Etica Wealth Management Pvt Ltd - Retirement Planning


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Presentation on Retirement Planning in India

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Etica Wealth Management Pvt Ltd - Retirement Planning

  1. 1. 28-05-2012Retirement Planning A simple way to invest in equity and create wealth"“IF ID KNOWN THAT RETIREMENT WASGOING TO BE THIS GOOD ID HAVE DONE IT THE DAY AFTER I LEFT SCHOOL !!!” 1
  2. 2. 28-05-2012WHAT IS RETIREMENT PLANNING Retirement Planning is an attempt to find out how much money you will need if you retire today The objective is to have enough savings & investment so that one does not have to compromise one’s life style post retirement and one never runs out of money. Retirement planning, in a financial context, refers to the allocation of finances for retirement. This normally means the setting aside of money or other assets to obtain a steady income at retirement. SAVE FOR YOUR OWN RETIREMENT BEFORE SAVING FOR YOUR CHILDREN’S COLLEGE EDUCATION. THEY CAN GET LOANS FOR COLLEGEYOU CAN’T GET LOANS FOR RETIREMENT 2
  3. 3. 28-05-2012WHY RETIREMENT PLANNING? No social security system No salary, no increments, no medical reimbursements, no bonus! Increased health care costs Increased standard of living Inflation hurts more than ever Early retirement Living long is a risk Abolition of Joint family system Not everything needs to be gloomy IF retirement is planned properly; then there are many positives No more 9AM to 6PM!! No milestones, targets, performance appraisals NO BOSS (except the spouse though!)WEALTH ACCUMULATION AND EROSION MODEL B Rs. needed to Fund Retirement A Working Life C Retirement Life D Life Expectancy 3
  4. 4. 28-05-2012 Getting ready to retire is a process that ideally starts as early as possible in ones working career. Allowing our investments more time to earn for us is the best way to build our portfolios. The first part is assessing your readiness to retire given the lifestyle goals you have and the age at which you hope to retire. The second is to come up with possible actions and decisions to improve your readiness and to get closer to your goals.DETERMINE YOUR RETIREMENT CORPUS Be honest about the way you hope to live and determine how much the lifestyle you want will cost you. Work backwards from there to calculate how much youll need to save in order achieve the required corpus. One key aspect of retirement planning is choosing the investment vehicles you will use to help you reach your financial goals. Healthy retirement planning depends on asset allocation rather than on the performance of one single investment. 4
  5. 5. 28-05-2012 NEVER TOUCH YOUR RETIREMENT SAVINGS EXCEPT FOR YOUR RETIREMENT !!!Estate Planning A simple way to invest in equity and create wealth 5
  6. 6. 28-05-2012WHAT IS ESTATE PLANNING? Estate planning deals with leaving your wealth back to your heirs. Tools for Estate Planning – Nominations, Will, Trust, Power of Attorneys Estate Planning minimizes confusin and emotional strain on beneficiaries of the estate It ensures your assets are distributed in the manner you want to distribute It helps to preserve your assets It ensures minimum or no court involvement It helps to protect your dependentsWHAT IS ESTATE Your "estate" consists of all property owned by you at the time of your death, including: Real estate Bank accounts Stocks and other securities, Life insurance policies, Personal property such as automobiles, jewelry, and artwork 6
  7. 7. 28-05-2012WHO NEEDS ESTATE PLANNING?If you own anything or have people who rely on you it is a good idea to havea plan. The more complicated your personal and financial affairs, the moreimportant it is. You should also review your estate plan at least once everythree years and whenever your circumstances change, such as: getting married, living with a partner, separating or getting divorced as soon as you have children or step-children buying real estate or other valuable assets buying, selling or operating a business if you have family members with special needs or children who are vulnerable if you set up a family trust or companyWHY SHOULD ONE CREATE A PVT. TRUST For Parent when I am away For minor At Present children When I am old and children are Managing Property away To distribute among In Future after my successors Demise To hold for spouse and children Charity 7
  8. 8. 28-05-2012 “6 REASONS YOU NEED A FINANCIAL PLAN” & WHY NOWREASON 1: IF YOU DON’T KNOW THE DESTINATION,HOW WILL YOU KNOW YOU’VE ARRIVED?1. A financial goal is something that has a time frame and that can be quantified2. Remember – Vague goals like “ a comfortable retirement” is hard to plan.3. Understand the key reason and set your mind to achieve it. 8
  9. 9. 28-05-2012REASON 2: DETERMINING A PROPER INVESTMENTALLOCATION IS CRITICAL1. You must understand how your investment are allocated to the different asset classes?2. Know how your investment are spread in terms of risk level.3. Know your risk tolerance level.4. Your investment allocation should reflect on the goals you are trying to achieve.REASON 3: ARE YOU SAVING ENOUGH FOR YOURRETIREMENT AND CHILD EDUCATION1. Whether you want to fund your children’s college education, save for retirement, or buy a new house, most financial goals mean periodic savings.2. The financial planning process will help you identify how much you will need to save periodically and in total for each of your goals .3. Have you set an emergency fund that you regularly invest in? 9
