RELIANCE RETIREMENT FUND An open ended notified tax savings cum pension scheme with no assured returns

Transcription

1 RELIANCE RETIREMENT FUND An open ended notified tax savings cum pension scheme with no assured returns Lambi Innings Ki Taiyari 1 st Notified Retirement Fund Also Having Equity Oriented Scheme

2 P o s i t i o n i n g An open ended notified tax savings cum pension scheme with no assured returns Reliance Retirement Fund has 2 Schemes (with separate portfolios) Wealth Creation Scheme & Income Generation Scheme This product is suitable for investors who are seeking*: long term growth and capital appreciation Reliance Retirement Fund Wealth Creation Scheme PRODUCT LABEL investment primarily in equity and equity related instruments and balance in fixed income securities so as to help the investor in achieving the retirement goals *Investors should consult their financial advisors if in doubt about whether the product is suitable for them. This product is suitable for investors who are seeking*: Income over long term along with capital growth Reliance Retirement Fund Income Generation Scheme PRODUCT LABEL Investing primarily in fixed income securities and balance in equity and equity related instruments so as to help the investor in achieving the retirement goals *Investors should consult their financial advisors if in doubt about whether the product is suitable for them.

3 RETIREMENT PLANNING WHY?

4 30 years ago the most sought after professionals of that time, earned a top income of.. Rs per month Source: RNLAM Research

5 Looks like a very small amount today, doesn t it?

6 The top income you earned at the peak of your career, will look very small too.. When you look back 30 years after your retirement

7 INFLATION IS A SILENT KILLER TODAY AFTER 30 YRS *Assumed inflation rate of 7% p.a

8 If you retired with Rs.1 crore today 30 years later it would be as if you had Rs.13 lakh A 7-FOLD EROSION IN VALUE! *Assumed rate of inflation 7% p.a

9 You prepare for the first 30 working years 30 YEARS Acquiring knowledge, skill and attitude So you earn sufficient income and live a good life

10 How well have you prepared for the next 30 years into retirement? NEXT 30 YRS

11 WELL PREPARED! AUSTRALIANS seem to have done quite well with retirement $43,000 of assets per citizen UK - $35,000 US - $27,000 Source: McKinsey CEO Roundtable Report 2014

12 ILL PREPARED CHINA - $141 INDIA - $128 That is about Rs.8000 of assets per person, set aside to fall back on after retirement Source: McKinsey CEO Roundtable Report 2014, USD/INR Exchange Rate is 62.5

13 15% Retirement assets are just 15% of India s GDP and can t go too far for a country with 1.4 billion people. 146% Retirement assets are 146% of Australia s GDP! Source: McKinsey CEO Roundtable Report 2014

14 We all need retirement planning since we Should expect to live longer, thanks to science and medicine Might not be living with our children, as our elders did Do not have any government sponsored social security May need a good cushion for health care as we age

15 RETIREMENT PLANNING HOW?

16 Retirement planning involves two distinct phases: Accumulation Distribution The phase when you build retirement assets The phase when you use retirement assets

17 You build in the first 30 years You enjoy the benefits in the next 30 years

18 Accumulation Challenge You can only save a part of your income You have expenses to take care of, don t you? You need that saving to become big enough To replace your regular income when you retire Your accumulated assets should cover your expenses Which will grow each year due to inflation

19 This is why you need an aggressive plan to accumulate retirement assets

20 You do one part of the job by setting aside as much as you can Your investments do the other part of the job by appreciating in value over time

21 AMOUNT IN RS. LAKH You invested Rs.5000 every month for 30 years % 9% 12% 15% NO OF YEARS At 7% your retirement assets will grow into Rs.61 lakh At 15% your assets would have grown to Rs.3.46 crore Note The above graph is only for illustration purposes, purely to explain the concept of SIP and power of compounding and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor/ tax advisor independently before investment.

