Financial planning is the process of achieving life goals through proper money management and disciplined use of investment options and current resources. It involves setting financial goals, analyzing one's current financial situation, creating a budget, and allocating assets across categories like protection, emergency funds, investments, taxes, retirement, and estate planning. Regular monitoring and adjustments are needed as one's situation changes over time to ensure goals remain on track.

1. Financial planning

2. What is Financial Planning?
It’s the process of achieving your life goals by using :-
 Different investment options
 With your current resources
 Through proper and disciplined money management

3. Financial Planning : CR+IO=FG

4. Rewards of Sound Financial Planning
 Maintain and improve standard of living
 Control spending in order to live well today and
tomorrow
 Accumulate wealth

5. Steps for setting Financial Goals
1. Write your goals (Should be specific and realistic)
1. Identify your time-specific goals
 Short Term ( within 2 year)
 Medium Term (within 5 years)
 Long term (after 5 years)
Priorities your goals

6. Analysis of present financial situation
1. Total Assets
2. Total Liabilities
3. Net Worth : (Assets – Liabilities)
4. Present Cash Flow statement (income and
expenditure)

7. Budgeting
 Income (from all sources)
 Expenses (Controllable + Uncontrollable)
 Present net saving
 Proposed net saving after reducing controllable
expenses.

8. Categories your financial goals
 Protection
 Medical
 Emergency Fund
 Investment / Wealth Creation
 Tax Saving
 Retirement
 Estate

9. Protection / Medical
 Life Insurance
 Critical Illness Insurance
 Hospitalization Insurance
 Personal Accident Insurance
 Disability Insurance
 Non-Life Insurance
How much insurance I need ?
Which policy should I take ?

10. Emergency Fund
 How much fund I require ?
 At what time I might require the funds ?
 Where to keep my emergency fund ?

11. Investment Planning
 Where to invest ?
 How to invest ?
 What is my risk appetite ?
 How much risk should I take ?
 Time frame for my investment ?
 Churning of Investment ?

12. Investment planning – Asset Class
 Fixed Deposit /Cash
 Provident Fund
 PPF / APF /NPS
 Equity- Mutual Fund / Stock Market
 Debt instrument /Bonds /
 Gold
 Commodity
 Real Estate
 Art
 Money Market
 ULIP

13. Guaranteed return / Non Guaranteed
return
Guaranteed Return Non Guaranteed Return
Fixed Deposit (Bank/Post office / Govt
Scheme)
Equity
Provident Fund / Additional PF Gold
PPF Commodity
Real Estate
Ulip
Guaranteed Return : Low risk & Low return
Non Guaranteed Return : High risk & High return

14. Asset Allocation
 Risk Appetite
 Time Horizon
 Different Life Stages
 Past Experience
 Net worth

15. Impact of Inflation
 Real return = Return – Inflation
Scheme Amount
Intere
st rate Return
Tax
Rate Tax
Post
tax
return
Post tax
value
Infla
tion
Inflatio
n
erosion
Net
value
SB A/c 100000 4% 4000 30% 0 4000 104000 7% 7280 96720
FD A/c 500000 9% 45000 30% 13500 31500 531500 7% 37205 494295

16. Impact of Inflation-Cont
Purpose Current cost / EstimateInflation Term Future Cost
HigherEduction forkids 1000000 9% 20 2800000
Child Marriage 1500000 8% 25 4500000
Medical Exp 500000 7% 30 1550000
Retirement Saving 5000000 8% 30 17000000

17. Liquidity / Contingency fund :
 Option to withdraw the money as per my wish / need
Investment products
 Bank deposit / Fixed Deposit / NSC
 Mutual funds
Strategy should be : Low risk- Low to Medium gain

18. Tax saving + Investment planning
Section 80C, 80 CCC, 80 CCD : Rs 1,50,000/-
 Repayment of principal amount on Housing Loan
 Stamp duty / Registration fees and other expenses for
the purpose of transfer of such house property to the
assesse
 PPF Accounts
 5 Year tax saving fixed deposit/ 5 Year RD with post
office
 NSC / Notified Bonds /Senior citizen saving scheme
 Equity Oriented Mutual funds
 Contribution to Employees Provident Fund
 Life Insurance Policy
 Pension Plans
 Sukanya Samridhi Account
 Children Education

19. Tax saving + Investment planning- Cont
Section 80CCD : Additional Saving of Rs 50000/-
For investment in National Pension Scheme (NPS)

