Case 1

Miss Kerry is working with TESCOs Horsham, West Sussex. She is on a day shift and works
additional shifts on weekends to meet her routine expenses. She has moved from her parents house
recently, post her graduation in Retail Management. She works in the operations side in this TESCO
mall. She has a brother who is married and well settled in London. He is a finance analyst. Her
friends, Jane, Janice and John form her circle of friends. She has no addiction and is healthy. She is
registered for the NHS schemes of the UK government, which takes care of the future health issues,
if any. She is a social drinker and does not have too many late nights. Her immediate superior, Mr.
William, is a professional and a dedicated worker at TESCO. He is very caring and supportive as
well. On one occasion, Ms. Rachel, who was working with TESCOs since last 30 years was to retire
in a couple of days and the employees has planned a farewell for her. Kerry was given the task to
arrange the food for the farewell party. With conversing with Rachel during the lunch break, Kerry
found that Rachel was subdued and looked sad. On inquiring whether her Rachel had a down mood
due to her impending retirement, Kerry was shocked to hear that Rachel was sad, as she did not have
a retirement corpus or plan in place and her retirement was going to hit her bad financially,
especially in line of her pending house loans, her kids college education and her recent divorce
which had taken a big hit on her savings. She mentioned to take up a job elsewhere as TESCOs did
not allow her to continue on an hourly or part time basis as well. Further, she mentioned to Kerry,
that, had she planned her retirement and finances more effectively, she would not have been in such
a position as of now. Hearing her side of the story Kerry has a spike in her spine and anxiety entered
her thoughts. Even though she was just 20 years old, she had never thought of any financial goals
and plans including retirement plans. Kerry was surprised that she at her young age, was a deterrent
to all such ideas, on money management as even though had a decent income and carefree of what
was to come in the future. However, after discussing the same with her friends, they all realized that
they needed a much better financial plan. Among the various ideas, Kerry decided to work on her
retirement goal as savings started from a very young age would add to a better corpus due to the
added advantage of compounding. Kerry approaches you, the financial planner as a client. She
decides to put an equal amount of funds aside every year for the next twenty years. Considering the
future cost of living, she wants to withdraw fifty thousand pounds per year for twenty years once she
retires at age sixty. Her first withdrawal to be on her sixty first birthday. Suggest how much amount
she should keep aside each year for her retirement if these savings and investments earn her a ten
percent return on her funds based on her risk aversion index. Ignore taxes and inflation.
What would be your answer in the following other situations:
a) She is thirty years old now and will invest till age 40 only.
b) She expects a conservative return of nine percent considering the uncertainty of the
future in lieu of twelve percent as envisaged by the financial planner.
c) She has an Aunt Ms. Kim, who is 40 years old and plans to retire at sixty but is a risk
taker and expects a fourteen percent return due to higher equity exposure in her investments.
Calculate her Corpus at age 40, assuming Kerry financial data being the same as applicable
to her.
Case 2:
Kitty is employed with Dhoka Bank. She is single, aged twenty seven and marriage is not on the
cards at present. She has completed her Masters in Finance and had joined the bank a few years
back. Her job profile consists of Customer facing roles and Client acquisition for investment and
retirement plans. She was a high achiever and with her pleasing personality, aptitude, good
enunciation skills and convincing power, she has been in the top three target achievers for the Bank
for the last three years. She is highly motivated and enjoys her work very much. Due to her good
performance she has been posted to Dubai as a Senior Business Development Officer. As a part of
her new job profile, she was to develop and manage the High Net worth Individuals (HNI) wealth.
Wealth Management was her niche domain in her job profile and she was to acquire and manage
new HNI clients.
One of her new clients was Ms. Belle from Norway who was employed as a Marketing CEO at
Dubba Dubba Water Sports Private Limited, a pioneering company in Water sports in Dubai. She
had an annual income of Dirhams (DH). 300,000. This income was to grow at five percent every
year. Ms. Belle`s living costs in Dubai consisted of rent payments, utility bills, routine food and
maintenance expenses and local conveyance. Her total current level of expenses came to 180,000
DH. She did not have any loans or any other annuity of liabilities. Kitty was to prepare a retire
portfolio for Belle. On gathering information from Belle, Kitty estimates that Belle meet her post
retirement expenses equal to seventy percent of her pre-retirement expenses. However, Kitty who
had come across a report on inflation in Dubai, wanted to adjust the plan for inflation which is six
percent. She plans to maintain a diversified portfolio for Belle with a higher exposure to equity
considering the volatile Dubai Financial Markets with an aim to generate a ten percent return on
Belles portfolio. Belle wants to know her retirement corpus, if she wishes to retire at age sixty and
hopes to live for another twenty years after that, she is twenty seven at present. Assume withdrawals
are done at end of year.
