Financial planning


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Financial planning

  1. 1. Financial Planning Jyoti Aneja Munish Aggarwal Prashant Bhardwaj
  2. 2. Do Not Work For MoneyLet Your Money Work For You
  3. 3. What is Financial PlanningFinancial Planning is when you develop a plan for your money is the process of meeting your life goals through the proper management of your finances is a critical exercise in ensuring long-term financial security. provides direction and meaning to your financial decisions. Helps you to adapt more easily to life changes and feel more secure that your goals are on track.
  4. 4. Why should you have aFinancial Plan? Do you know how much you need to invest in order to have a comfortable retirement? Do you know how much you need to save up in order to get an MBA education for your 1 year old after 20 years? Do you know how much you need to invest today to get your 10 year old married after 15 years? Do you know in which investment avenues should you invest your money to achieve these goals? Do you know what kind of life insurance you should buy? Do you know how much health insurance do you need? Do you know what is your net worth? Do you know what is your asset allocation?A financial plan would help you answer these questions, and more
  5. 5. Financial PlanA financial plan is a road map to help you achieve your life’s financial goals.The process involves:  gathering relevant financial information,  setting life goals,  examining your current financial status  coming up with a strategy or plan for how you can meet your goals given your current situation and future plans.
  6. 6. How to make FinancialPlanning work for you? To achieve the best results from your Financial Planning engagement, you will need to be prepared to avoid some of the common mistakes by considering the following advice: Start planning as soon as you can Set measurable goals Be realistic in your expectations Realize that you are in charge Understand the effect of each financial decision Re-evaluate your financial situation periodically
  7. 7. Budget Planning Budgeting allows you to track your monthly expenditures so that you can plan key savings strategies for important short- and long-term goals. Having a financial budget may find that about 5-10% of your total spending may be for purchases that are not needed. Budget identifies expenses that can be cut so that you can set goals on making important long-term savings.
  8. 8. Saving and Investing If you are not currently saving, you may never achieve financial independence Save at least 10% of your gross income each month Creating a savings plan help you reach your short and long term goals Once you commit to creating savings, you must define an investment strategy that works for you. Assess your risk tolerance and then invest so you will have enough money to reach your goal.
  9. 9. Contingency Plan A contingency plan is a plan devised for a specific situation when things could go wrong. It is your guard for those Murphy moments in life. A good emergency fund consists of 3 to 6 months of living expenses. This could be saved in form of cash in Saving Accounts, Bank FDs and liquid funds.
  10. 10. Assets & Liabilities Assets  In financial accounting, assets are economic resources.  Anything that has value and that is held to have positive economic value is considered an asset.  Assets include stocks, mutual funds, gold, real estate Liabilities  indebtedness: an obligation to pay money to another party  Liabilities include loans such as Home Loan, Education loan, Personal loan and Credit Card loan
  11. 11. Investments Short Term Investments  Bank and Post Office Fixed Deposits  Recurring Deposits  Fixed Maturity Plans  Liquid Funds  Company Deposits
  12. 12. Investments Long Term Investments  Stocks  Mutual Funds  Real Estate  Provident Fund  National Savings Certificates  Kisan Vikas Patras  ULIPS
  13. 13. Alternative Investments Gold and Silver Agricultural Commodities Art Wine Currencies
  14. 14. Insurance Life Insurance  Term Insurance  Whole Life Insurance  Endowment Plans  ULIPS Health Insurance Accident Insurance Motor Insurance
  15. 15. Debt Education Loans Home Loans Car Loans Loan Against Gold Loan Against Securities Personal Loans Credit Card Loans
  16. 16. TAXThe only sure things in life are death and taxes Utilize the entire Section 80C deduction  Provident Fund  National Saving Certificate  Life Insurance Premium  Tuition fees paid for childrens education (maximum 2 children)  Principal component of home loan repayment  Equity Linked Savings Schemes (ELSS)  5-Year fixed deposits with banks and Post Office
  17. 17. TAX Think beyond Section 80C  Interest payments on Home Loan  Medical Insurance for Self & Family  Medical Insurance for Parents  Donations  HRA  LTA
  18. 18. Estate Planning An estate is the total of all personal and real property owned by an individual  Estate planning is the process of anticipating and arranging for the disposal of an estate.  Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses.  Guardians are often designated for minor children and beneficiaries in incapacity.
  19. 19. Retirement Planning Analysis of the available retirement benefits from various sources, such as the State, the employer, etc. to arrive at the additional needs to be met Dependency needs of self and other family members requiring continued income flow Anticipation of possible changes to the employment conditions and the family circumstances Decision on the savings pattern out of the present income to build the required corpus for the visualized and prioritized needs Proper selection of investment strategies on the basis of defined yield and rate of accumulation Analysis of risk elements arising during the process
  20. 20. Summarize
  21. 21. Q&A