20. Tax saving + Investment planning-Cont
Section 80D, 80DD, 80 DDB
 Section 80D : Medical Insurance premium of self or
spouse or children – Rs 25000-30000/-
 Section 80DD : Medical Treatment of Handicapped
Dependents
 Section 80DDB : Treatment of Specified Diseases

21. Tax saving + Investment planning-Cont
Section 24: Interest on Housing Loan
 Self-occupied property: Rs 2 Lakh
 Not Self-occupied property : No maximum limit (Rental
income to be subtracted)
Condition : The house should be constructed within 5
years.
If not : the eligibility will reduce to Rs 30,000/-
 Rs 30000/- if loan is for repair and maintenance of self
occupied house.

22. Tax saving + Investment planning-Cont
Section 80EE : Interest on Home Loan (First time
buyers)
Additional deduction of Rs 50,000/- for interest.
Conditions
 Value of property <50lakhs and Loan < 35 lakhs

23. Tax saving + Investment planning-Cont
Section 80 E : Education Loan
 For higher education of himself or spouse or
children :
 Only allowed for repayment of interest and not for
principal repayment
 No maximum limit

24. Tax saving + Investment planning-Cont
Section 80CCG : RGESS
 Annual income < Rs 12 Lakhs P.A.
 Investment in specified companies and mutual funds
 Only for first time investors
 Investment upto Rs 50000/-
 50% deduction of the amount invested during the
year.
 Benefit can be availed for 3 consecutive years

25. Tax saving + Investment planning-Cont
Section 54, 54EC, 54 F : Capital Gains
Asset Min Holding
period for
Long term
Taxation
Equity 1 Year 0%
Debt 1 Year Whichever is beneficial- 10 % without
indexation or 20% with indexation benefit
Real
Estate
3 Year 20% with indexation benefit
Gold 3 Year
physical gold
20% with indexation benefit
1 Year Gold
ETF /MF
Same as for debt
Bonds/
NCDS
1 Year 10% without indexation
Long term vs Short term capital gains

26. Tax saving + Investment planning-Cont
Section 80 G: Donations
 Contribution to National Relief Fund
 Donation for charity, social purpose.
In some cases 100% of donation can be deducted
while in certain cases the deduction is restricted upto
50%
Cash donation : Rs 10000/-

27. Retirement Planning
 Corpus required
 Identify the assets for investment
 Diversification
 Risk taking capacity
 Portfolio churning as per the change in age profile /
performance of portfolio etc
 Pension plan
 Annuity scheme

28. Estate Planning
Whom I would like to give the property after my life:
 Preparation of will
 Amendment of will
 Allocation of resources as per my wish.

29. Estate Planning -Cont
Will is a legal document in which a person gives
instruction about the distribution of his/her assets and
the legal guardian (if require).
Parties in a will
 Executor
 Beneficiary
 Power of Attorney
https://sbicaptrustee.in : My will services online

30. Financial planning is an on-going process
Pre work
Asset
allocation
MonitoringAnalysis of
current
situation
Risk
profiling
Implemen
tation
Goal Setting
Rebalanci
ng

31. Section 80 D: Medical Insurance
 Insurance of Self, Spouse and dependent children:
Rs 25000
 If senior citizen : Rs30000
 Health insurance premium for parents : Rs 30000

32. Section 80 DD: Medical Expenditure for a
Handicapped Relative
 Expenditure incurred on medical treatment, training
and rehabilitation of handicapped dependent relative
 Payment or deposit to specified scheme for
maintenance of dependent handicapped relative
Where disability is 40%-80% - 75000/-
Disability > 80% -125000/-

33. Section 80DDB : Deduction for medical
expenditure on self or dependent relative
 For treatment of specified disease or ailment – Rs
40000/-
 For senior citizen – Rs 80000/-

34. Insurance
 Term Plan : Only risk cover, no survival benefit
 Endowment Plan : Risk cover + survival benefit
Types of Insurance products
 Term Plan
 Endowment
 Annuity
 Whole life insurance

35. Risk
 Systematic risk : Movement in market / economy
 Non Systematic risk : Unique to particular investment
Other risks are
 Liquidity risk
 Exchange rate risk
 Political risk
 Interest rate risk
 Management risk
 Financial risk
 Business risk
 Re-investment risk
 Purchasing power risk

36. Risk profile of an individual
 Age
 Income level
 Time horizon of investment
 Dependents
 Market knowledge / investment products
 Capacity to absorb loss