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Nectar Solutions Personal Financial Planning
- 1. Welcome to a session From Nectar Solutions On Financial,Insurance & Tax Planning
- 2. Nectar Solutions FINANCIAL PLANNING & NEED FOR INSURANCE
- 3. The Pre – Dependency stage Earning Stage Peak Earning Smoothening stage Secondary Dependency stage Life Cycle
- 4. FINANCIAL PLANNING PREDICTABLE EVENTS UNPREDICTABLE EVENTS Children’s education Marriage Life goals: retire early, buy property, travel around the world etc., Provision for old age Disability Critical Illness Untimely Death
- 5. PREDICTABLE EVENTS Specific purpose known Time frame is known Budget is known Can be achieved through Planned & appropriate savings strategy Implications of not planning : FINANCIAL STRESS Implications of not planning : FINANCIAL STRESS SAVING IS ONE AND ONLY TOOL STARTING IT EARLY IS THE KEY
- 6. UNPREDICTABLE EVENTS Event may happen any moment or may not happen at all Can be achieved through Investing in protection Implications of not planning : DISASTROUS FOR DEPENDANTS Implications of not planning : DISASTROUS FOR DEPENDANTS THUS PROVIDE AND THE SOLUTION IS ONLY ONE THAT IS INSURANCE
- 7. FINANCIAL PLANNING BASE RULE Provide for unpredictable events Unpredictable events can happen any moment - Provide for them early Save for predictable events We know when they are going to happen and what amount will be required Start early – have a long term view
- 8. Birth Death I n c o m e 25 60 Unmarried Young married with children Pre retirement Married with older children Retiremen t Age Life Cycle & Income
- 9. Birth Death I n c o m e 25 60 Provision for insurance Life Cycle & Insurance need Age Young married with children Unmarried
- 10. Birth Death I n c o m e 25c 60 Pre retirement Married with older children Retirement Provision for pension Life Cycle & Pension need 45 Age
- 11. When Do I Start Saving for Pension ?
- 12. Protection planning No financial dependants Financial dependants Pay off debts Health care expenses Maintenance of dependants Pay off debts Children’s future care
- 13. Factors Affecting Protection Needs Age Dependants Income Assets & Liabilities
- 14. Liabilities & Property Savings Investments Protection Decreasing Priority Most people prioritize investments this way
- 15. Whereas your priority should be Protection: Life Insurance against unpredictable events Savings : Short Term Savings : Long term Investments : Short & Long Term Liability & property Decreasing Priority
- 16. Who is your family depending on? YOU are the basis for building of income and prosperity YOUR income decides your family’s lifestyle Life cycle planning is aimed at providing income without the family having to dip into capital assets
- 17. What is Human Life Value? A economic loss to the dependents due to loss of life of the bread winner is called as the HUMAN LIFE VALUE
- 18. What is my Human life value ? Gross earnings : 300000/- per annum Personal Expenses : 50000/- per annum Net cash flow to my family : 250000/- per annum IF MY FAMILY HAS TO RECEIVE THE SAME AMOUNT AFTER ME WHAT IS THE SUM THEY SHOULD HAVE ? Considering a Bank Fixed deposit rate of 6% they should have 250000 / 0.06 = 4166000/- So my human life value to my family is 41.66 lacs
- 19. In Summary Prioritize your investments Cover the financial loss that the family may be put to, at any time Move from pure risk protection to savings to growth investments
- 20. Financial Planning Strategy Protection Investment Pension Savings
- 21. Why Financial Planning with Nectar Solutions Realistic promises and need based solutions Customised solutions Commitment to customer Superior service levels Quality of advice
- 22. ACTION PLAN 1. Personalized Financial, Insurance and Tax planning 2. Individual Assistance on One to One basis
- 23. Thank you, With Regards Prasad Ashok Joshi Financial Consultant Contact No. 09822821995 What’s Up 09145274224 E-mail ID: nectarsolutions@consultant.com joshi.prasad.a@gmail.com Welcome to the world of smart investing! NECTAR Solutions - The smart way to plan your finances.
Editor's Notes
- Financial planning for an individual involves making provision both for the predictable as well as the unpredictable events in life.
- We do need to plan for our future needs. Considering the inflation and increasing costs, we need to do a clear planning of our expected needs and start saving on a regular basis. Assuming that you are planning to buy a house 10 years from now, you need to start saving to provide for your margin commitment for the cost of the house while the balance may be availed through a housing loan from HDFC. In case you do not plan for events like children’s education, marriages, and provision for old age, when these events come to pass, as they surely will, you will not have funds to meet the events . This will lead to a financial stress on your resources causing a lot of hardship. It is, therefore, wise to make plans to meet the financial requirements of predictable events. And it is highly advisable and cheaper to start the process of savings early so that you have a longer time to build up the required funds to meet the needs arising out of predictable events. One can provide for predictable events by adopting a planned and appropriate savings strategy.