  10. 10. 28-05-2012REASON 4: ARE YOU PROPERLY INSURED1. Do you have enough life insurance, and do you have the right kind of policy for your situation.2. Do you have disability and long –term care insurance? Do you need this coverage?3. A financial plan addresses how much of coverage you will required and all of the above issues.REASON 5: KNOW WHICH ASSETS IS PERFORMINGFOR WHICH GOAL1. With a comprehensive financial plan, you can instantly determine which assets is performing to your set goals. This will be critical as it will assist you to make the decision to hold, sell or even to buy more of the targeted investment. 10
  11. 11. 28-05-2012REASON 6: WHAT WILL HAPPEN TO YOUR ASSETSUPON YOUR DEATH1. Most of us have someone to whom we would like to pass on whatever wealth we have accumulated during our lifetime.2. Do you have a will? Are you beneficiary designation on retirement accounts and insurance policies up to date? What would happen to your assets if you dies today? Is this what you intended.3. Estate planning is a central part of the financial planning process. NOTE TO REMEMBER Remember: Financial Planning is not a one time event, but rather an on-going process. The plan is base from which to make financial decision, but the plan can change over time based upon change in your personal circumstances. 11
  12. 12. 28-05-2012QUESTIONS TO ASK A FINANCIAL PLANNER OR ADVISOR What experience do you have? What are your qualifications? What services do you offer? Are you independent of financial product sponsors? How much do you typically charge? How will I pay for your services? Are you licensed by SEBI / IRDA / FPSB ? Have you ever been publicly disciplined for any unlawful or unethical actions in your professional career?WHAT A CLIENT WANTS ? Understand my situation Educate me Respect my assets (no matter how small) Solve my problem – don’t sell me product Monitor my progress Keep in touch 12
  13. 13. 28-05-2012FOCUS ON FIDUCIARYFOCUS ON FIDUCIARY Meaning of Fiduciary: A person who holds assets in trust for a beneficiaryA fiduciary duty is a legal or ethical relationship of confidence & trust 13
  14. 14. 28-05-2012FOCUS ON FIDUCIARY“The agent is not your friend. He’s more like a Doctor who charges patients on how often they change medicines. And he gets paid far more for the stuff the (drug companies) are selling, than the stuff that will make you better” - Warren Buffet Last but not the least…….. If you have both knowledge & time, then you do not require a financial advisor. However, if you donot have any one of these, then hire someone to do it for you - and be willing to pay for the service. Most of us at some point have something in our body that needs fixing and we happily pay a doctor to do so, but we hesitate to pay someone to help fix the financial mismatch most of us are born with. 14
  15. 15. 28-05-2012SOURCE Life Insurance Council, India IRDA Annual Report Outlook Money Respective company websitesOUR INVESTOR AWARENESS INITIATIVES Conducted more than 100 free workshops in FY 2011-12 across India catering to approximately 6,000 individuals Business schools Colleges Companies / BPOs / Small & Medium Enterprises Senior executives Rotary Clubs Media Journalists Housing Societies Clubs Charitable Trusts & Institutions Indian Naval base Various Social organizations “When you are successful you must give back to society. Society gives us so much; we must reciprocate” – J R D Tata 15
  17. 17. 28-05-2012500+ PARTICIPANTSFor any further information, please contact:Mr. Gajendra Kothari, CFA, CAIA, ICFAM:+91 98678 24321E: gajendra.kothari THANK YOUÉtica Wealth Management Private Limited501, T-39 Sunshine Building,Shastri Nagar, Lokhandwala Complex Road,Andheri West, Mumbai - 400 053Landmark: Suburban Diagnostics, Near Lokhandwala CircleT: +91 22 2632 9644 +91 22 4264 8740E: 17
  18. 18. 28-05-2012For any further information, please contact:Mr. Gajendra Kothari, CFA, CAIA, ICFAM:+91 98678 24321E: gajendra.kothari THANK YOUÉtica Wealth Management Private Limited501, T-39 Sunshine Building,Shastri Nagar, Lokhandwala Complex Road,Andheri West, Mumbai - 400 053Landmark: Suburban Diagnostics, Near Lokhandwala CircleT: +91 22 2632 9644 +91 22 4264 8740E: info@eticawealth.comBRIEF HISTORYFirst Phase: 1964-87Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. At the end of 1987, UTI hadRs.6,700 crores of assets under management.Second Phase: 1987-1993 (Entry of Public Sector Funds)Marked the entry of non- UTI, public sector mutual funds set up by public sector banks and LifeInsurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI MutualFund was the first non- UTI Mutual Fund established in June 1987. At the end of 1993, the mutual fundindustry had assets under management of Rs.47,004 crores.Third Phase: 1993-2003 (Entry of Private Sector Funds)1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutualfunds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now mergedwith Franklin Templeton) was the first private sector mutual fund registered in July 1993. As at the endof January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.Fourth Phase: since February 2003In February 2003, following the repeal of the Unit Trust of India Act 1963, UTI Mutual Fund Ltd wasformed and sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under theSEBI Mutual Fund Regulations. The AUM of 41 fund houses as at March 31, 2011 stands atRs 7,00,538 crores 18