ppt- Financial planning.pptx

Meaning of Financial planning
 Financial planning is the process of taking a comprehensive look at your financial
situation and building a specific financial plan to reach your goals. As a result,
financial planning often delves into multiple areas of finance, including investing,
taxes, savings, retirement, your estate, insurance and more.
 Financial planning is the practice of putting together a plan for your future,
specifically around how you will manage your finances and prepare for all of the
potential costs and issues that may arise. The process involves evaluating your
current financial situation, identifying your goals and then developing and
implementing relevant recommendations.
.

 Financial planning is the practice of putting together a plan for your future, specifically
around how you will manage your finances and prepare for all of the potential costs and
issues that may arise. The process involves evaluating your current financial situation,
identifying your goals and then developing and implementing relevant recommendations.
 Financial planning is the practice of putting together a plan for your future,
specifically around how you will manage your finances and prepare for all of the
potential costs and issues that may arise. The process involves evaluating your
current financial situation, identifying your goals and then developing and
implementing relevant recommendations.
.

 A financial plan is a document that details a person’s current
financial circumstances and their short- and long-term monetary
goals. It includes strategies to achieve those goals.
 A financial plan can help you to establish and plan for
fundamental needs, such as managing life's risks (e.g., those
involving health or disability), income and spending, and debt
reduction.
.

 It can provide financial guidance so that you're prepared to meet
your obligations and objectives. It can also help you track your
progress throughout the years toward financial well-being.
 Financial planning involves a thorough evaluation of one’s
money situation (income, spending, debt, and saving) and
expectations for the future. It can be created independently or
with the help of a certified financial planner.
.

Different Types of Financial Planning
Tax planning: Financial planners often help clients address certain tax issues. They can also figur
out how to maximize your tax refunds and minimize your tax liability. Certain advisors may also b
able to actually help you with preparing your taxes and filing your annual taxes.
Estate planning: Estate planning seeks to make things a bit easier for your loved ones after you d
Preparing a will may be part of a financial planner’s services. Estate planning also helps prepare f
any estate tax you may be subject to.
Retirement planning: You presumably want to stop working some day. Retirement planning serv
help you prepare for that day. They ensure that you’ve saved enough money to live the lifestyle yo
want in retirement.

Philanthropic planning: It’s always nice to give something to people who need it or help a cause
close to your heart. Financial planning can help you ensure you’re doing it efficiently and getting
the tax benefits you’re eligible for.
Education funding planning: If you have children or other dependents who wish to pursue a col
degree, you may want to help them to pay for it. Financial planning can help make sure you are ab
do so.
Investment planning: Though financial planning doesn’t include the actual management of your
assets, it can still help with your investment portfolio by mapping out how much you should be
investing and in which types of investments.

Insurance planning: A financial planner can help you evaluate your insurance needs. Some fina
planners are also licensed insurance agents and can sell you insurance themselves. However, they
likely earn a commission, which would create a conflict of interest.
Budgeting: This is perhaps the cornerstone of financial planning. A planner can make sure you ar
spending the right amount given your income and can also make sure that you aren’t going into d

Benefits of financial planning
There are numerous practical benefits to financial planning. It helps you to:
Increase your savings
It may be possible to save money without having a financial plan. But it may not be the most
efficient way to go about it. When you create a financial plan, you get a good deal of insight
into your income and expenses. You can track and cut down your costs consciously. This
automatically increases your savings in the long run.
Enjoy a better standard of living
Most people assume that they would have to sacrifice their standard of living if their monthly
bills and EMI repayments are to be addressed. On the contrary, with a good financial plan, you
would not need to compromise your lifestyle. It is possible to achieve your goals while living in
relative comfort.

Be prepared for emergencies
Creating an emergency fund is a critical aspect of financial planning. Here, you need to ensure
that you have a fund that is equal to at least 6 months of your monthly salary. This way, you
don’t have to worry about procuring funds in case of a family emergency or a job loss. The
emergency fund can help you pay for varied expenses on time.
Attain peace of mind
With adequate funds at hand, you can cover your monthly expenses, invest for your future goals
and splurge a little for yourself and your family, without worry. Financial planning helps you
manage your money efficiently and enjoy peace of mind. Don’t worry if you have not yet
reached this stage. If you are on the path of financial planning, the destination of financial peace
is not very far away.

Saving tax
Every year, you are probably paying a substantial amount as tax. But you can now lower your
tax outgo legally. The Indian Income Tax Act provides various provisions for people to reduce
their tax outgo. By planning your taxes in advance, you can identify the best avenues to invest
your money and reduce your taxable income. Mutual funds provide a tax efficient avenue for
investing for your life goals.