22 The Reality In the initial years you earn less, save less In the later years you earn more, save more Invest as much as you can every month Take the time advantage Add lump sums to your corpus Take the wealth advantage

23 Starting Age of Retirement Planning Catch up With the Corpus Lump sum investment needed for a retirement corpus of Rs.3.46cr Your Catch-up Amount (Rs. Lakh) HOW TO READ THE GRAPH : Investor who start investing at age 35 instead of 30 have to catch up for the 5 years missed with a lump sum investment of Rs. 4 lakh along with a monthly SIP of 5000 for 25 yrs to accumulate a retirement corpus of Rs.3.46 p.a assumed rate of return If you did not begin early, you have to add lump sums to catch up Note The above graph is only for illustration purposes, purely to explain the concept of SIP and power of compounding and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor / tax advisor independently before investment.

24 Distribution Phase Change of attitude From aggressive accumulation of assets To cautious protection and use of assets

25 Key concerns in the distribution phase Income should be adequate to maintain lifestyle Inflation should not erode the income or corpus Corpus should not be subjected to high investment risks

26 Traditional Approach Deposit the corpus and earn interest income Earn fixed annuity income from corpus

27 Limitations Taxable income No growth in corpus Low ability to fight inflation

28 Modern Approach Invest the corpus in an incomeoriented fund Draw down as required during retirement

29 Advantages Tax efficient SWP * Has the potential to grow corpus over time Scope for better return *Note : SWP is a facility which enables an investor to withdraw home made regular income from the accumulated corpus. Tax benefits applicable will be in conjunction to the Current SEBI Regulations applicable to Mutual Funds.

30 Role of Investment Primary focus on income generation Growth assets for fighting inflation Enable drawdown without depleting corpus

31 Annuity Rate % p.a Monthly Retirement Annuity Higher the corpus, greater the income 10% 53, ,784 Higher the return, better the annuity 7% 40, ,304 Corpus of Rs. 346 Lakh accumulated at 15% p.a Corpus of Rs. 61 lakh accumulated at 7% p.a HOW TO READ THE GRAPH : If over a 30 year period, the accumulated retirement corpus was Rs cr from a monthly SIP of Rs at an assumed rate of 15%, then one can withdraw an annuity of Rs. 3 Lakh per month over next 30 yrs assuming that the corpus would grow at 10% post retirement Note The above graph is only for illustration purposes, purely to explain the concept of annuity and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor / tax advisor independently before investments.

32 RELIANCE RETIREMENT FUND An open ended notified tax savings cum pension scheme with no assured returns A one stop Equity & Debt Oriented Retirement Solution

33 Key Features Two schemes with distinct portfolios WEALTH CREATION SCHEME INCOME GENERATION SCHEME Equity-oriented for accumulation % in Equity & equity related instruments 0-35% in debt and money market securities Debt-oriented for distribution 70-95% in debt and money market securities 5-30% in Equity & equity related instruments Please refer Scheme information document for detailed information on Asset Allocation of the respective scheme.

34 KEY FEATURES Flexibility To Manage Investments Auto transfer to move from accumulation to distribution Unlimited switch between schemes Exit load of 1% on redemption before age 60, subject to lock in period of 5 Yrs Auto Transfer Facility * Note: Switch of investments made with ARN code, from Other than Direct Plan to Direct Plan of a Scheme shall be subject to applicable exit load, if any. Please refer Scheme Information Document for details of the above mentioned features * Auto Transfer is an optional facility wherein investors' entire investment (Lump sum/sip) shall be switched automatically from Wealth Creation Plan to Income Generation Plan (with nil exit load) at any date as specified by the investor (which is within or after the lock-in period) or upon completion of 50 years of age.

35 KEY FEATURES Systematic Transactions Accumulate using both SIP and lump sum over the earning years Step up Facility * Use systematic withdrawal plan (SWP) to use only what is needed after retirement Auto SWP* Manual SWP *Note: Step Up is a facility wherein an investor who has enrolled for SIP, has an option to increase the amount of the SIP Installment by a fixed amount at predefined intervals. Auto SWP : This optional facility aims to provide a regular inflow of money to investors (monthly/quarterly/annual) by automatic redemption of units on or after 60 years of age. Please refer Scheme Information Document for details of the above mentioned features

36 KEY FEATURES Tax Benefits As per the clause (xiv) of sub-section (2) of Section 80C of the Income Tax Act, 1961, individual investor will get tax deductions for investments up to Rs.1.5 lakh in a Financial Year* Note: Please refer Scheme Information Document for details of the above mentioned features *Subject to existing tax laws

