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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Planning Basics

Vikram Joshi, aged 45, wants a retirement corpus of Rs 3,00,000 x 100 = Rs 3,00,00,000 at age 60. He has no current savings and will invest a fixed amount at the end of each year for 15 years at 10% p.a. Given the future value annuity factor for 15 years at 10% is 31.77, what is the approximate annual investment required?

Divide the target corpus by the future value annuity factor: Rs 3,00,00,000 divided by 31.77 gives roughly Rs 9,44,000 per year. Simply dividing by 15 years ignores compounding growth and overstates the required annual saving.

  1. ARs 9,44,000Correct
  2. BRs 20,00,000
  3. CRs 7,18,000
  4. DRs 9,44,00,000

Explanation

Annual investment = FV / annuity factor = 3,00,00,000 / 31.77 = about Rs 9,44,000. Dividing by 15 gives Rs 20,00,000, which ignores returns. Rs 7,18,000 comes from dividing by 41.8 (a wrong factor, such as an annuity-due or longer-period factor), and Rs 9,44,00,000 is a scale error.

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