Financial planning for life goals
The importance of personal financial planning in India cannot be ignored. It is not just about
increasing your savings and reducing your expenses. Financial planning is a lot more than that.
This includes achieving your future goals, such as:
Wealth creation
The rise in the price of everyday items means that if you want to maintain or increase your
current standard of living in the future, you need to create a sufficient corpus of wealth. You
may also want to purchase a better car or a new house in the future. All this requires money, and
it merely highlights the importance of wealth creation. It is possible to achieve these goals by
carefully investing your money in the right avenues. Equity mutual funds can be a suitable
option for long term goals. These funds could help the investor to accumulate wealth in the

Retirement planning
Your retirement may be 25 or 30 years in the future. But that does not mean you plan for it
when you retire. To enjoy a happy and comfortable retired life, you need to start building your
safety net right now. Planning at an early stage in life can help secure your future against
financial uncertainties. Also, you invest lesser amounts if you start early and gain from the
power of compounding which helps to build a large enough corpus over the 25-30 year period.
Child’s education
Education has become very expensive, not only in India but across the world. And in future, this
cost is only going to rise. This is why it is necessary to start planning from the moment your
child is born. Calculate how much you wish to earn and start investing in long-term investment
avenues that can help you achieve this goal. You can approach a financial advisor for advice if

1.Evaluate your current financial situation
To get started, you need to have a good understanding of the state of your current finances,
specifically when it comes to your:
• Expenses
•Income
•Debt
•Investments
•Savings
Completing this first step will give you a good understanding of the condition of your finances
and ways to improve. This is the first step in financial planning, as it gives you a good sense
on the state of your finances and ways to improve.

2.Write down your financial objectives
Write the different financial goals that you wish to achieve—both short term
and long term. Ensure that your goals are clear and specific.
For example, here are some attainable goals:
• “I want to purchase a car in the next three years”
• “I want to buy a house in the city in the next two years.”
• “I will save 10% of my income to go toward a down payment this year.”
The more specific your goals, the better you can plan for them. These goals
will act as a guide for you on how you lay out your plan and how you allocate
your money.

3.Look for different investment opportunities
Multiple investment possibilities are available for investors. You can pick from
nearly thousands of projects and schemes in the mutual fund market. Various
investment avenues allow investors to accomplish different goals. For example,
stock or equity funds are suited for long-term plans like retirement planning,
education, etc. If you are interested in a fairly steady income and risk-averse, you
might want to invest in debt mutual funds. Similarly, the ELSS (Equity Linked
Saving Scheme) fund is ideal for saving tax. Financial experts have emphasized
the importance of mutual funds when it comes to investing. Investing in these
funds regularly over a prolonged period can help you fulfill your goals and
objectives.

4.Carry out the right plan
When financial planning, there are several factors you should take into consideration, including:
•Your age
•Goals
•Risk tolerance
•Current investments
•Retirement plans
Financial plans are highly customized to your situation, so you shouldn’t follow a one-size-fits-all
approach. Instead, take recommendations and tailor them to fit your circumstances. It may take
some time and effort to get all the elements of your financial planning figured out, but doing your
due diligence will only benefit you in the long run.

5.Monitor your financial plan consistently
Financial planning doesn’t just stop once you’ve put your plan in motion. You need to keep an eye
on the progress toward your goals and may need to pivot as your circumstances and desires chang
Some important things you should keep an eye on to see how your plan is working out for you are
•How much you’ve saved
•How close you are to reaching the goals you’ve set
•How your investments are performing
•Where you’re falling short
Often things like major life changes impact our financial planning and require us to go back and
reassess. For example, your financial preferences will likely change if you have a child, so you wi
need to adjust the expenses and objectives according to that. Or, if you decide you want to make a
big purchase—like real estate—you’ll likely need to adjust your previous plan to help you achieve

GOLDEN RULES OF FINANCIAL PLANNING
Financial planning is the process, which provides you a framework for achieving your life
goals in a systematic and planned way by avoiding shocks and surprises. It comes with
objectives, such as determining capital requirements, framing financial policies, and ensuring
that the scarce financial resources are utilised the best possible way.