37 Ideal Way To Invest For Youngsters 6 Set up auto SWP from Income Generation Scheme on retirement Set your goal & begin with Wealth- Oriented Scheme 1 5 Continue SIPs until retirement Set up SIPs and step-up option 2 Auto transfer to Income Generation Scheme before retirement Add lump sums along the way 4 3 Note The above mentioned ideal way to invest is purely a recommendation from RNLAM. However, we advise investors to make investment decisions based on their risk/return profile and to take independent opinions from their tax and financial advisor before making actual investments.

38 Ideal Way To Invest For Investors Nearing Retirement 5 Set up auto SWP from Income Generation Scheme on retirement Set Your Goal & Begin with Income- Generation Scheme 1 4 Continue SIPs until retirement Set up SIPs and Step-up option 2 Add lump sums along the way 3 Note The above mentioned ideal way to invest is purely a recommendation from RNLAM. However, we advise investors to make investment decisions based on their risk/return profile and to take independent opinions from their tax and financial advisor before making actual investments.

39 Salary ADDvantage Facility Advantage Employees: Systematic Financial Savings for Retirement Employer: Facilitating Financial Goals of Employees Employers can sign up to offer employees a convenient way to invest in Reliance Retirement Fund systematically by opting for deduction from their salary Employer transfers a monthly single credit to Reliance Mutual Fund of participating employees Salary Addvantage is a special facility available in the select Schemes of Reliance Mutual Fund (RMF) to deduct the desired amount from the salary of the employees and remit the same to RMF on any date (working day) of the month or the quarter. Entry load will be nil and Exit load as applicable in the respective Scheme at the time of registration.. Note The above mentioned ideal way to invest is purely a recommendation from RNLAM. However, we advise investors to make investment decisions based on their risk/return profile and to take independent opinions from their tax and financial advisor before making actual investments.

40 Scheme Attributes Wealth Creation Scheme Income Generation Scheme Asset Allocation Equity & Equity Related Instruments % 5-30% Debt & Money Market Securities 0-35% 70-95% Benchmark S&P BSE 100 Index Crisil MIP Blended Index Fund Managers Sanjay Parekh (Equity), Anju Chajjer (Debt), Jahnvee Shah (Overseas Investments) Growth Plan : Growth Option Plans and Options Dividend Plan : Dividend Payout Option Direct Plan - Growth Plan: Growth Option Direct Plan - Dividend Plan: Dividend Payout Option Lumpsum Rs.5,000 & in multiples of Rs. 500 thereafter Minimum Application Amount Monthly SIP Rs. 500 & in multiples of Rs.500 thereafter for minimum of 12 months Quarterly SIP Rs.1,500 & in multiples of Rs.500 thereafter for minimum of 4 quarters Annual SIP Rs. 5,000 & in multiples of Rs.500 thereafter for minimum of 2 years Additional Minimum Application Amount (Lumpsum) Rs. 1,000 & in multiples of Rs.500 thereafter Minimum Amount for Auto SWP Monthly Frequency Rs. 500 & in multiples of Rs.500 thereafter Quarterly Frequency Rs.1,500 & in multiples of Rs.500 thereafter Annual Frequency Rs. 5,000 & in multiples of Rs.500 thereafter

41 Scheme Attributes Cont d.. Additional Tax Benefit* The Central Government has specified Reliance Retirement Fund as a pension fund for the purpose of clause (xiv) of sub-section (2) of section 80C of the Income Tax Act, 1961 (the Act ) for the assessment year and subsequent assessment years vide notification No. 90/214/F.No.178/63/2012-ITA-I dated 23/12/2014. Units offered under the present Scheme to the Investors, enable them to avail the benefits under clause (xiv) of Sub-section (2) of Section 80C of the Act Accordingly, Investment made in the scheme will qualify for a deduction from Gross Total Income up to Rs.150,000/- in a Financial Year (along with other prescribed investments) under section 80C of the Act Tax deduction up to Rs. 1.5 Lakh per year u/s 80C (2) on the amount invested in the Fund. Kindly refer SID for further details *Subject to existing tax laws

