 Years: 5%
• Risk free rate of return : 8%
• Expected return – post retirement : 8%
• Expected return – pre retirement : 10%

Use the above information to help Mr Rahul Plan for his Financial Goal.

SCENARIO 1

• Can he afford to retire at age 55

• If he delays retirement till age 60 how will it impact his finances
• He wants to leave an additional Rs. 50,00,000 as his estate in cash for his
children apart from the existing real assets he has already acquired. To be
distributed equally among his children. Can he do it if he continues to work till
age of 65

SCENARIO 2

• Rahul has a dream of exchanging his current house for a bigger house after 10
years for which he will require 1 Crore Addtional Amount. Can he afford it if
decides not to leave cash legacy for his children.
• How will his retirement goal be impacted if he is retrenched now and remains
jobless for next 2 years. Thereafter finding a new job with same annual
income as of now and works till age 65.
• He has an option to switch to less stressful job today at 50% pay cut which he
can continue till age 65. How will it impact his Goals.