Manage your Money
Managing one’s money need not be boring. It’s not rocket science and you need not be from a
financial background. You only need to show a bit of commitment.
Saving money helps you avoid falling into debt traps. Not only this, but systematic saving on a
regular basis can make you rich. You may achieve your financial goals in a timely manner. As
soon as you get your salary, start putting it under various heads. These heads can be expenses,
EMIs, investments, and savings.
Ensure that you save a minimum of 10% of your income every month. It can be that simple! But
don’t put it in a piggy bank. Idle money in a piggy bank doesn’t grow. Even the saving bank
account may not fetch higher returns.
Instead, you may invest this amount in a liquid fund. Liquid fund is a type of debt mutual fund
which invests money in fixed-income generating instruments like FDs, commercial paper,

Regulate your expenses wisely
If you are living paycheck to paycheck and finding yourself struggling for money even before
the month ends, then chances are you are living way beyond your means. Maybe there are a
lot of unplanned expenses! These might be leaving you with no money for the necessities. But
there’s a way out of this.
Try preparing a budget. Unless you have a budget, you won’t be able to control your cash
flows. A budget simply shows how much money you have coming in and how those funds are
spent.
Start by categorizing your expenses into fixed and variable; urgent and non-urgent; necessities
and luxury; avoidable and unavoidable. In this way, you will create a full inventory of
expenses in front of you.

• The more you convert things from abstract to physical, the better you will get
a hold of them.
• You can create a hierarchy of needs and decide which ones to address first. It’s
all about prioritizing. You need to accept that you have got limited resources
and unlimited wants. But you have to manage your resources. The sooner you
accept this fact, the better you can control your impulses towards avoidable
expenditure.
• Make sure you commit to your budget. Consider it as a commitment instead of
a burden and stick to the boundaries.

Maintain a personal balance sheet
Having a personal balance sheet helps to know what you own and what you owe! It’s a pretty
powerful tool to take your finances to the next level. It’s a statement wherein you can jot down
your assets and liabilities. The difference between your assets and liabilities shows your personal
net worth.
Before getting started, pull together your bank statements and other proofs of the liabilities. Then,
list down your assets like the bank balance, investments, home value, and value of other assets.
Take a sum of all the assets to arrive at the total value of your assets.
Further, list down your liabilities like the car loan, home loan, credit card balances and remaining
balances in other loans. The sum of all the liabilities will show the value of the money you owe.
Ideally, your net worth needs to be positive, which means the money you own is greater than the
money you owe. Don’t lose heart if it’s negative. As you keep repaying your loans, your net

Dealing with surplus cash judiciously
How you deal with surplus cash determines your future. When you don’t have a plan, you are
likely to overspend. This money could have been used to make you financially self-sufficient.
How you deal with surplus cash determines your future. When you don’t have a plan, you are
likely to overspend. This money could have been used to make you financially self-sufficient.
In the backdrop of inflation, everything is going to be costlier with each passing year. If you
don’t invest, your money won’t grow to bridge the inflation gap. Otherwise, you might not be
able to retire as you would want to.
Investing can be a great way to channelize the extra cash and counter inflation. It can be used
to grow wealth and divert it to goal accomplishment. The earlier you start investing, the better.
Investing can be a bridge between where you are and where you want to be.

Create your personal investment Portfolio
Constructing your first investment portfolio is an achievement in itself. After all, it is your
first step towards wealth accumulation. Building a portfolio involves distributing your
investment amongst asset classes like equity, debt, and cash. It is known as asset allocation.
Although equity is the best tax-efficient and inflation countering vehicle, putting all your
money in equity isn’t a prudent move. You need to diversify the sums that are to be allocated
in each asset class as per your investment goals. It is always wiser to be a long-term investor
in order to accumulate greater corpus.
Your investment horizon would ideally be around 10-15 years. Once you have constructed a
portfolio, you need to rebalance it periodically to keep the portfolio’s risk within expected
limits due to market fluctuations.

Planning for Retirement
Planning for retirement is important for everybody. Owing to a sedentary lifestyle, you are
more vulnerable to ailments, such as diabetes, hypertension and heart attacks. Healthcare costs
are increasing with each passing year. In the absence of a social security net, you need to have
your own funds to fund for all these expenses.
Like many others, you might be thinking that it’s too early to start planning now. At this rate,
you begin retirement planning late and accumulate a smaller amount as compared to what you
could accumulate given that you started early. This is due to the “magic of compounding”. It
enables you to even retire early and lead a hassle-free life.
While planning for retirement, you need to clarify a few points like deciding an age at which
you want to retire. Along with that, estimate how much money you will need every month to
meet your post-retirement expenses.

Manage your Debt wisely
Lack of debt management may eat up a major part of your paycheck. You may end up
borrowing fresh loans to pay off older loans. If it gets out of control, then you may fall in a
vicious debt trap. Your critical life goals may get sidelined and even your retirement may get
delayed.
Strategising your debt payment may keep you away from such troubles. All you need is
being informed about how much you owe to whom. Chalk out a schedule to pay them off. In
case you have a lot of debt to shoulder, start paying off the most expensive one first.
Always keep debt as the last resort. As far as possible, make down payments for your
purchases. In case you are shouldering big-ticket loans, look for balance transfer option. You
can transfer your loan to another bank offering a lesser rate of interest. This method helps
you save a lot of money going out as interest.

