NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Miscellaneous Aspects of Retirement Planning
Mr. Iyer retires with a corpus of Rs 1,00,00,000 and withdraws Rs 5,00,000 in year 1, increasing the withdrawal by inflation each year. What is his initial withdrawal rate?
The initial withdrawal rate is 5 percent, found by dividing the first-year withdrawal of Rs 5,00,000 by the corpus of Rs 1,00,00,000. Later withdrawals rise with inflation, but the rate is defined only on the starting corpus.
- A0.5%
- B5%Correct
- C20%
- D50%
Explanation
Initial withdrawal rate = 5,00,000 / 1,00,00,000 = 0.05 = 5%. The 20% option inverts the ratio (corpus/withdrawal = 20 as a multiple), and the others are decimal errors.
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