Power Booster Plan

The Power Booster Plan in the Index Long-Term Strategy is designed for individuals with a substantial portfolio who can pledge assets to obtain F&O margin. It excludes the purchase of nifty bees and instead focuses on purchasing synthetic futures of nifty 50. Investors have the freedom to allocate 90% of their initial investment in various asset classes. The plan aims to generate a return of 7.15% or more. There are costs associated with hedging and futures forwarding, but investors are expected to earn interest from debt funds and other assets. Discipline is required to maintain the pledged portfolio value and make optimal asset allocations. Regular SIP contributions are necessary. This plan is suitable for individuals who can generate higher returns on debt and commit to monthly SIPs. It leverages the existing portfolio for potential growth and returns. Power Booster Plan Details Initial Investment Suppose you possess Rs 1 crore for investment, along with a portfolio valued at Rs 30 lakhs available for pledging as F&O margin. Utilization of Portfolio The 30 lakhs portfolio will be pledged to obtain the margin in the F&O segment. Initial Investment for Power Booster Plan 10% of the initial investment will be reserved to cover the annual costs associated with the index long-term strategy. Nifty Bees Exclusion This plan excludes the purchase of nifty bees. Synthetic Futures Purchase Purchase synthetic futures of nifty 50, providing exposure equivalent to 1 crore, utilizing the margin obtained by pledging the 30 lakhs portfolio. Put Options Purchase Acquire put options in a quantity equivalent to the position of nifty futures. Investment Freedom Investors have the flexibility to allocate the remaining 90% of the initial investment in various asset classes, their business or loan repayments. The expectation is to generate a return of 7.15% or more from this investment. Costs Associated Hedging Cost 5% of the total exposure value, which translates to 5 lakhs in the provided example. Futures Forwarding Cost 5% of the futures exposure, equating to 5 lakhs in the given example calculated by finding 5% of 1 crore. Gross Cost The sum of hedging cost and futures forwarding cost, amounting to 10% of the total exposure value. In the example, it is rupees 10 lakhs. Earnings from Debt and Other Assets Investors are anticipated to earn 7.15% interest from investments in debt funds and other asset classes, totaling 5% of the total exposure. In the example, this equates to 6.5 lakhs. Net Cost is calculated as the difference between hedging cost, futures forwarding cost, and interest earnings. In the example, the net cost is 3.5 rupees lakhs which is 5 lakhs plus 5 lakhs, 6.5 lakhs. Discipline Required in Power Booster Plan Portfolio Maintenance The investor is obligated to maintain the value of the pledged portfolio at a level equal to 30% of the total exposure in the index long-term strategy. Maintaining Portfolio Value In the event of a decline in the value of the portfolio, the investor must take prompt action. This may involve either pledging additional portfolio assets or injecting the required funds to maintain the requisite value. Optimal Asset Allocation The investor is required to invest the remaining 90% of the initial amount in an asset class that has the potential to yield an annual interest rate greater than 7.15%. Calculation of Interest Earnings While calculating the net profit and loss PNL, in the index long-term strategy, the investor must factor in the interest earned from the investment. Regular SIP in Index Long-Term Strategy Implementing a disciplined approach, the investor needs to initiate a systematic investment plan, SIP, in the index long-term strategy from the first month onward. The monthly SIP amount should be calculated as annual interest earnings divided by 12 months. These discipline requirements aim to ensure that the investor maintains the necessary financial safeguards, actively manages the pledged portfolio value, maximizes returns from the asset allocation, considers earned interest in performance evaluations, and adopts a consistent investment approach through regular SIP contributions to cover annual costs. Adhering to these guidelines contributes to the overall success and sustainability of the Power Booster Plan within the Index Long-Term Strategy. For whom? The Power Booster Plan of the Index Long-Term Strategy is tailored for individuals who meet the following criteria. Possessing a Substantial Portfolio This plan is designed for individuals who already have a robust portfolio, providing them with the assets required for pledging and obtaining F&O margin in the Index Long-Term Strategy. Generating Higher Returns on Debt Investors targeted by this plan should be capable of generating elevated returns from debt investments. This implies a level of financial acumen and strategic decision-making to optimize returns from debt funds and other similar asset classes. Capable of Monthly SIP The plan is suitable for individuals who have the financial capacity and discipline to commit to a monthly systematic investment plan. This regular investment strategy is an integral part of the Power Booster Plan and necessitates consistent contributions from the investor. In essence, this strategy caters to those with a strong financial standing, the ability to capitalize on debt instruments, and a commitment to regular monthly investments through SIP. It aims to leverage the existing portfolio to enhance exposure in the Index Long-Term Strategy, providing a pathway for potential growth and returns.