Get your risks covered
Human life and property are vulnerable to risks. These risks can lead to loss of income
and put you and your dependents in a financial jeopardy. Similar to investing for wealth
accumulation, ensure wealth preservation through insurance.
Buying a ULIP is not all. You end up paying more and remain inadequately insured.
Instead of this, a term insurance plan will be a wiser proposition to buy. Term insurance
plan provides you higher risk coverage at a reasonable price.
Apart from life insurance, you may need a health insurance as well. It will enable you to
access high-quality healthcare at reasonable prices. Don’t end up shelling out more for
less.

Planning your Estate
Believe it or not! Each one of us has an estate. Whether it’s your vehicle or your home; the
cash lying in your saving and current account, every asset constitutes an estate. It’s your
responsibility to decide what happens to these when the time comes.
You need to ensure that the right asset is assigned to the appropriate individual in the right
manner. Ultimately, you need to think about estate planning. Often, individuals misconstrue
that estate planning is meant only for the wealthy. However, the reality is totally opposite. It
is relevant for every person who can’t afford to leave his assets in the hands of the unwanted
after he is not around.
Prepare a will which can be the best favour for your loved ones. It will ensure that the
beneficiaries do not have to face challenges in order to get the ownership of assets. In case
you are clueless about how to get things done, consult an experienced lawyer.

Planning your Taxes
It is necessary for you to analyze your finances from a tax efficiency point of view. You are
free to claim various tax exemptions, deductions, and benefits so as to reduce your tax
liability at the end of the financial year.
Even though tax planning is very much legitimate in nature, you need to ensure that you
don’t indulge in tax evasion or tax avoidance. There are a number of deductions available
under Sections 80C through to 80U that are given in the Income Tax Act.
The most efficient way to take advantage of Section 80C is to invest in Equity Linked
Savings Scheme (ELSS). It has the shortest lock-in period as compared to all the other tax-
saving options available under Section 80C.

Objectives of Financial Planning
Financial planning anticipates future cash requirements and ensures smooth cash flow at all
times.
Financial planning allows you to control your financial matters by avoiding excessive debt and
dependence on others. The objectives of a sound financial plan are to make you cash ready by
creating reserves to meet the following needs;
1. Medical Emergencies
Medical expenses are an area where cash flows out unexpectedly. Therefore, the first part of
your financial plan should be focused on protecting yourself and your family through a good
medical claim policy.
Doing so will also take care of any unexpected expenses related to medical emergencies.
Besides protection from medical expenses, you can also avail of tax benefits under the Income

2. Insurance
The term insurance component of financial planning offers you the much-needed protection
for uncertainties. Term policies require low premiums and provide maximum protection,
making them cost-efficient.
Term policies also provide you tax exemptions under India’s Income Tax Act. Further, you
can apply for policies to protect major assets such as your home and vehicle from theft, fire
or other unforeseen incidents.
3. Children’s future
One of the prime objectives of a financial plan is to keep us prepared for our children’s
expenses, like their education and wedding.
Mutual fund investments can help secure our children’s future. Investment in equity mutual
funds or children’s fund can help build a corpus of wealth until they turn into young adults.

4. Retirement
Proper financial planning will help you plan better for your retirement
period right from the beginning of your career.
You can choose investment instruments such as mutual funds, bank fixed
deposits or invest in the stock market through expert advice. This will help
in timely creating a retirement fund so that you lead a happy and relaxed
retired life.

Importance of Financial Planning
Financial planning plays an important role in giving direction to your goals. It helps you set short-term and
long-term goals in life and helps you make financial decisions more easily.
1. Helps manage income
A good financial plan helps you manage your income better. We need money for our basic needs but
occasionally tend to splurge on unnecessary luxuries. Planning your finances will keep a check on your
expenses and help you make savings.
As you will have a budget ready, you can easily assess whether you are overspending or are within budget.
This will help you understand how much you need to save to reach your goals.
2. Help choose investments
It is essential to have a financial plan for choosing investments in line with your income, risk capacity, and
goals. This will help you maintain a balanced investment portfolio at all times.
A sound financial plan will also help you assess your tax obligations at the beginning of a financial year.
So you can plan your finances accordingly in such a manner that you pay the least amount as tax legally.