- Planning for predictable events is much easier as the purpose , time and budget is known at the time of making the plan. On the other hand, unpredictable events like disability, sickness or death have an element of uncertainty in the sense that such events may happen without notice. We take care to insure our car or two wheeler against accidents or theft and are willing to pay up any premium. But one generally postpones to cover ones own life which is by any account so much more precious. In case the unpredictable events catch us without any financial protection, you can imagine the consequences for our near and dear ones. One may not be able to avoid the emotional stress following an unpredictable event, but one can at least try and ensure that the loved ones that are left behind are protected from financial stress. This can be achieved through investing in protection.
- This brings us to the base rule in financial planning. To provide for the unpredictable events first as it involves our near and dear ones. Unpredictable events by their very nature can happen at any time. Therefore they require our immediate attention. Further, if the unpredictable events happen they frustrate the savings made for the predictable events. The earlier we provide for the unpredictable events the better. We should therefore start early and have a long term view. A short term view will leave us exposed in the later stages of life. It is always better we start the protection investments early and review them periodically. Review of ‘protection needs’ is very important due to changes in standard of living, cost of inflation, Change in family composition etc. .
- An individual’s income is expected to grow throughout his/her working years except at the end of his career where the income generally stagnates. On retirement the income falls precipitously unless he/she has invested in a retirement benefit or is eligible for a pension fund. In case the unpredictable events take place during the earning life of the individual, the family is put to a substantial loss of income . Income loss of this kind arising out of unpredictable events can be adequately compensated by investing in life insurance. And, remember, one needs to adequately provide for life cover at every stage in life.
- Protection planning in terms life insurance has to start early. Life insurance provides income in case of the happening of an unpredictable event. The need to insure ones life is maximum during the working/active years of life. As the age increases , premium also increases. It may be expensive to take up a policy later. It may not be possible due to ill health. During the unmarried phase, an individual needs to protect himself against loss of income due to illness or disability. But the need changes when he has a family with young children. He needs to plan for their education, marriage and also for adequate protection to cover these costs in his absence. Review of the size of the life cover every year is also very important depending on the financial requirements of self and dependants. .
- Pension planning is again very important. Considering the medical trends, one is expected to live longer and, therefore, it is important that one also takes care of this requirement. The income or pension one gets may not be sufficient to provide for the expenses or other needs of self or family. Post retirement, our resources should be sufficient enough to give us a decent standard of living and to cover our cost of medical expenses. And post-retirement, as there is little possibility of boosting income, it is prudent to start providing for pension early on but no later than from the mid-40s instead of waiting for pre-retirement stage.
- Protection Planning involves: providing for an income for oneself in the event of sickness or disability providing for an income to the dependants. providing for health care expenses. paying off debts providing for children’s future. Protection planning will differ in case we have or do not have dependents in the sense that we need not provide for dependants in case we do not have them.
- Protection needs are dependent on the following factors: Age: Lower the age higher is the need for protection as in case of death, disability or sickness a lot of future income is at stake. Dependants: Higher the number of dependants , higher the need for protection as the income required to maintain the dependants will be higher. Income: Higher the income , higher the need for protection. The idea is to be able to maintain the same standard of living for the dependants in case of loss of income. Assets: Lesser the assets higher the need for protection as the dependants cannot depend on the assets for the income. Liabilities: Higher the liabilities higher the need for protection. In case of stoppage of income the dependants will have to clear the liabilities like housing loans, vehicle loans etc etc.,.
- Ordinarily people prioritise their investments in this manner. We give the highest priority to property and gold and the least priority to Life Insurance.
- For a proper protection to our dependents we should give the maximum priority to investing in protection ( Life Insurance).
- We build income and provide for the prosperity of our dependants through our income. Our income will decide the lifestyle and the standard of living of our family.
- Human Life Value is the economic value of an individual. This value, depends upon ones age, annual income and retirement age . In case of death of the principal earner, the family loses the income that would have been earned in case the principal earner lived till his retirement. This income stops on the happening of any one of the following events. - Death - Sickness - Accident - Retirement If adequate life insurance is taken, it protects the income of the bereaved family / individual in the event of any of the above events happening. Human Life value is, therefore, the lump sum amount required to generate the income the person earned before his income stopped.
- .Realistic promise and need based selling HDFC Standard Life is firmly committed to need based selling – offering products to customers that best suit their requirements after having undertaken a life cycle analysis and a review of their risk profile. The Company believes that it is currently impossible for any provider to forecast returns over a long period of 15 or 20 years and hence, customers are best served through ‘with profit’ policies that offer reversionary and terminal bonuses. .Customised solutions HDFC Standard Life offers products that provide customers an opportunity of designing their own solutions with advice from our trained distribution partners. The riders enable customers to pick up a benefit of their choice at a small additional cost. Going forward, HDFC Standard Life will continue to offer options to customers that would enhance the flexibility of its products. .Commitment to customer HDFC Standard Life believes that its success depends directly on the satisfaction level of its customers – the intermediaries and the policyholders. Both promoters have received numerous awards in their respective markets for the excellence that they have displayed in the area of customer service. HDFC Standard Life will continue with the same philosophy and strive to outperform its customers’ expectations from time to time, not only at the point of sale but over the entire servicing cycle. .Superior service levels HDFC Standard Life endeavors to redefine the standards of service for the insurance industry. This it will be able to do with the help of a robust IT backing. The customer service processes will be highly leveraged on technology, whether it is getting a new policy on the books, paying commission or settling a claim.