Assumptions in the case of the 25 year-old....................

• Existing savings for house purchase: Nil
• Percentage of loan to part-finance house purchase: 25%
• Annual return on debt funds: 12 per cent
• Annual return on equity funds: 20 per cent
• Annual rate of inflation: 8 per cent

• A recommended debt to equity ratio of 40:60. For this, a mix of debt and equity based funds should be selected.
• Estimated current value of the desired property of Rs 2.5 million would inflate to a little more than Rs 7.9 million after 15 years.
• This would be part financed by a loan to the extent of 25 per cent which is Rs 1,980,000.
• Therefore, the balance amount of Rs 5,950,423 would need to be saved over a period of 15 years.
• With a debt to equity mix of 40:60, the person needs to begin with a total monthly investment of Rs 5,954. This monthly saving/contribution would keep on increasing every year.

Year	Year	Equity Fund	Debt Fund	Total	Yearly	Income	Cumm. Balance**
2000	1	3,572	2,382	5,954	71,447	5,547	76,994
2001	2	3,930	2,620	6,549	78,591	17,374	172,959
2002	3	4,323	2,882	7,204	86,450	32,034	291,444
2003	4	4,755	3,170	7,925	95,095	50,051	436,590
2004	5	5,230	3,487	8,717	104,605	72,039	613,234
2005	6	5,753	3,836	9,589	115,065	98,712	827,011
2006	7	6,329	4,219	10,548	126,572	130,902	1,084,485
2007	8	6,961	4,641	11,602	139,224	169,579	1,393,288
2008	9	7,658	5,105	12,763	153,156	215,869	1,762,313
2009	10	8,423	5,616	14,039	168,468	271,083	2,201,864
2010	11	9,266	6,177	15,443	185,316	336,742	2,723,922
2011	12	10,192	6,795	16,987	203,844	414,610	3,342,376
2012	13	11,212	7,474	18,686	224,232	506,734	4,073,342
2013	14	12,332	8,222	20,554	246,648	615,488	4,935,478
2014	15	13,566	9,044	22,610	271,320	743,621	5,950,419

CASE II

Assumptions in the case of the 30 year-old....................

• Current existing savings towards purchase of home: Rs 100, 000
• Approximate post-tax annual return on existing savings: 15 per cent
• Percentage of loan to part-finance house purchase: 25 per cent of the net gap

• Recommended debt to equity ratio of 50:50. For this, a mix of debt and equity based funds should be selected.
• Estimated current value of the property of Rs 2.5 million would inflate to Rs 53,97,312 after 10 years.
• The value of the current investment would grow to Rs 404,556.
• Therefore, the target amount to mobilise after 10 years would be Rs 49,92,757.
• This would be part financed by a loan to the extent of 25 per cent which is Rs 12,50,000.
• Therefore, the net amount to save in next 10 years would be Rs 37,42,757.
• With a debt to equity mix of 50:50, the person needs to begin with a total monthly investment of Rs 10,429. This monthly saving/contribution would keep on increasing every year.

CASE III

Assumptions in the case of the 35 year-old....................

• Existing savings for house purchase: Rs 200,000
• Approximate post-tax annual return on existing savings: 15 per cent
• Percentage of loan to part-finance the house purchase: 25 per cent of the net gap

• Recommended debt to equity ratio of 50:50. For this, a mix of debt and equity based funds should be selected.
• Estimated current value of the property of Rs 2.5 million would inflate to Rs 36,73,320 after 5 years.
• The value of current investment would grow to Rs 4,02,271.
• Therefore, the target to mobilise after 5 years would be Rs 32,71,049.
• This would be part financed by a loan to the extent of 25 per cent which is Rs 8,20,000.
• Therefore, the net amount to save in next 5 years would be Rs 25,51,049.
• With a debt to equity mix of 50:50 the person needs to begin with a total monthly investment of Rs 24,150. This monthly saving/contribution would keep on increasing every year.

Year	Year	Equity Fund	Debt Fund	Total	Yearly	Income	Cumm. Balance**
2000	1	12,075	12,075	24,150	289,802	21,537	311,339
2001	2	13,283	13,283	26,565	318,782	67,278	697,398
2002	3	14,611	14,611	29,222	350,660	123,695	1,171,754
2003	4	16,072	16,072	32,144	385,726	192,711	1,750,191
2004	5	17,679	17,679	35,358	424,299	276,559	2,451,049

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