Financial Planning for Youth A simple, easy to understand guide for youngsters to learn how to manage their money and create wealth. This presentation sheds light on the factors that are critical to a healthy financial management over one's lifetime. It will further take you through the fundamentals of planning - be it investment planning, risk management, tax and contingency planning or planning for your retirement.

1. Financial Planning for the Youth

2. What does today’s youth want?

3. Easy Availability of Credit Funds the Aspiration

4. Which Leads to….
Huge Burden
of Debt
Shortage of money for
financing the critical
goals
No surplus to invest,
leading to uncertain
future

5. Perils of excessive debt
• Regular outflow to fund EMIs prevents accumulation of savings
• High interest cost if existing debt is high
• Opportunity Cost – not being able to invest when opportunity
arises
• Additional stress
• Effect on long term goals (retirement, child’s education/marriage)

6. Ensures your present action is aligned with future goals

7. What is Financial Planning?
Financial Planning is a process
Making, executing and monitoring financial decisions that enable you to achieve
your financial goals
Financial Planning Involves
Risk Management – risk of dying early, living too long or critical illness
Investment Planning
Asset Acquisition
Estate Planning

8. Financial Planning Process

9. Life Stages
Young Adult Family Formation
Family FormationFamily Development
Retirement

10. Life-Cycle Phases Financial Planning Areas
Young adult (18–25) Consumption and savings; career
Family formation (26–35) Consumption and savings; career; debt; insurance;
income taxes
Family development (36–49) Investment; retirement; income taxes
Family maturity (50–60) Investment; retirement; estate
Retirement (60–?) Estate; income taxes
Life Cycle Financial Planning

11. 25 30 43 50 55 60 65 70 80 90 100
AGE
Marriage /
children
Children – growing
needs/education
Growing
needs/marriage
•Your earning grow till
60
•Save max till 60
•Have max resp.till 60
Now it’s your
own needs
Would not
like to be
dependent on
anybody
Earnings have gown
down
Responsibility Curve
L
I
A
B
I
L
I
T
I
E
S
Needs
Income

12. Objectives of Financial Planning
• Risk Management
– Life
– Health
– Liability Management
• Investment Planning
– Wealth Creation
– Asset Acquisition
– Planning for Events
(Child’s Marriage/Education, Retirement)
• Contingency Planning
• Tax Planning
• Retirement Planning

13. Keys to an effective financial planning….
 Start Early – Benefit from the power of compounding
0
200000
400000
600000
800000
1000000
1200000
30
32
34
36
38
40
42
44
46
48
50
52
54
56
58
60
Age
FundValue
Rs. 10,000 invested from age 30 to age 40
years
Total Amount saved Rs. 100,000
Maturity Value Rs. 9.8 Lacs
Rs. 10,000 invested from age 40 to age 60 years
Total Amount saved Rs. 200,000
Maturity Value Rs. 5.5 Lacs
Cost of Delay
Difference = Rs.4.3 Lacs

14. Keys to an effective financial planning….
 Allocate funds to assets based on the following factors
• Risk Tolerance
– Stage in life (young adult, nearing retirement etc.)
– Net Worth (Asset liability balance)
– Investment Experience (novice, knowledgeable)
• Time Horizon
– Short term goals
– Long term goals
• Investment Objective
– Retirement
– Wealth Creation
– Capital Preservation
– Income Generation

15. Risk
R
e
t
u
r
n
Savings
Account
Liquid Funds
KVP, NSC PO
Gold
Equity
Debt Funds
Real Estate
Keys to effective financial planning….
Risk Return characteristics of asset classes

16. Keys to effective financial planning….
Year 1 2 3 4 5 6 7 8 9 10 11 12
NAV 10 9.5 8.5 8 7.6 7 6.5 7.4 8.2 9.3 9.5 9.9
One time Lump sump Investment in fund
Systematic Investment Plan
Investment made on 10 Jan – Rs. 120,000/-
Fund Value on 12th
Year – Rs. 118,800/-
Regular Annual Investment – Rs. 10,000/-
(as shown in graph)
Fund Value on 12th
Year – Rs. 143,261/-
SIP Safeguards
From Volatility
Year
SIP Works Magic
Earns Significant Returns
Even if Market is not encouraging
6
7
8
9
10
11
1 2 3 4 5 6 7 8 9 10 11 12
Rs 10,000/-
Rs 10,000/-
Rs 10,000/-
Rs 10,000/-
Rs 1,0000/-
Rs 10,000/-
Rs 10,000/-
Rs 10,000/-
Rs 10,000/-
Rs 10,000/-
Rs 10,000/-
Rs 10,000/-
For an Investment = 120,000/- in an volatile market
Invest in a systematic and a disciplined manner

17. Keys to effective financial planning….
Unemployment
Disability
Accident
ContingencyContingency
PlanningPlanning
Critical Illness
Keep reserves for a rainy day

18. Thank You