2. •Consider the case of a person starting to work from the age of 25, with an
annual salary of Rs. 3,00,000 and continues to work till age 60.
•Let’s assume that his salary increases at the rate of 10% each year.
•By the time he retires at age 60, he would have totally earned through his
salaries, an amount of Rs. 8,97,38,042 (Approx. 9 crore rupees).
3. But majority of people like him would not have saved even 20% of that
amount when they retired !!!
Now consider a situation when he saves a meager 10% of his salary
every year until he retires and the funds are growing at annual rate of
10%.
He would have still saved a mind boggling amount of
Rs. 89,73,804 (Eighty Nine Lakhs Seventy Three Thousand Eight
Hundred and Four rupees). Sounds easy, but not many achieve it,
the reason being, most amongst us, don’t commit to long term savings
4. Illustrating this further…
Savings @10% of
Age (in Yrs.) Salary Salary
23 75000 7500
24 82500 8250
25 90750 9075
26 99825 9983
30 146153 14615
35 235382 23538
40 379085 37909
45 610520 61052
50 983249 98325
55 1583533 158353
60 2550296 255030
Total earning from age 23 to age 60: Rs. 3,07,23,241
The 10 % savings of his salary growing at a 10%
growth rate: Rs.94,36,073
5. ‘What is financial planning and why do I need it?’
Basically to suit your individual circumstances in your life.To help you:
• Raise your family to the finest standards
• Educate your children in the best institutions
• Fulfill your business ambitions and
• Plan for your Retirement.
Personal financial planning will help you to achieve your dreams
and goals. Now we shall go through a series of charts and
diagrams indicating the events in your life.
6. International Statistics say this
Wealthy
3%
Financially independent
7%
Dead 26%
Dependant on children, relatives & charity
64%
25 35 45 55 65
NOBODY PLANS TO FAIL, BUT MANY FAIL TO PLAN.
7. There are Five categories of people
RICH
WEALTHY
COMFORTABLE
STRUGGLING
POOR
8. The Four Areas
Personal Financial planning will form four distinct and specific parts
.Each part will relate to different aspects of our lives.
1.Family and Income protection
2.Old age independence
3.Children’s well being and advancement
4.Life time aspirations
Anything and everything that we work for, live for and dream about will
fall in either of these four categories.
9. Worries ???
• Almost 90% of our worries, fears and sense of insecurity arises
from financial matters!
• We are neither worried of the past nor the present .
• All our worries are about the future and if we had the answer to
the questions of future we would enjoy a better peace of mind.
• It is this peace of mind that we shall try and achieve.
10. Eventualities
• The three possible Events-
- Living too long
- Dying too soon
- Illness
11. Living too long
• With increasing life span, statistics have shown that one third of
our lives is spent in retirement.(i.e. we earn only for one third of
our lives)
• The biggest job of financing that a person is ever called upon to
do is financing old age.Do you have a plan for financing yours?
• Planning for this Eventuality is of utmost importance.
START EARLY IN LIFE!
12. Living too long-II
All that we would want is old age
independence.
Independence is nothing but freedom.
How do we get this freedom?
13. Dying too soon
• Aren’t our family’s current welfare and future sense of security, that
all will be fine tomorrow, our No.1 priority?
• Regardless of whether we are there or not, our families should
continue living in the same life style they are use to, when were
around.
• Death, brings along with it an emotional loss,but an emotional loss
along with a financial loss could prove disastrous.
14. Illness
• 80%
• 20%
• 80% of the people die either of a heart attack,
stroke or cancer
• 20% of the people don’t reach age 65
These are absolute hard facts
15. Illness
• If you were to get critically ill or hurt, there are
four sources of income for your family
– Dip into your savings
– Friends and relatives
– Charity
– Insurance
WHICH DO YOU PREFER?
16. Illness
•With advances in medical sciences, more people are going to
survive a critical illness, but then life is never the same again.
Maybe you could never get back to work and in that event, where
does the income come from?
There are only two ways to make money-
- Your ability to work
- Money at work for you
If the first one fails, then the second should take charge.
Life insurance is not always money after death, but it is also
provision during life!
17. Life Insurance
•It costs less to buy than not to buy.
•Eventually, somebody has to pay for it-
YOU or YOUR FAMILY!
If you die, the bank pays what you have
saved;the insurance company pays
what you meant to save.
18. THE POWER OF SAVING EARLY
Rajesh started contributing Rs 15000 per annum to his
plan at age 25. He stopped contributing at age 35, but left
the money in the plan until he was 65.
Ajith, at age 35, began contributing Rs 15000 per annum
to his plan the same year. He continued to contribute
through age 65.
Both earned an annual effective rate of 10%*.
19. What a difference!
Rajesh Ajith
Starting Age 25 35
Ending Age 35 65
Total Contribution Rs. 1,50,000 Rs. 4,50,000
Years Contributed 10 yrs. 30 yrs.
Value @ Age 65 Rs. 45,88,626 Rs. 27,14,137
What made this possible?
20. Even though Ajith contributed for 30 yrs, Rajesh’s plan
was worth Rs 18,74,475 more than Ajith's because he
started earlier. In fact Ajith contributed Rs 3,00,000 more
to his plan but the difference is that Rajesh’s money had
more time to grow i.e. 40 years as against 30 years.
This is the Power of Compounding
and
Starting Early in Life.