42 Scheme Attributes Cont d.. Attribute Exit Load Who can Invest Details 1% if redeemed/switched out from Reliance Retirement Fund before attainment of 60 years of age. Nil in case of Auto SWP/Redemption/Switch out from Reliance Retirement Fund on or after attainment of 60 years of age or after completion of 5 year lock in period, whichever is later. Nil in case of switch made from Wealth Creation Scheme to Income Generation Scheme or vice versa Nil in case of Auto Transfer from Wealth Creation Scheme to Income Generation Scheme Note: Age will be computed with reference to years completed on the date of transaction) The Fund allows unlimited switches from Wealth Creation Scheme to Income Generation Scheme or vice versa, within and after the lock-in period, without any exit load subject to (point no a). However, investors should note that taxes (such as Capital Gains tax, STT, etc.) would be applicable for such transactions as per the prevailing Income Tax Laws. The following persons (subject, wherever relevant, to purchase of units being permitted under their respective constitutions and relevant State Regulations) are eligible to subscribe to the units: Adult Resident Indian Individuals, either single or jointly (not exceeding three). Non resident Indians and persons of Indian origin residing abroad, on a full repatriation basis Parents / Lawful guardians on behalf of Minors The Fund reserves the right to include / exclude new / existing categories of investors to invest in the Schemes, subject to SEBI Regulations and other prevailing statutory regulations, if any. Currently, Individuals qualify for tax benefits U/S 80C of Income Tax Act, Point No a: Switch of investments made with ARN code, from Other than Direct Plan to Direct Plan of a Scheme shall be subject to applicable exit load, if any. Kindly refer SID for further details

43 Disclaimers The information herein mentioned in the presentation is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Scheme Specific Risk Factors: Trading volumes and settlement periods may restrict liquidity in equity and debt investments. Investment in Debt is subject to price, credit, and interest rate risk. The NAV of the Scheme may be affected, inter alia, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The NAV may also be subjected to risk associated with investment in derivatives, foreign securities or script lending as may be permissible by the Scheme Information Document. The views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

44 THANK YOU

45 ILLUSTRATIONS For Retirement Planning Note All the tables included herein are for illustration purpose only, and should not be taken/ considered as any indication of correlation with the scheme either by way of capital protection or equity market returns, in any manner. RNLAM does not recommend any action based on these illustrations. Investors are advised to consult their financial advisor/ tax advisor independently before making any decision or investment.

46 INFLATION IS A SILENT KILLER Table 1: Value of Rs. 1 Lakh over a period of time due to inflation Inflation Rate 5 years 10 years 15 years 20 years 25 years 30 years 6.0% 1,33,823 1,79,085 2,39,656 3,20,714 4,29,187 5,74, % 1,40,255 1,96,715 2,75,903 3,86,968 5,42,743 7,61, % 1,46,933 2,15,892 3,17,217 4,66,096 6,84,848 10,06, % 1,53,862 2,36,736 3,64,248 5,60,441 8,62,308 13,26,768 Note: The above table is only for illustration purposes, purely to explain the concept of inflation and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor/ tax advisor independently before investment.

47 DECIDE YOUR CORPUS Table 2: How much is required to be invested per month to accumulate a retirement corpus of Rs. 1 Cr Assumed Rate of Return No. of Years for Retirement % 1,39,679 57,775 31,549 19,197 12,345 8, % 1,32,584 51,676 26,427 14,973 8,920 5, % 1,22,444 43,471 20,017 10,109 5,322 2, % 1,12,899 36,335 14,959 6,679 3,083 1,444 Note Though the above table illustrates the Annual Amount required to accumulate retirement corpus, SIP can be made in Monthly, Quarterly and Annual frequencies. The above table is only for illustration purposes, purely to explain the concept of power of compounding and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor / tax advisor independently before investment.

