Rahul is a successful professional manager, having worked for the last 38 years in marketing and sales both in India and abroad. He currently works for a reputed group in south India as GM-Marketing. He has been in this assignment for the past five years. His wife, a graduate and home-maker, has been the backbone of his success. They have two children - a son and a daughter- both engineers and well-settled in their careers. Rahul, 58 years old, though well-settled, has a few lurking fears about his future after his impending retirement in two years. The present salary package includes good cash and perquisites, but does not provide for any superannuation benefits, pension, etc. This is the cause for Rahul's anxiety. Rahul likes to maintain the current lifestyle even after his retirement. He does not like taking any financial support from his children or his relatives. As he has own house, his current living expenditure is around Rs. 25,000 a month and would like to earn around Rs. 30,000, (considering inflation) after retirement. His accumulated savings deployed in various safe investments would give an income of Rs. 22,000 a month. He needs an additional Rs. 8,000 as regular income every month over the next 25 years. He is ready to allocate Rs. 5 lakh for this purpose. He is exploring various plans for achieving his goal.
He seeks the help of his friend Sachin, a CA and wealth management consultant, who gives valuable advice on investing in the share market. After their first detailed meeting, Rahul is very clear and keen to start investing in shares. Sachin, however, advises him to gather all the relevant information about the primary market and the secondary market thoroughly before investing. Sachin suggests that he should study company annual reports to get the required information. Rahul starts doing it immediately. Sachin explains the steps to analyze profit and loss account, balance sheet and illustrates the use of a few key ratios to judge the soundness of the company.After
three sessions with Sachin (refer Portfolio Organizer,
December 2007, February 2008 and April 2008), Rahul puts
into practice the process of investing suggested by Sachin
in a systematic manner.
Things
seemed to be going fine till the Black Friday in June 2008,
when the inflation figure is announced. The announcement
of inflation crossing 11.05% shocks the share market. The
market crashed by 612 points without any warning! Rahul
was intrigued by the crash and wanted to know the correlation
between the rise in inflation rate and share market crash.
This again jolts his confidence. He now decides that he
must understand more about inflation and its effects on
the share market.
|
