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Vol.4, Issue IX, Pages 54, September 2012From the Managing Directors DeskAnup BagchiMD & CEOICICI Securities Ltd.Our retirement could be very different than what our parents experienced. As more and more corporates and even government moves towards dehned contribution system, a guaranteed pension and medical benehts from employers may not exist. This means for 25-30 years of retired life, we would need to save enough today.A good way to start is to take a stock of the current pool of assets that you have, which have been earmarked for retirement. These could be your EFF, FFF, gratuity or pension schemes offered by insurance hrms. lt is also important to understand the type of assets that you hold under these investments.The second step is to estimate the expenses that you will incur after you retire. This could be a bit tricky, because what you spend then could be signihcantly different than what you spend today. With ination, the expenses go up every year and your investments will need to grow to meet up with those expenses. ln real terms, your expenses are likely to reduce by 60-70. However the pattern may change. There are likely to be more medical expenses but lesser expenses relating to children, travel etc. lt is a good idea to have a separate corpus for medical expenses based on current htness, family history, coverage, if any, through the current employer, etc.The third step is to hnd how much you should invest today to have enough corpus at the time of retirement. This could be a ICICIdirect Money Manager z 1September 2012complex decision with a large number of investment options available today. Basically, you need to get your objectives right. A long-term retirement plan needs to strike a balance between capital growth, risk management, protection and tax planning. Additionally, this mix has to be reviewed regularly so that it is aligned to your retirement goals.At times we may realize that funds are less and goals are high. It therefore becomes tougher to estimate what one would require at the time of retirement and how much is good enough to save today. A proper planning can help answer how much you need to save. Its a good practice to analyze the household budget for income and expenses. Reviewing credit card bill statements, electricity bills, cheques issued, etc, of the last one year will give us an insight on where our money is disappearing. On the income side, one has to observe the hnancial as well as physical assets, and ensure that all are made to work to improve returns on lazy money lying around.Flanning for retirement ought to be the top hnancial goal. The reason is simple. The responsibility to ensure we have a regular income is no one elses but ours. The services of a good personal hnance advisor can hand-hold you through the process of retirement planning. With our vast experience in hnancial markets and a commitment to pioneer innovative solutions for customers, we are always there to partner you towards a secure and peaceful retirement. Do talk to your ICICIdirect relationship manager to help you with your plan.Our message remains the same - Keep investing and stay invested for your life goals. Through this magazine and our website www.icicidirect.com we want to make an earnest attempt to partner with you in setting and achieving your hnancial goals. Give us an opportunity to serve you, walk into any of your Neighbourhood Financial Superstore and talk to us.2 zICICIdirect Money Manager September 2012EDITORIALEditor & Publisher : Abhishake Mathur, CFP CMCoordinating Editor : Yogita Khatri Editorial Board : Sameer Chavan, Pankaj PandeyEditorial Team : Amit Gupta, Azeem Ahmad, Darshan Dodhia, Dharmesh Shah, Nithyakumar VP, Nitin Kunte, Pankaj Agarwal, Purnendu Jha, Sachin Jain, Shaboo Razdan, Sheetal AsharMost of us understand the importance of retirement planning, yet very few of us actually take steps towards it. We ran a poll on ICICIdirect asking our customers if they had planned for their retirement. The result - about 51 percent of the respondents said they have not planned for their retirement yet. Part of the problem is the awareness and knowledge on options available.Regular income in our old years is something that we all seek for. It could be achieved with the help of pension products, which provide old-age income security. One such product is New Pension Scheme (NPS). NPS is a low cost portable pension product with multiple fund managers and investment options. It has a provision for mandatory 40% annuitization which ensures regular pension in old years.NPS allows you to invest 50% of your money in equities; the rest goes in debt instruments. Its a good retirement planning option, especially for moderate and conservative types of investors. In this issue of ICICIdirect Money Manager, we cover all that one needs to know about NPS.The edition also offers the information and analysis on balanced funds that seek the best of both world equity and debt. These funds are ideal for investors looking for a combination of income and moderate growth. We also cover thirteen fund managers opinions on equity and debt markets along with their recommended investment strategy for retail investors. So read on, stay updated and involved.Do write in with your feedback at moneymanager@icicisecurities.com.ICICIdirect Money Manager z 3September 2012CONTENTSImportant: All the contents of ICICIdirect Money Manager are the exclusive property of ICICI Securities Ltd. No article, either in whole or in part, may be published circulated or distributed through any medium without the express consent of ICICI Securities Ltd.Join us on Facebook at www.facebook.com/idirectmoneymanagerFrom the Managing Directors Desk .................................................... 1Editorial .................................................................................................. 2Contents ................................................................................................. 3News ....................................................................................................... 4Markets Round-up ................................................................................. 5Technical Outlook .................................................................................. 6Derivatives View .................................................................................... 8Top Picks: PNB and Havells India ....................................................... 12Flavour of the Month: New Pension Scheme (NPS) ......................... 15Here we discuss how NPS helps you save regularly to ensure income security during retirementFund Managers Survey ...................................................................... 20Query Corner ........................................................................................ 24Financial Planning Case Study ........................................................... 27Mutual Fund Analysis: Category Balanced Funds ......................... 31Investing Tip: P/B Ratio SimpIied ................................................... 40Knowledge Base Article: Bank FDs vs. RDs ...................................... 42Equity Model Portfolio ........................................................................ 44Quiz Time ............................................................................................. 47Premium Education Programmes Schedule ...................................... 484 zICICIdirect Money Manager September 2012NEWSEuropean Central Bank plans unlimited bond-buyingThe European Central Bank (ECB) has agreed to launch a new and potentially unlimited bond-buying programme to lower struggling Euro zone countries borrowing costs and draw a line under the debt crisis. Seeking to back up his July pledge to do whatever it takes to preserve the euro; ECB President Mario Draghi said the new plan, aimed at the secondary market, would address bond market distortions and unfounded fears of investors about the survival of the euro.Courtesy: The Times of IndiaMid-year change in capital gains tax likelyThe Parthasarathi Shome panels recommendation of abolishing short-term capital gains tax has thrown up various possibilities before the hnance ministry including making amendment in the Finance Act, 2012, to implement it even before the next Budget. Though a hnal decision on this will be taken by Finance Minister P Chidambaram after the committee appointed by Prime Minister Manmohan Singh to look at the General Anti-Avoidance Rules (GAAR) draft guidelines gives its hnal report by the end of this month, ofhcials in the know of the developments indicated the possibility of bringing the change mid-way might also be explored. Short-term capital gains are taxable at 15 per cent.Courtesy: Business StandardGDP grows marginally at 5.5% in Q1The Indian economy grew marginally stronger-than-expected in the April-June quarter on the back of robust farm sector growth but economists said the Reserve Bank of India is unlikely to ease monetary policy soon as its attention is focused on taming price pressures. Data released by the Central Statistics Ofhce on Friday showed the economy grew 5.5 % in O1 of 2012-13, compared to 5.3% in the January-March quarter. It rose 8% in the April-June quarter of 2011-12. The farm sector posted a robust performance, rising 2.9% in April-June quarter compared to 3.7% expansion in the previous-year ago period. The manufacturing sector continued to pose a concern as it remained at at 0.2% compared to 7.3% in the