Additional Questions:
(1)What would be your answer in case Belle is 37 years old with an investment return expectation of
thirteen percent? Assume withdrawals are done at end of year.
(2) What would be your answer in case she is?
a) Aged 35 b) Aged 36 c) Aged 45 other things remaining the same as in original data
d) Would your original answer change is the Inflation is estimated at 8% other things remaining the
same
e) Would your original answer change is the Inflation is estimated at 4% other things remaining the
same
f) Would your original answer change is the post-retirement expenses are estimated at 80% of the
pre-retirement expenses other things remaining the same
g) Would your original answer change is the post-retirement expenses are estimated at 90% of the
pre-retirement expenses other things remaining the same
h) Suggest a list of asset allocation for her assuming average return based on the rates of return
obtained in the current financial year 2015-16
Case 3:
Mr. Rapchik is employed with Dhinchak Apparel Mall, a high Mall for Designer Clothing outlet in
Oxford Street, London. He is a designer and is well known for his unique designs in men and women
wear. He has recently started kids wear design in the previous few weeks and they have been a super
hit with the customers. The other sales of the firm have picked up in view of the upcoming festive
season. Due to his contribution the owner have increased Rapchik`s salary to Rs. 6, 00,000 per
annum which he expects to grow by six percent per annum. His current living costs are fifty percent
of the income (Rs. 3,00,000). A friend of his, Ms. Khati-meethi advised him to approach a wealth
management adviser and get propere financial plans laid down. She directs him to her personal
financial planner, Mr. Dhan-Sukh Rupayewala and asked him to take an appointment, which
Rapchik did. Mr. Rupayewala, collected the information based on a questionnaire from Rapchik, his
client and found that Mr. Rapchik`s post retirement expenses would be eighty percent of his pre-
retirement expenses. His analysis revealed that inflation would be on an average of six percent. A
detail study of his net worth indicated that at present he has rupees eight lakhs invested in various
asset classes across equity and debt. Mr. Rapchik indicated that he expects to generate a return of
12.20% on his investments till the time of retirement and thereafter 9.75%. His aim is to retire at age
60 and expects to live for another twenty years. As an analyst you are requested to answer the
following:
a) What will be the Clients real rate of return during retirement days, i.e. post retirement?
b) How much would be the amount of annual retirement expenses during the first year of retirement
c) His retirement corpus would add up to what amount
d) Calculate the amount to be saved annually to reach his retirement corpus
e) Calculate the amount to be saved monthly to reach his retirement corpus
f) Recalculate the answers from (a) to (e), assuming that his age is 35 and inflation is 8%, other data
remaining the same
g) Recalculate the answers from (a) to (e), assuming that his pre-retirement returns expectattions are
10% and post retirement are 9% per annum, other data remaining the same.
Ignore taxes in all calculations.

Case 4
Miss Hillaree Chi, a Chinese national working for Xi-Bill Private Limited, a toy design and
manufacturing company. She is a specialist in children toy designing. She was always fascinated
since childhood to live and work near the Himalayas and hence, she took a voluntary retirement
from her current employer in China. She is 55 years old at present. Immediately post retirement, she
migrated to Arunachal Pradesh and secured a job with a private company. Her employer is based in
Arunchal Pradesh. She has over 30 years of experience in deisgning children toys and her role as
designer for various children toys has helped her get a secured job in the company. She speacialises
in designing toys for age groups 4 to 14. She plans to reside in India permanently. Her employer
informed her that there is no social security in India post retirement unlike in many other countries
and that she needs to plan the same. She approached a wealth management adviser to help her plan
her finances. Her current annual income was Rs. 600,000 which she expects will grow by 6% per
annum. The living costs amounted to Rs. 300,000 and she suggested that she could meet her post
retirement expenses amounting to eighty percent of the pre-retirement expenses. The inflation would
be on an average at six percent and at present she has a cash balance of Rs. 500,000 savings, which
she accumulated and brought from China. Considering the uncertainity post retirement, she plans to
take up a part time job during retirement generating her an Income of rupees two lakhs per annum
and hopes to continue with it. The increment is expected to match the inflation. Her financial advisor
has recommended a portfolio of various investment in diverse asset classes, giving her a pre-
retirement of 10.8% and post retirement a return of 9.40%. She plans to retire at age 60 and fulfill
her childhood dreams of spending more time in the Himalayas, and undertaking adventure of
trekking in these beautiful mountains. She has a life expectancy of eighty years. You are required to
calculate the following:
1. Compute the real rate of return during retirement
2. Estimate the first year expenses after retirement
3. Calculate the corpus to be accumulated at time of retirement, at age 60
4. Calculate the retirement corpus, if she does not intend to take up the part time job during
retirement
5. What would be the annual savings required to achieve the retirement corpus in point 3
6. What would be the monthly savings required to achieve the retirement corpus in point 3
7. Recalculate answers to point 1 to 6, if her age today was 45.