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Facts

Ravi is a 40 year old State Government employee of Kerala. He is working as Assistant Professor of Commerce in a Government College at Palakkad District of Kerala State. He will not come under the New Pension Scheme. Therefore, his retirement age is 56 years old. His Net salary per month is Rs.125, 000. Net Salary includes the following

  1. Basic Salary (UGC)
  2. Dearness Salary(UGC)
  3. HRA-(Kerala State Government House Rent Allowance)

Gross Salary per month is 150,000.Contribution to General Provident Fund  - Rs.10, 000 per month .Contribution to State insurance Policies-Rs.4000 per month .Sum assured is 10,00,000.It will get at the earliest of the happening of the two events.

  1. Death
  2. Retirement

General Provident Fund Loan Repayment-Rs.11, 000 per month. He has four members in his family.

Following are the details

  • A. Wife-1, Aged 35 –House wife .Education –Degree Failed. Therefore, no chance to get a job to her.
  • B. Son-1-Aged 09-School Going .He wants to become a doctor
  • C. He has to care his old aged Mother and the family of his sister (Widow) including daughter of his sister (Aged 21 Years –M.com Student)
  • D. His brother, also an Assistant Professor of Commerce in a Government College of Kerala State, Will equally help him in the case of mother and sister.
Case Study - Investment Avenues

He has no other Insurance Policy besides the above mentioned One. His Saving Account shows a credit balance of Rs 5,000.He has a self -occupied house property valued 1 crore (Family Property). Following are the other owners of the House Property

  • Mother
  • Sister
  • Brother

Other investments are meagre. He recently sold one of his property (land) situated at Netumpura, Thrissur District, Kerala. (A Village Area of Kerala State) .He got 9 Lakh Rupees .He has decided to invest it .Please advise him about the best Investment Portfolio.

Even though lot of diversification portfolios are available, it seems the following is a better option on the basis of the following factors which affects investments

  1. Profitability
  2. Safety
  3. Security
  4. Liquidity
  5. Reduction /Elimination of Risk
  6. Tax considerations
  7. Various Laws and regulations like
  • Income Tax Act ,
  • Banking Regulation Act,1949
  • Kerala Co-operative Act 1969,
  • Companies Act 2013
  • Various SEBI Regulations
  • GST Act
 

Investment Avenues

1. Fixed Deposit in Co-operative Society - Rs. 150,000
It will provide a better interest @7.75%.There are the provision of Crediting Monthly interest facility in the Co-operative Securities of Kerala

2. Gold (Digital) - Rs.90, 000
3. Insurance (Term) -2 Year Premium - Rs.30, 000
Sum Assured = Rs. 50,00,000

4. Savings Bank Account - Rs.105, 000
To meet the emergencies expenses of his family

5. Ethical Investment - Rs.20, 000
6. Deposit in Kerala Treasury Account - Rs.230, 000

 

It will provide a better interest. The interest rate is above 7% .There are the provision of Crediting Monthly interest facility in the Co-operative Securities of Kerala

7. Health Insurance Policy (One Year Premium) - Rs.25,000
Contribution to Health Insurance Policy is eligible to get deduction under section Sec 80 D of the Income Tax Act 1961.

8. Mutual Fund- - Rs.100, 000
9. Equity Shares - Rs. 100, 000
10. PPF - Rs.50, 000

Total-  900,000

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