3. Retirement lifestyle
Relaxed retirement life is possible only if your finances are in a healthy state and are in order.
This means having enough cash reserves for medical expenses and other emergencies.
A proper financial plan will have your retirement goals listed, including your income and
expenses as detailed as possible.
4. Manage inflation
Financial planning helps you manage inflation by planning your budget in a better way. This
eventually gives you peace of mind because then only you will be able to get a clear picture of
your future finances.
You will be aware of when your investments will give returns and how and when you will
achieve your goals.

5. Takes care of the estate
A financial plan will guide those taking care of your finances to manage your
estate efficiently. Financial planning includes estate planning, which means
the smooth distribution of your wealth after your death.
In essence, a proper financial plan makes things smoother. Life is
unpredictable, any untoward incident can happen at any moment and you
may need money urgently.

 Anticipation of Unforeseen Circumstances
It is important for planners to consider contingencies and emergency circumstances while developing their
financial plans. Consequently, some extra capital may be retained in order to satisfy the demands of unanticipated
occurrences. Ideally, these situations would be foreseen in advance to avoid any unpleasant surprises.
 Simplicity
A solid financial structure should give a straightforward financial framework that is manageable and understood
even to the most inexperienced investor. “Simplicity” is a requirement sine qua non for the success of the
promoters and management in raising the necessary quantity of cash for their venture. It is also simple to devise a
straightforward financial strategy.
Characteristics / Features of Financial Planning for Individuals

 Adaptability
Because it becomes essential to repeat the financial changes, flexibility is required in order for it to be easily
adaptable.
 Makes it Easier to Keep Costs Under Control
The ability to keep costs under control is essential for generating the projected profits and achieving the desired
growth. Financial management entails a features of financial planning strategies that are used to maintain the costs
of the business within acceptable bounds.
 Less Reliance on External Sources of Information
The goal of long-term financial planning should be to decrease reliance on external sources of funding. This is
made feasible by reserving a portion of revenues for reinvestment purposes.

Reduce the Likelihood of an Accident
It is the goal of financial management to reduce risk by maintaining a healthy balance between
profitability and risk exposures. Financial managers arrange all of the funds in a sensible
manner, after thoroughly examining the many investment options that are accessible.
Liquidity
Current assets should be maintained in the form of readily available cash. Cash is also
necessary to finance purchases, pay for everyday necessities such as salaries, wages, and other
incidental costs, and to cover other expenses.
Economy
Finally, but certainly not least, the financial opening should be structured in such a way that
the cost of capital acquisition is kept to a bare minimum. There should be no excessive burden
placed on the firm as a result of the cash raised.

Features / Characteristics of Financial Planning in a Business
Cash Flow that has been Properly Controlled
The ability to keep a close watch on cash and debt levels can assist you in maintaining a
stable business financial situation, which is especially crucial for freshly established firms.
Finances Under One’s Own Name
It is very necessary to receive a wage, regardless of the size of your company. While utilizing
business money in the early phases of development, it is not necessary to pay a significant
salary. Small company owners who pay themselves enough to meet their National Insurance
contributions will be eligible for tax-free treatment on their wages.

Obtaining Business Objectives
In the same manner that they devote effort to developing long-term company strategies, business
leaders should devote time to developing personal goals. Knowing what is personally attainable is
just as essential as knowing what is financially attainable when organizing the finances of a firm.
Provision of a Long-Term Safety Net
Financial planning may assist you in determining the direction of your financial decisions. It assists
you in making decisions about numerous investments that might help you get out of your financial
bind.
Risk has been Reduced
Small firms frequently make the mistake of reinvesting their assets directly back into their own
operations. However, doing so raises their financial risk significantly. Ideally, business owners
should spread risk over a number of different industries, which will minimise the likelihood and

1H & 4W approach on Financial Plan

• Most of you must be well aware of the famous tried-and-true 5W 1H (Who, What, Where,
When, Why, How) framework which has maintained its status as the master key to analyse or
create any marketing strategy under the sun since times immemorial.
• However, when you dig deeper into this brilliant framework you will realise that there isn't
really a 5W 1H, but a 4W 1H 1Y which marks the beginning of every booming entity in the
world.
• Now, if you're an entrepreneur on a mission to build a profitable business with a strong long-
term vision, you need to figure out your 4Ws (Who, What, When, Where), 1H (How) and 1Y
(Why), but just so you know, the first thing that you need to know as a business owner is your
WHY, and everything else will just follow.

Life cycle approach
 There are four stages to an individual’s financial lifecycle. There is the accumulation of wealth, growing or
managing wealth, preserving and protecting wealth, and transferring wealth. Each phase of the cycle
overlaps and needs to be managed using a comprehensive approach.
 For business owners in the earlier stages of their company, often all of their wealth is tied up in their
business. As the business grows and helps the owner accumulate wealth, the owner has to transition into
managing that wealth — a critical stage of the financial lifecycle because those who don’t manage their
wealth well will have nothing to work with in the subsequent stages.

