Financial Planning

1. Dr. Ankit Jain 1

2.  A risk profile is an evaluation of an individual
willingness and ability to take risks.
 A risk profile is important for determining a proper
investment asset allocation for a portfolio.
 Risk Profiling is an approach to understand the risk
appetite of investors.
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3.  Some AMCs and securities research houses provide
risk profiling tools in their website.
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4. Dr. Ankit Jain 4

5. Dr. Ankit Jain 5

6. Dr. Ankit Jain 6

7.  Allocating the available resources between asset class
within the appropriate risk and return framework.
 Asset allocation is driven completely by his need for
return and risk profile.
 It is for long term.
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8.  It is the decision that comes out of calls on the likely
behaviour of the market.
 Tactical asset allocation is suitable only for seasoned
investors operating with large investible surpluses.
 It is risky.
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9.  Fixed Asset Allocation
 Flexible Asset Allocation
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10. MF
Schemes
Low Risk
Funds
Moderate
Risk Funds
High Risk
Funds
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11.  This funds are suggested to the investors whose risk
appetite is very low.
 The low risk fund comprise of Money Market Mutual
Fund and Government Securities Fund.
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12.  This funds are suggested to the investors whose risk
appetite is moderate.
 The moderate risk fund comprise of following below
mentioned mutual fund schemes.
1. Income Funds
2. Balanced Funds
3. Growth and Income Funds
4. Growth Funds
5. Short term bond Funds
6. Intermediate bond Funds
7. Index Funds
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13.  This funds are suggested to the investors whose risk
appetite is very high.
 The high risk fund comprise of below mentioned
mutual fund schemes.
1. Aggressive Growth Fund
2. International Funds
3. Sector Funds
4. Gold Funds
5. High Yield Bond Funds
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14. Based on the risk level of the different fund categories,
Jacob recommends the following portfolio sub allocations
within each category. They are
1. Low Risk (Conservative) Portfolio
2. Moderate Risk (Cautiously Aggressive) Portfolio
3. High Risk (Aggressive) Portfolio
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15. Low Risk
(Conservative)
Portfolio
50%
Government
Securities Funds
50%
Money Market
Funds
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16. Moderate Risk
(Cautiously Aggressive)
Portfolio
40%
Growth and
Income Funds
30%
Government
Bond Funds
20%
Growth Funds
10%
Index Funds
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17. Dr. Ankit Jain 17
25%
Aggressive
Growth Funds
25%
International
Funds
25%
Sector Funds
15%
High Yield Bond
Funds
10%
Gold Funds

18. The portfolio must be constructed keeping in mind the following
phases of the life cycle of an investor.
1. Young, Unmarried Professional
2. Young Couple with Two Incomes and Two Children
3. Older Couple, Single Income
4. Recently Retired Couple
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19. Investor
Young, Unmarried
Professional
Recommended Model
Portfolio
1. 50% in diversified Equity
Funds
2. 20% in sector funds
3. 10% in Gold ETF
4. 10% in diversified debt
5. 10% in Liquid Funds
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20. Investor
Young Couple single
Incomes members and
Two Children
Recommended Model Portfolio
1. 35% in diversified in Equity
Schemes.
2. 10% in Sector Funds
3. 15% in Gold ETF
4. 30% in diversified debt Funds
5. 10% in liquid schemes
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21. Investor
Single income
family with grown
up children who are
yet to settle down
Recommended Model Portfolio
1. 35% in diversified in equity
schemes
2. 10% in Index Funds
3. 15% in Gold ETF Funds
4. 30% in diversified debt fund
5. 10% in Liquid Schemes
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22. Investor
Couple in their
seventies, with no family
support
Recommended Model Portfolio
1. 15% in diversified in Equity
Funds
2. 10% in Gold ETF
3. 30% in diversified in debt Funds
4. 30% in MIP
5. 15% in liquid schemes
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23. Basic Managed
Portfolio
1. 50% in Diversified Equity Value
Funds
2. 25% in Government Securities
Fund
3. 25% in High Grade Corporate
Bond Funds
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24. Basic Indexed
Portfolio
1. 50% in Total Stock Market
Index Fund
2. 50% in Total Bond Market
Portfolio
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25. Simple Managed
Portfolio
1. 85% in Balanced 60/40 Fund
2. 15% in Medium term Bond
Fund
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26. Complex Managed
Portfolio
1. 20% in diversified equity funds
2. 20% in aggressive growth funds
3. 10% in speciality funds
4. 30% in long term bond funds
5. 20% in short term bond funds
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27. Ready Made
Portfolio
Single Index Fund with
60% Equity Holdings
+
40% Bond Holdings
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28.  Review the performance at certain period of time.
 Rebalancing is in Fixed or strategy asset allocation.
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29. While investing in equity funds, a principle to
internalize is that markets are more predictable in the
long term, than in the short term.
So, it is better to consider equity funds, when the
investment horizon is adequately long.
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30. It can be risky to invest in mid-cap / small cap funds during
periods of economic turmoil.
As the economy recovers, and investors start investing in the
market, the valuations in front-line stocks turn expensive. At this
stage, the mid-cap / small cap funds offer attractive investment
opportunities.
Over longer periods, some of the mid/small cap companies have
the potential to become large-cap companies thus rewarding
investors.
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