48 ACCUMULATING CORPUS VIA SIP Table 3: How much retirement corpus will be accumulated with Monthly SIP of Rs. 5,000 Assumed Rate of Return No. of Years for Retirement % 3,57,965 8,65,424 15,84,811 26,04,633 40,50,358 60,99, % 3,77,121 9,67,571 18,92,029 33,39,434 56,05,610 91,53, % 4,08,348 11,50,193 24,97,901 49,46,277 93,94,233 1,74,74, % 4,42,873 13,76,085 33,42,534 74,86,197 1,62,17,648 3,46,16,398 Note: The above table is only for illustration purposes, purely to explain the concept of SIP and power of compounding and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor / tax advisor independently before investment.

49 ACCUMULATING CORPUS VIA LUMPSUM Table 4: How much retirement corpus will be accumulated with one time investment of Rs. 10 Lakhs Assumed Rate of Return No. of Years for Retirement % 14,02,552 19,67,151 27,59,032 38,69,684 54,27,433 76,12, % 15,38,624 23,67,364 36,42,482 56,04,411 86,23,081 1,32,67, % 17,62,342 31,05,848 54,73,566 96,46,293 1,70,00,064 2,99,59, % 20,11,357 40,45,558 81,37,062 1,63,66,537 3,29,18,953 6,62,11,772 Note: The above table is only for illustration purposes, purely to explain the concept of power of compounding and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor/ tax advisor independently before investment.

50 CATCH UP BY WAY OF LUMPSUM Table 5: Lumpsum amount to be invested today along with Monthly SIP of Rs to achieve retirement corpus at age of 60 (refer in conjunction with Table 3) Assumed Rate of Return Age When You Start Retirement Planning % 40,50,358 26,04,633 15,84,811 8,65,424 3,57, % 56,05,610 33,39,434 18,92,029 9,67,571 3,77, % 93,94,233 49,46,277 24,97,901 11,50,193 4,08, % 1,62,17,648 74,86,197 33,42,534 13,76,085 4,42,873 Note: The above table is only for illustration purposes, purely to explain the concept of power of compounding and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor / tax advisor independently before investment.

51 MONTHLY ANNUITY Table 6: Annuity receivable per month for an investment of retirement corpus of Rs. 1 Cr Assumed Rate of Return per annum No. of Years % 1,16,108 89,883 77,530 70,678 66,530 8% 1,21,328 95,565 83,644 77,182 73,376 9% 1,26,676 1,01,427 89,973 83,920 80,462 10% 1,32,151 1,07,461 96,502 90,870 87,757 12% 1,43,471 1,20,017 1,10,109 1,05,322 1,02,861 Note The above table is only for illustration purposes, purely to explain the concept of annuity and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor / tax advisor independently before investment..

52 COMBINATION OF ACCUMULATION & DISTRIBUTION Table 7: Combination of Pre-Retirement & Post-Retirement Illustration Assumed Rate of Return For Accumulation for 30 Yrs Monthly SIP Combination of Pre - Retirement and Post - Retirement Assumed Rate of Return for Annuity Per Month For Post Retirement Yrs 10% % Assumed Rate of Return For Accumulation for 30 Yrs 12% ,57,458 3,71,990 3,34,056 3,14,559 3,03, ,14,917 7,43,979 6,68,111 6,29,119 6,07, ,29,833 14,87,958 13,36,223 12,58,238 12,15, ,74,583 37,19,896 33,40,557 31,45,595 30,37,837 Assumed Rate of Return for Annuity Per Month For Post Retirement Yrs Monthly SIP 8% ,12,018 1,66,998 1,46,166 1,34,874 1,28, ,24,036 3,33,997 2,92,333 2,69,747 2,56, ,48,071 6,67,994 5,84,666 5,39,494 5,12, ,20,178 16,69,985 14,61,664 13,48,735 12,82,240 Note: The above table is only for illustration purposes, purely to explain the concept of SIP and annuity and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns. RNLAM does not recommend any action based on the above illustration. The investment decision of RNLAM is based on several factors including research, market potential, future outlook etc. Investors are advised to refer to financial advisor / tax advisor independently before investment.

53 Disclaimers The information herein mentioned in the presentation is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. Before making any investments, the readers are advised to seek independent professional advice, verify the contents in order to arrive at an informed investment decision. None of the Sponsor, the Investment Manager, the Trustee, their respective directors, employees, affiliates or representatives shall be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

54 THANK YOU