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Mr. Shekar is a young software engineer, working with an MNC earning around INR 4.50 lacs. He has no dependents as of now. He is planning to get married soon. He has parked all his savings in bank FD. He is skeptic of investing in the capital markets because of the recent crash in the market. He is also concerned about the falling FD rates when compared to growing inflation. He is really worried so as to protect his savings and wants them to grow well. He needs around INR 3,00,000 at the end of 2 years for his marriage. He is also planning to buy a car (worth INR 3,50,000) after a year. His expense per month is around 50% of his income (INR 32,000 per month). He has a bank FD of around INR 1,50,000 (4 years), around INR 20,000 in bank's savings a/c.

Mr. Shekar is young and earning well. He has got the capacity to invest in slightly comparative risky avenues. As at this age and income he has the capacity to absorb short term losses and recoup them very soon. His short term goals can be met through a systematic and disciplined investment style. He also needs to keep some amount aside for emergency.

However, his worry for the volatile capital market can be taken care of. He can invest in parts in the equity markets through a Systematic Investment Plan (SIP). This will in turn average out the cost of acquisition and will ensure a decent return. It will also ensure that he has not bought on the peaks.

Mr. Shekar should start investing an amount from his current monthly income for his short term future goals. Looking in to Mr. Shekar case to meet one life stage goal and one lifestyle goal reaching very soon, we have to start investing very soon.

Mr. Shekar needs INR 3 lacs at the end of 2 years and around INR 3.5 lacs at end of 1 year. It is recommended that he takes an auto loan for 80% of the cost and rest he can finance himself. However, for the INR 3 lacs at the end of 2 years, he should finance the entire amount himself as the personal loans are very expensive. The equity market being at corrections now, so over a period of 1-2 years, it will yield around 10-12%. Let us consider 10% to take a pessimist view of the market.

If he invests INR 16,000 (50% of Income) in an equity fund at expected return of 10%, it will yield him in the following manner:

Amount Invested per Month is Rs. 16,000
	1	2	3	4	5
8%	1,99,199	4,14,931	6,48,569	9,01,599	11,75,630
10%	2,01,049	4,23,151	6,68,509	9,39,560	12,38,993
12%	2,02,920	4,31,575	6,89,230	9,79,562	13,06,715
15%	2,05,766	4,44,609	7,21,848	10,43,654	14,17,192
20%	2,10,615	4,67,438	7,80,605	11,62,478	16,28,131
25%	2,15,602	4,91,730	8,45,376	12,98,301	18,78,377
30%	2,20,729	5,17,585	9,16,823	14,53,753	21,75,865

Here, at 10% CAGR, at the end of first year, the fund accumulated is INR 2,01,050 from this he can take out INR 70,000 for the purchase of his car and take a loan for INR 2.8 lacs. He will leave the balance amount in the same fund. From second year onwards if he invests in INR 13,000 instead of 16,000 (as he needs to pay for the auto loan EMI, which will come around INR 5,000 @ 12% for 7 years) At the end of second year he will accumulate around INR 3,08,500 (sum of first years residue and second years investment of INR 13,000), which is slightly above then what he needs for his marriage.

Amount Invested per Month is Rs. 13,000
	1	2	3	4	5
8%	1,61,849	3,37,131	5,26,962	7,32,549	9,55,199
10%	1,63,352	3,43,810	5,43,164	7,63,392	10,06,682
12%	1,64,873	3,50,655	5,59,999	7,95,894	10,61,706
15%	1,67,185	3,61,245	5,86,502	8,47,969	11,51,469
20%	1,71,125	3,79,793	6,34,242	9,44,514	13,22,857
25%	1,75,176	3,99,531	6,86,868	10,54,870	15,26,182
30%	1,79,342	4,20,537	7,44,918	11,81,175	17,67,891

This also ensures a large amount of his EMI payments. However, he will have to manage the rest amount from his monthly expenses for one year.