As individuals move into the preserve and protect stage,
the decision comes down to risk. A reduction of risk
typically means stepping back their potential returns in
exchange for less volatility and a portfolio that stays just
ahead of inflation. It’s also thinking about how to
complement their portfolio with life insurance, and how
to offset their health care costs or pay down debt.
The last phase is really about making sure the
accumulated and preserved assets go to the people the
individual intends them to go to. It means having a sound
estate plan to transfer wealth.

Steps in Financial Planning:
Financial planning involves the following steps:
1. Establishing Financial Objectives:
The financial objectives of a company should be clearly determined. Both short-term and long-
term objectives should be carefully prepared. The main purpose of financial planning should be to
utilize financial resources in the best possible manner. There should be an optimum utilization of
funds. The concern should take the advantage of prevailing economic situation.
2. Formulating Financial Policies:
The financial policies of a concern deal with procurement, administration and distribution of
business funds in a best possible way. There should be clear-cut plans of raising required funds
and their possible uses. The current and future needs for funds should be considered while
formulating financial policies.

3. Formulating Procedures:
The procedures are formed to ensure consistency of actions. The procedures follow the
formulation of policies. If a policy is to raise short-term funds from banks, then a procedure
should be laid to approach the lenders and the persons authorized to initiate such actions.
4. Providing for Flexibility:
The financial planning should ensure proper flexibility in objective, policies and procedures
so as to adjust according to changing economic situations. The changing economic
environment may offer new opportunities. The business should be able to make use of such
situations for the benefit of the concern. A rigid financial planning will not let the business
use new opportunities

Financial goals
A financial goal is a scientifically defined financial milestone that you plan to achieve or
reach. Financial goals comprise earning, saving, investing and spending in proportions
that match your short-term, medium-term or long-term plans. Every financial goal will
have the following three details associated with them:
- What is the purpose?
- How much money is needed?
- How much time? (usually in years)
Emergency funds, retirement corpus, home purchase, car ownership, debt clearance etc
are all examples of financial goals.

Characteristics of financial goals
•Specific
In order to be a proper financial goal, it must first be specific. For instance, wanting to save up ₹50,000 by the
end of 6 months from today is a good example of a specific financial goal.
•Measurable
Financial goals must be quantifiable in nature. Whether it is to save up a particular amount of money or repay a
debt obligation that you have, financial goals should always be measurable.
•Attainable
Another major characteristic of a good financial goal is attainability. A financial goal that is realistic and
attainable can not only motivate you in a better manner, but also save you from disappointment.
•Relevant
Financial goals must be relevant to your life. Only when they are relevant will you want to work hard towards
achieving the goal. If it is not relevant to you or your loved ones, the possibility of you giving up on them
midway is higher.
•Time-bound
Financial goals must also have a finite time-frame associated with it. Financial goals that have no specific time
frame for completion are harder to follow up. Setting a time period for your goals can help prevent
procrastination and can bring about much-needed financial discipline.

Investment avenues
An investment avenue means investing money in something. It is often
referred to as investment alternatives or investment strategies. There
are numerous methods to categories investing possibilities.
Surprisingly, no investment strategy can guarantee a high rate of return
with no risk. Danger and reward are proportionate in the real world;
that is, the greater the risk, the larger the return. It is vital, however, to
maintain a solid, long-term portfolio that benefits you, not the bank.
This establishes the basis for investor profiling.

Equity Stocks
While equity is gaining popularity, it is not suitable for everyone.
Clearly, it is the most volatile asset, with no certainty of profit. When
it comes to investing in stocks, time is critical. The timing of entries
and exits is just as critical as the stock selection. On the other hand,
stock markets have the ability to outperform in the long run.
To limit losses, investors should trade the stock market using a
stringent stop loss. Seek expert counsel before investing in stocks. A
demat account is required to invest directly in shares.

Mutual Funds Investments
A mutual fund is a professionally managed investment vehicle that aggregates money from a
variety of investors to purchase equities. They can invest in a variety of securities. Mutual
funds may invest in gold, equities, bonds, or a combination of the three. They can be dealt
with in an aggressive or quiet manner.
The fund manager selects the securities that will generate returns, whereas passive funds,
also known as exchange traded funds (ETFs), invest in indices. Equity mutual funds are
classed according to their market capitalization or industry exposure.
For example, pension funds invest in debt mutual funds due of their stable returns and low
risk. The funds invest in fixed-income securities such as corporate and government bonds,
as well as treasury bills, commercial paper, and other money market instruments. On the
other hand, debt mutual funds are neither risk-free nor guaranteed.

