What is Financial Planning-2

7/28/2019 What is Financial Planning-2

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Presented by

Ashoka RajanMBA, CFPCM


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Inflation the villain1985 2012 2030

Petrol 8 70 298

Toothpaste 5 70 407

Sugar 4 40 185

Movie 15 150 697

Milk 4 32 128


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Inflation the villainHouse hold expenses (today)

25000.00

After 30 years

House hold expenses250000.00


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Higher education Engineering (today) 500000.00

After 10 years

Expenses on engineering study 1300000.00


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Higher education MBA (today) 300000.00

After 10 years

Expenses on MBA study 780000.00


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Child Marriage Today 1000000.00

After 20 years

Expenses on Marriage 4500000.00


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Investments tools

Conventional products

Low risk products

High risk products


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Conventional productsLow risk and low returns

Bank FD / RD 9.00%

Post office 8.00%-8.50% NSC

PPF

RD

Investment through LIC

Overall ve returns will not beat inflation


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Conventional productsHigh risk & High returns (uncertain)

Gold ----liquid but work when uncertainty world wide

Properties---illiquid and geographical specific

There are crises in properties

Japan

USA subprime crises


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Corporate bonds

Depends upon rating

Higher the rating lower the returns

High returns ----fraud and scams

CRB Capital

Co-operative Banks and Societies


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Ponzy schemes

CRB capital fiasco

Gold Sukh

Speak Asea

Stock guru


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Stock markets and Mutual fund

High risk and high returns

Scams

Harshad Mehta scam

Ketan parikh scam

IPO scandle


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Stock markets and Mutual fundLong term stable returns

1979----100

2012---18500Returns---17% yoy

Very high liquidity

Individual stocks---too risky and need constant

monitoring


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Mutual fundsRetail investor ---pool their money

Professional fund managers

Trustees are big names

SBI HDFC

ICICI

PNB

TATA BIRLA

RELIANCE

Regulated by SEBI


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How financial planning help us

Case studyYogesh mathur

Age- 30 years Retirement age 60 years

Life expentancy80 years

Current monthly Income 4.36 lac per annum

Current house hold expenses 2.40 lac per annum


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Case study contd

Family

WifeSangita ( age -28 years)

House wife Son Ankur

Age 1 year

Daughter Rashi

Age 3 year


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Case study contd

Financial goals

Daughter Rashi higher studies Current cost4.00 lac

Daughter marriage

Current cost10.00 lac


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Case study contd

Financial goals

Son Ankur higher studies Current cost4.00 lac

Son Ankur marriage

Current cost8.00 lac


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Case study contd

Financial goals

Yogesh retirement corpusAssumptions

Inflation 10% (higher education)

Inflation 08% (marriage and house expenses)


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Case study contd

Future price of

Daughter Rashi higher studies 16.70 lac

Daughter Rashi marriage 46.60 lac Son Ankur higher studies 20.20 lac

Son Ankur marriage 50.72 lac

Yogesh retirement corpus 195.00 lac

Human life value of Yogesh 45.00 lac


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Case study contd

Now we have future projections

We can plan them today


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Case study contd

Yogesh retirement plan

term 30 years

Future value 2.00 crore

Rate 8% 12% 15%

Per MonthInvestment

13,330 5,665 2,853


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Case study contd

Yogesh retirement plan

Rate 15% per annum

Future value 2.00 crore

Timeperiod

( years)

20 25 30

Per MonthInvestment

13,193 6,089 2,853


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Who need financial planning?

Whatever may be level of your income or assets, youneed financial planning.

It is a myth that only rich people need financialplanning

Financial planning is a scientific methods


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Investment strategiesRisk profiling

Age Risk taking capacity

Income generation consistency

Dependency on invested money

Equity (100-age)


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Which type of Life Insurance plan?

Term Insurance It is purest form of insurance

Do not buy Endowment, Money back, Capitalprotection plan, Children plan or Unit Linked PlansULIP

Best option is Term Insurance + PPF / ELSS scheme ofmutual fund


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Past performanceOpen ended schemes (through SIP)

S.No. Name of the Scheme10 years

Return (%)

15 yearsReturn (%)

1 DSP Black Rock Equity 21.70 21.20

2 HDFC Equity 21.82 25.74

3 Reliance Growth 22.98 26.79

4 SBI Magnum Equity 18.39 17.23

5 Tata Ethical Fund 17.90 16.94


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Past performanceTax saving (ELSS) under sec. 80C (through SIP)

S.No. Name of the Scheme10 years

Return (%)

15 yearsReturn (%)

1 Birla SL tax relief 96 13.77 21.00

2 HDFC Taxsaver 20.96 27.71

3 Principal Taxsaver 13.65 18.71

4 SBI Magnum Taxxgain 22.42 21.53

5 TATA Tax saving 15.49 16.57


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Past performance of any mutual fund scheme is noguarantee of future performance


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Asset allocation

Diversification

Never put all your eggs in one basket

Different assets give better returns for specificduration

94% of portfolio return will depend on Assetallocation


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ThanksAshoka Rajan

9460293293

What is Financial Planning-2

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