Personal Finance & Wealth Management

Assignment for February 2011

Question 1

Aman and Deepa are nearly 35 years old. They have worked for almost 10
years. Between the two they earn reasonably well – combined income after tax
is almost Rs 2.50 lacs a month. However, they have not been able to save much
except the PF savings and a car for each one of them – no liability against the
cars. They lead an expensive and flamboyant lifestyle that they love. They live in
a rented house in a very posh locality paying a rent of Rs 75000 per month.
They are in no state of mind to change their life style. They have no long term
loan liability though they do indulge in short term personal loans and extensive
use of credit card whenever needed.

Given the above back ground, they have been proposed by one of their friends
to buy a plot of land in the outskirts of the city they live in, even if they have to
take a loan for the same. The plot is likely to cost them approx. Rs 50 lacs. The
idea of buying a plot appeals to them. Should they go ahead with it??

Discuss the pros and cons of their willingness to go for buying the plot of land
within the given parameters as above,

(a) If they have a 6 year old child

(b) If they do not have any child

Question 2

X a foreign national (not a PIO) came to India from USA on July 11, 2005. He
stayed in India at a stretch for 3 years and left for Japan on July 11, 2008. He
returned to India on April 10, 2009 and remained here till August 17, 2009 when
he went back to USA. He got back to India on January 29, 2011 and will stay in
India thereafter. Determine and discuss his residential status for the Assessment
Year (AY) 2011-12.

Question 3

Find out from the net or from relevant dailies / newspapers and list out five
specific Mutual Fund schemes ‘each’ under any three categories, namely,
Growth Funds, Income Funds, Capital Protection Funds, Large Cap Funds, Mid
Cap Funds and Small Cap Funds. Also attempt to indicate the % of return for
each of those schemes over the last 3 years.

Prepared by D. Ranganathan, Chartered Accountant

ranganathan103@gmail.com; Mobile No. - +91 98100 01187