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 a homemaker,
has been the backbone of his success. They have two children
- a son and a daughter - both engineers and well settled
in their own 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 the anxiety in Rahul's mind. 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 per month and would like
to earn around Rs. 30,000 (considering inflation) after
retirement. His accumulated savings deployed in various
safe investments would give income of Rs. 22,000 per month.
He needs minimum additional Rs. 8,000 as regular income
per month over the next 25 years. He is ready to allocate
Rs. 5 lakhs for this purpose. He is exploring various plans
for achieving his goal.
He seeks the help of his friend Sachin, 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 right away.
Sachin, however, advises him to gather the relevant information
about the primary and the secondary markets thoroughly before
investing. Sachin suggests that he should study company
annual reports to get the required information, which Rahul
starts doing 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 four sessions with Sachin (Refer Portfolio Organizer,
December 2007, February 2008, April 2008 and August 2008)
Rahul puts into practice the process of investing suggested
by Sachin in a systematic manner.
Even though he had the clarity on inflation (August 2008),
he was intrigued why it cannot be controlled. He was thinking
why even eminent economic team consisting of PM, FM, the
RBI Governor and Chairman of Planning Commission could not
tame inflation. He has been hearing phrases like Repo rates,
Reverse Repo, CRR rates etc., being revised upward and downward.
He wanted to know how it will impact company's borrowing
rates which in turn will affect the profitability for the
second quarter. He decides that he must understand these
aspects and its effect on the Indian economy.(Rahul once again calls up Sachin and tells him that he
needs some more clarifications on appropriate methods for
curbing inflation. Sachin agrees to meet Rahul at the Royal
Club in the evening. After a brief exchange of pleasantries,
Rahul and Sachin go to the topic straight away).
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