Debentures / Bonds
They are long-term investments that generate a predictable cash flow
stream based on the interest rate set at the time of purchase. They believe
to be less hazardous. The identity of the issuer determines the risk level of
debentures or bonds. Examples include government securities, savings
bonds, and public sector unit bonds.

• The National Pension System (NPS) is a pension scheme sponsored by the
government that was started in 2004 for all government employees.
• The scheme was made open to all citizens in 2009. It is a voluntary and long-term
retirement scheme.
• It is regulated by the Pension Fund Regulatory and Development Authority
(PFRDA) and Central Government.

Any employee from public, private and even the unorganised sectors can opt for
this. Personnel from the armed forces are exempted. The scheme is open to all
across industries and locations.
The other eligibility criteria for opening an NPS account:
1.Must be an Indian citizen.
2.Must be between the ages of 18 and 65.
3.Must be KYC compliant.
4.Must not have a pre-existing NPS account.

NPS Benefits
•NPS offers returns higher than traditional instruments like the PPF (Public Provident Fund).
•It offers many investment options to subscribers who also have a say in where their funds
are invested.
•The NPS reduces the retirement liabilities of the government.
•If the subscriber has been investing for at least three years, he/she can withdraw up to 25%
for certain purposes before retirement (age 60). This withdrawal can be done up to 3 times
with a gap of at least 5 years between each withdrawal. These restrictions are only for tier I
and not tier II accounts.
•The entire amount cannot be withdrawn by the account-holder on retirement [Changes to be
introduced]. As of April 2021, 60% can be withdrawn which has now been made tax-free.
The rest 40% has to be kept aside so that the subscriber can receive a regular pension from

Provident fund
A provident fund is a compulsory, government-managed retirement savings scheme
used in Singapore, India, and other developing countries. In some ways, these funds
resemble a hybrid of the 401(k) plans and Social Security used in the U.S. They also
share some traits with employer-provided pension funds.
Workers give a portion of their salaries to the provident fund and employers must
contribute on behalf of their employees. The money in the fund is then held and
managed by the government and eventually withdrawn by retirees or, in certain
countries, their surviving families. In some cases, the fund also pays out to the disabled
who cannot work.

Public provident fund
PPF full form, Public provident fund is a popular investment scheme among
investors courtesy its multiple investor-friendly features and associated
benefits. It is a long-term investment scheme popular among individuals
who want to earn high but stable returns. Proper safekeeping of the principal
amount is the prime target of individuals opening a PPF account.

Importance of provident fund
A Public provident fund scheme is ideal for individuals with a low risk appetite.
Since this plan is mandated by the government, it is backed up with guaranteed
returns to protect the financial needs of the masses in India. Further, invested
funds in the PPF account are not market-linked either.
Investors can also undertake the public provident fund regime to diversify their
financial and investment portfolios. At times of downswing of the business
cycle, PPF accounts can provide stable returns on investment annually.

Features of a PPF Account
The key characteristics of a public provident fund scheme can be listed as follows–
• Tax Benefit
Up to Rs.1.5 lakh under Section 80C
• Risk Profile
Offers guaranteed, risk-free returns
• Minimum Investment Amount
Rs.500
• Maximum Investment Amount
Rs 1.5 lakh per annum.
• Tenure
15 year

Pension fund
A pension fund, also known as a superannuation fund in some countries, is any plan,
fund, or scheme that provides retirement income. Pension funds are pooled monetary
contributions from pension plans set up by employers, unions, or other organizations
to provide for their employees' or members' retirement benefits. Pension funds are the
largest investment blocks in most countries and dominate the stock markets where
they invest. When managed by professional fund managers, they constitute the
institutional investor sector along with insurance companies and investment trusts.
Typically, pension funds are exempt from capital gains tax and the earnings on their
investment portfolios are either tax-deferred or tax exempt.

Savings Account
As the name suggests, the savings accounts can be opened by an individual or jointly by two people with an
aim to save money.
The main benefit of opening a savings bank account is that the bank pays you interest for opening this type of
account with them.
Given below are a few features of the Savings account:
•There is no limit to the number of times the account holder can deposit money in this account but there is a
restriction on the number of times money can be withdrawn from this account.
•The rate of interest that an account holder get varies from 4% to 6% per annum
•There is no minimum balance that needs to be maintained for this type of an account
•The savings account holders can get an ATM/Debit/Rupay Card if they want to
•Savings bank account is further divided into two types: Basic Savings Bank Deposit Account (BSBDA) and
the other one is Basic Saving Bank Deposit Accounts Small Scheme(BSBDS)
•The savings bank account is mostly eligible for students, pensioners and working professionals

