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CAPITAL PROTECTION COUPLED WITH GROWTH, AN ATTRACTIVE INVESTMENT STRATEGY FOR NRIs IN INDIA

CAPITAL PROTECTION COUPLED WITH GROWTH, AN ATTRACTIVE INVESTMENT STRATEGY FOR NRIs IN INDIA.

Combination of NRE Fixed Deposit and Systematic Investment Plans (SIP) in Equity Mutual Funds.

➡️ Concept:

NRI Investors largely invest in Fixed Deposits (FDs) because they want safety of principal. What if, an investment offers safety of principal equivalent to FDs, but relatively higher returns than FDs? The following is the novel investment idea that gives capital protection and growth.

➡️ Three Step Investment Guide:

Step 1: Investment in NRE FDs for 5 years.
Step 2: Choose the option of annual interest payout.
Step 3: Invest the interest income in equity funds every year by monthly SIP.

➡️ Example:

Step 1: Investment in NRE FDs.

▪️ Investment in FDs: Rs. 25,00,000.
▪️ Annual Rate of interest: 5.50 per cent.
▪️ Duration of investment: 5 Years.
▪️ Investment Option: Annual Interest Payout.
▪️ Expected Interest Income Every Year: Rs. 1,37,500.

Step 2: Annual interest payout.

▪️ On the above FD, expected interest income every year would be Rs. 1,37,500.

Step 3: Investment of interest income in equity funds every year.

▪️ Invest Rs. 1,37,500 every year to Equity Mutual Fund – Growth Plan.

▪️ Ideally it can be investment of Rs. 11,500 per month in Equity Mutual Fund by way of a SIP by adjusting the cash flow.

➡️ Value of Investment after 5 years:

▪️ Expected Value of Investment in Equity Mutual Fund: Rs. 9,48,593. (Returns assumed – 12 per cent).

▪️ FD Principal Repayment: Rs. 25,00,000.

▪️ Total Value of Investment at the end of 5 years: Rs. 34,48,593.

➡️ Benefits of Investment in Combination:

▪️ Ensures high Safety of Principal (i.e. risk-free investment).

▪️ Investment in Equity Market only through interest income.

▪️ Increased Expected Returns, with minimum risk.

▪️ Investment done through NRE account in fixed deposits and mutual funds along with their returns are fully repatraible.

➡️ Analysis:

▪️ INVESTMENT IN NRE FD

Investment Amount: Rs. 25,00,000
Maturity Amount at the end of 5 years: Rs. 32,67,400
Annualized Returns: 5.50%

▪️ INVESTMENT IN COMBINATION

Investment Amount: Rs. 25,00,000
Maturity Amount at the end of 5 years: Rs. 34,48,593
Annualized Returns: 6.64%

▪️ BENEFIT OF INVESTMENT IN COMBINATION: Rs. 1,81,193

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CAPITAL PROTECTION COUPLED WITH GROWTH, AN ATTRACTIVE INVESTMENT STRATEGY

CAPITAL PROTECTION COUPLED WITH GROWTH, AN ATTRACTIVE INVESTMENT STRATEGY. Combination of Fixed Deposit and Systematic Investment Plans (SIP) in Equity Mutual Funds. ➡️ Concept: Investors largely invest in Fixed Deposits (FDs) because they want safety of principal. What if, an investment offers safety of principal equivalent to FDs, but relatively higher returns than FDs? The following is the novel investment idea that gives capital protection and growth. ➡️ Three Step Investment Guide: Step 1: Investment in FDs for 5 years. Step 2: Choose the option of annual interest payout. Step 3: Invest the interest income in equity funds every year by monthly SIP. ➡️ Example: Step 1: Investment in FDs. ▪️ Investment in FDs: Rs. 5,00,000. ▪️ Annual Rate of interest: 6.8 per cent. ▪️ Duration of investment: 5 Years. ▪️ Investment Option: Annual Interest Payout. ▪️ Expected Interest Income Every Year: Rs. 34,000. Step 2: Annual interest payout. ▪️ On the above FD, expected interest income every year would be Rs. 34,000. Step 3: Investment of interest income in equity funds every year. ▪️ Invest Rs. 34,000 every year to Equity Mutual Fund – Growth Plan. ▪️ Ideally it can be investment of Rs. 2800 per month in Equity Mutual Fund by way of a SIP by adjusting the cash flow. ➡️ Value of Investment after 5 years: ▪️ Expected Value of Investment in Equity Mutual Fund: Rs. 2,30,962. (Returns assumed – 12 per cent). ▪️ FD Principal Repayment: Rs. 5,00,000. ▪️ Total Value of Investment at the end of 5 years: Rs. 7,30,962. ➡️ Benefits of Investment in Combination: ▪️ Ensures high Safety of Principal (i.e. risk-free investment). ▪️ Investment in Equity Market only through interest income. ▪️ Increased Expected Returns, with minimum risk. ➡️ Analysis: ▪️ INVESTMENT IN FD Investment Amount: Rs. 5,00,000 Maturity Amount at the end of 5 years: Rs. 6,94,746 Annualized Returns: 6.80% ▪️ INVESTMENT IN COMBINATION Investment Amount: Rs. 5,00,000 Maturity Amount at the end of 5 years: Rs. 7,30,962 Annualized Returns: 7.89% ▪️ BENEFIT OF INVESTMENT IN COMBINATION: Rs. 36,216 For further details feel free to contact us Mobile: +91 73835 30919 / 93773 35959 Email: vrm@ashutoshfinserv.com Ashutosh Investment Services A service of ASHUTOSH FINANCIAL SERVICES PVT. LTD. •Investments •Insurance •Income Tax & Estate Planning •NRI Services www.ashutoshfinserv.com Follow us using AshutoshFinserv at Facebook, Instagram, Youtube, Twitter & Linkedin to receive all the latest information.