Financial awareness presentation ahmedabad meet


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Financial awareness presentation ahmedabad meet

  1. 1. Personal Financial Planning The Need of the Day building careers Prashant V. Shah CFP PROGRAM HEAD Anagram Knowledge Academy
  2. 2. building careers Where you are on the driver’s sit of your life
  3. 3. Expectations of the Participants building careers
  4. 4. Financial Planning building careers A continuous process through which a planner helps his client to achieve his life goals These goals may be: • Retirement Planning • Children Education • Recreational Goals etc.
  5. 5. building careers Transact -ion Invest ment Loan Surplus Money Deficit
  6. 6. building careers Income Expense Savings Revenue from Investment Investment Long Term Short Term
  7. 7. Retirement Planning? building careers It is the process of ensuring sufficient financial resources to the retired person so that he/she can enjoy the desired lifestyle during the retirement years
  8. 8. Why Retirement Planning building careers • People are living longer • Change in demographic profile
  9. 9. Questions People Face for RP building careers • When to start • How much to be saved • Estimating retirement income and expense
  10. 10. Wealth Creation building careers Involves the building of assets by means of careful investment into asset based investments, usually over a long period of time so as to achieve an income stream that will ensure a continuation of a high quality lifestyle in the years beyond retirement
  11. 11. Principles of Building Wealth building careers Start investing early 5.71 Mr. E Mr. L Crore* Investment Starting Age 25 40 Investment - Monthly SIP Rs.5,000/- Rs.10,000/- Saving Years till age 60 35 years 20 years Total Investment Made Rs.21 lacs Rs.24 lacs 1.33 Crore* Investment requires time to grow 25 years 40 years 60 years *Expected rate of return 15%
  12. 12. Principles of Building Wealth building careers • Investment does not require timing but it requires time to grow • Reap the benefit of compounding
  13. 13. The Simplified Maze.. building careers • All debt is a bad debt • Have written budget and try to adhere • Set the SMART goals • Let your money work for you
  14. 14. Challenges building careers • Longevity Risk • So when such plans are made the nest should be higher than the required for the expected life…
  15. 15. Inflation Risk the Biggest Chellange building careers • Too much money chasing few goods • Increases the future cost of goods • Reduces the purchasing power • While planning for retirement inflation estimates plays the vital role • Average inflation can be assumed between 5% to 6% based on the past average
  16. 16. Case study - Inflation building careers • Suppose Mr. Chauhan aged 45 spends Rs. 3,00,000 p.a. Expected increase in standard of living 3% Standard of living during retirement 80% Inflation 5% • Imagine the amount that he will require at the age of 60 years for one year Its 9,51,650 approximately
  17. 17. FP and Investment Planning building careers • Through investment one can achieve life goals • It is a path to retirement Must consider • Asset allocation • Risk • Time
  18. 18. Asset Classes building careers • Equity • Debt • Money Market • Gold • Real Estate
  19. 19. FP and Insurance Planning building careers • Loss of earning can destroy the plans • Simultaneously it is not possible to cover all the risks because of the cost • Life insurance • Disability income insurance • Medical insurance
  20. 20. Human Life Value building careers Mr. Mohan is an assistant manager in a private firm • Present age is 45 years and retires at age 60 Present salary Rs. 2,40,000 pa Total life insurance premium Rs.15,000 pa Income tax and professional tax Rs.35,000 Self-maintenance expense Rs.30,000 • Medical expenses are being reimbursed by the company. • Assume discount rate to be 8% p.a.
  21. 21. Calculation building careers Gross total income 240000 Less: Self maintenance expenses 30000 Taxes payable 35000 Life insurance premium 15000 Surplus income generated for the family 160000 By discounting the annuity of Rs.160000 for 15 years @8% His insurance need for today is 14,80,000
  22. 22. Types of Plans building careers • Term Plan • Pure Endowment Plan • Non Traditional Plan
  23. 23. Tax Planning and FP building careers • The biggest enemy of FP is taxes • Taxes eat up lots of wealth of the investor • Efficient tax planning can help an investor to generate better wealth • Taking higher risk and paying higher tax is not a wise strategy • Focus more on tax reduction
  24. 24. I want to Buy a Car building careers • Let say, you are buying a car of Rs.5 lakh and Rs.1 lakh you have paid as down payment. Rs.4 lakh is loan for 5 years. Rate interest on loan 12% pa No of EMIs 60 EMI 8900 approximately Decline in value of car per year 20% Loss of interest on down 8% payment KM run per year 10,000 Mileage 15 km per liter Price of fuel (petrol) 55
  25. 25. Cost of Ownership building careers Fuel cost per km 3.67 Interest burden of loan per km 2.68 Loss of value per km 10 Loss of interest on down 0.8 payment per km Total cost of running car per km 17.15 for the first year
  26. 26. Force Theory of Money building careers If I get Rs.10 lakh today, my all the financial problems will get over and I can start with planning.
  27. 27. What is Better building careers • Shall I buy a house or take it on rent • Shall I buy a smaller house or bigger house
  28. 28. Retire at 60 building careers Wealth Accumulation Years Retirement Years
  29. 29. Retire at 50! building careers Wealth Accumulation Years Retirement Years
  30. 30. Retire at 65 building careers Wealth Accumulation Years Retirement Years
  31. 31. Retire from WORK…. building careers Not from LIFE!!!!
  32. 32. Websites to Visit building careers For Financial Awareness • • • • For CFP •
  33. 33. Sharings of Participants building careers