Mr. X, a 45 years old, is employed in a private company and planning to retire...

Mr. X, a 45 years old, is employed in a private company and planning to retire at 58. He wants to plan for his retirement kitty so that he can comfortably live his retirement through regular cashflows apart from the pension that he is going to receive from his employer. He has also saved Rs. 15,00,000 for his retirement. He would like to save Rs. 25,000 every month for this goal. You, as an advisor, is required to advise Mr. X on constructing his mutual fund portfolio for his retirement goal. Please suggest the category and weightage wise portfolio and describe the reasoning for the same.

Expert Solution

I will be advising for preparation of mutual fund portfolio as follows-

A. Growth portfolio- I will advise him to allocate 20% of the total portfolio value into growth portfolio that he is 45 years old and he can invest for longer period of time equities growth.

B. Tax saver scheme- I will advise him to allocate 15% of the total portfolio to tax saver scheme the mutual fund which will be helpful in saving his overall rate of return from getting taxed.

C. Value funds- I will advise him to locate 15% of the total portfolio to value funds as these companies are valued lower beyond their intrinsic value in the market and there is an expectation of catching up with their intrinsic valuations.

D. Balanced funds- I will advise him to locate 20% of its portfolio to balance funds because they are just like all weather portfolios and they will be hedging adequately against any volatility by having better exposure to equity and debt.

C. Debt funds- I will be advising him to allocate 30% of his portfolio to the debt funds because it will be helping him in order to have a better security against any of the downside in the market and he is 45 years old so after he is retired, he will be needing uniform rate of income and these debt securities will be providing him with uniform interest rate.

jeff jeffy answered 2 years ago

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