Current Account
The second type of bank account is the current bank account. These accounts are not used for the
purpose of savings.
Some important pointers related to the current bank account have been discussed below:
•This type of bank account is mostly opened by businessmen. Associations, Institutions,
Companies, Religious Institutions and other business-related works, the current account can be
opened
•There is no fixed number of times that money can either be deposited or withdrawn from such
accounts
•Internet banking is available
•This type of bank account does not have any fixed maturity
•Overdraft facility is available for current bank accounts

Recurring Deposit Account
Recurring Deposit account or RD account is a form of account wherein the account holder
needs to deposit a fixed amount every month until it reaches the fixed maturity date.
The features of the Recurring deposit account have been discussed below:
•Any individual or an Institution can open a recurring deposit account either separately or
jointly
•Periodic or monthly instalments that need to be added can be as low as Rs.50/- or may vary
from bank to bank
•The range of months for which an RD account can be opened varies from 6 months to 120
months
•The interest rate varies depending upon the bank you choose to open an account with
•Nomination facility is also available for RC accounts

Fixed Deposit Account
FD or a fixed deposit account is another type of bank account that can be opened in any Public
or Private sector bank.
The list of important things that need to be known with respect to the fixed deposit account has
been mentioned below:
•It is a one time deposit and one time take away account. Under this type of account, the
account holder needs to deposit a fixed amount of sum (as per their wish) for a fixed time
period
•The amount deposited in FD account can only be withdrawn all at once and not in instalments
•Banks pay interest on the fixed deposit account
•The rate of interest depends upon the amount you deposit and for the time duration of the FD
•Full repayment of the amount is available before the maturity date of FD

Senior citizens’ savings scheme

• Senior Citizens Savings Schemes can be availed by any individual above the age of
60 years. They are effective savings options for the long term and offer attractive
features and unmatched security.
SCSS Information
• Tenure
5 years
• Interest Rate
8.0% p.a.
• Investment Amount
Maximum amount that can be deposited is Rs.15 lakh
• Premature Withdrawal
Allowed

The Senior Citizens Savings Scheme (SCSS) was launched with the main aim of
providing senior citizens in India a regular income after they attain the age of 60
years old. Some of the main benefits of the scheme are:
•Tax benefits are provided.
•Safe to invest in the scheme.
•Premature withdrawal is allowed.
•The account can be transferred across the country
•High interest rates are offered
The scheme comes with various security features and provides individuals with a savings
option for the long run. The SCSS is available at post offices and certified banks across
the country.

Pradhan Mantri Vaya Vandana Yojana
The Pradhan Mantri Vaya Vandana Yojana is a type of government pension
scheme exclusively for the senior citizens of country. PMVVY scheme is
launched by Union Finance Minister Mrs. Nirmala Sitharaman on 21 July 2017.
The main objective of the scheme is to provide social security to the senior
citizens. It also aims to protect the elderly population against the fall in the income
from interest due to uncertain market conditions in the future. In May 2020, Union
Cabinet has extended PMVVY scheme for a period of three years till March 2023.

•The Pradhan Mantri Vaya Vandana Yojana – PMVVY Scheme was launched by Union
Minister for Finance Mrs. Nirmala Sitharaman on 21 July 2017 from New Delhi.
•It is a retirement cum pension scheme that provides an alternate source of income to the
senior citizens above the age of 60 years.
•This scheme is backed by the Government of India and it is implemented through Life
Insurance Corporation(LIC). Under PMVVY, agent commission is 0.1% of invested amount.
•Initially, it was opened for enrollment till 31st March 2020. Later, it was extended till
March 2023.
•The scheme can be subscribed in offline as well as online mode.
•The maximum amount that can be invested in this scheme is Rs.15 lakh.
•The pmvvy interest rate is 7.40% per annum for financial year 2022-23. The rate of interest
is revised by the government every year based on the Senior Citizen Saving Scheme (SCSS).

•The policy term of the scheme is 10 years. After the period of 10 years, the beneficiary will
receive a fixed amount.
•Under this scheme, beneficiaries can also choose the option of monthly/quarterly/half yearly
or annual payout. For example – If a subscriber has chosen a monthly payout option then
he/she will receive the first payment after one month of enrolling in the scheme.
•The scheme will provide a minimum monthly pension of Rs. 1000 and maximum Rs. 9,250.
•The returns of this scheme are fully exempted from the taxation under Goods and Services
Tax(GST).
•On death of a pensioner during the policy tenure, the beneficiary will receive the complete
invested amount i.e. purchase price.
•A subscriber can also exit the scheme before the completion of a 10 years period. In this case,
only 98% of the Purchase Price shall be refunded.

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