The deck captures basics of Financial Goal planning and steps on creating one.

1. An overview of Financial Goal Planning
By
Sourabh Sharma & Binay Raina

2. Contents
1 Introduction
2 Steps of Financial Goal Planning
3 Typical Financial Goals
4 Analysis of few Financial Instruments
5 Q&A

3. Introduction
Income – Expenses = Saving
Income – Saving = Expenses
Saving ≠ Investing

4. Time Value of Money
 If you had Rs.1 Lakh in 1978 and had :
 Bought Gold : Current* worth would be Rs. 37.17 lakhs
 Left as cash : Current* worth would be Rs. 7k in terms of PPP
 Invested in Sensex: Current* worth would be Rs. 1.88 crores
*- As of March 31st
2012

5. Goal Planning – Step 1
 Identify and prioritize specific life goals
 Calculate what you need to achieve each goal
 Determine your risk tolerance
1.EstablishYour Goals and Expectations

6. Typical Goals
Kid’s Marriage
A goal without a plan is just aWish

7. Goal Planning– Step 2
 Allocate resources to each goals
 Choose instruments aligning with the risk appetite
 Invest regularly and systematically
2. Make Investments

8.  Best time to start saving for retirement is the day you start earning
 Save at least 10% of income for retirement
 At the peak of earnings save 40-50% of income
Retirement
Graph source : Internet -

9.  Prepare for the costliest education (Medical, Graduation/Masters Overseas etc.)
 MBA that costs 10L today would cost 67L in 20 years at 10% education cost inflation
 Diversify your investments across geographies to factor in overseas education
Education
Graph source : Internet -

10.  Above cost is derived by factoring in 10% marriage cost inflation
 Above cost is excluding the gold cost
 Buy gold regularly via ETF , GSBs ( a gram/month or quarterly)
Kid’s Marriage
Kid’s
Marriage
Graph source : Internet -

11.  Time not timing is the key to investment success
 The best time to invest is whenever you have money
Wealth Creation
Graph source : Internet -

12. Goal Planning – Step 3
 Establish benchmarks
 Compare performance to expectations
 Be vigilant and update your expectations/strategies
3. Monitor and MaintainYour Portfolio

13. Sample Instruments

14. Survey 1 - Indian Household Assets Breakup

15. Survey 2- Retirement Products held by Indians

16. Employee Provident Fund
Real return has been calculated after adjusting for retail inflation

17.  Defined Contribution Pension system open for all citizens of India
 Tax exemption of upto 2 lacs + 10% of basic salary
 Mandatory annuity purchase of atleast 40% of accumulated pension wealth
National Pension System

18.  Defined Contribution Pension system open for all citizens of India
 Tax exemption of upto 2 lacs + 10% of basic salary
 Mandatory annuity purchase of atleast 40% of accumulated pension wealth
National Pension System

19. Mutual Funds
 Professionally managed investment fund with Products for all risk appetite
 No tax on long term capital gain
 ELSS is a very good tax saving instrument

20. Franklin India Smaller Companies Fund
CAGR Return since Inception : 17.89%
Small Cap Fund

21. ICICI Prudential FMCG Fund
CAGR Return since Inception : 17.7%
Sectorial Fund

22. Axis Long term Equity Fund
CAGR Return since Inception : 19.19%
ELSS

23. Birla Sun Life Tax Plan
CAGR Return since Inception : 20.59%
ELSS

24. EPF vs. Large Cap Fund

25. Recap

26. 1. Establish Your Goals and Expectations
ShortTerm
• Emergency fund
• School/College fees
• Premium payments
MediumTerm
• New Car
• Downpayment for House
• ForeignVacation
LongTerm
• Child’s Education
• Child’s Marriage
• Retirements
Goals Years to Achieve Risk Appetite
<< 1Year
1Year – 5Year
5Year – 25Years
No Risk
Low Risk
Medium to High Risk

27. 2. Making Your Investments
ShortTerm
• Emergency fund
• School/College fees
• Premium payments
MediumTerm
• New Car
• BookingAmount for House
• ForeignVacation
LongTerm
• Child’s Education
• Child’s Marriage
• Retirements
Goals Investment
Options
Expected Rate of
Return
Recurring Deposits
Liquid Funds
8%
8-10%
9-12%
9-15%
11%
12-20%
>>16%
Debt Funds
Balanced Funds
Gold
Equity Funds
Stocks

28. 3. Monitor and Maintain Your Portfolio
Equity
• Stocks
• Mutual Funds
Debt
• FD/ RD
• Liquid Funds
• Debt Funds
Real Estate
• Residential
• Commercial
Portfolio Mix Age Percentage ofTotal
20 - 45
45 - 55
55 - 60
>> 60
50 - 80%
40 - 50%
10-30%
0 - 10%
Gold
• Physical
• ETF/Gold Funds
20 - 45
45 - 55
55 - 60
>> 60
20 - 45
45 - 55
55 - 60
>> 60
20 - 45
45 - 55
55 - 60
>> 60
10 - 20%
20 - 40%
40 - 60%
60 - 100%
20%
10%

29. Thanks