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Investment and financial planning


... from assets already owned, borrowed money, and savings or foregone consumption. By foregoing consumption today and investing the savings, we expect to enhance ... – PowerPoint PPT presentation

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Title: Investment and financial planning

Investment and financial planning
  • By
  • Suresh Parthasarathy Certified Financial Planner
  • Sr.Research Analyst
  • Business Line

Economic Purpose of Life
our aspirations
Dream car
A beautiful house
Child education
Happy Retirement
Holidays and Tours
Childrens marriage
Why financial planning?
  • The only permanent thing in life is change!
  • Life is uncertain. We do not know what may
    happen tomorrow. All of us hope for a better
    future ahead.
  • Dont we all want to lead a worry-free and
    financially secure life?
  • We should be able to deal with all kind of
    risks in life.

Financial Planning
Financial decisions form the basis of much of
what we do in our lives. Poorly thought out
personal finance decisions can at best cause
great anxiety and at worst lead to bankruptcy,
whereas well thought out, sound financial
decisions can lead to a prosperous
lifestyle. Financial Planning is the process of
identifying a persons financial goals,
evaluating existing resources, and designing the
financial strategies that help the person achieve
those goals.
What if no financial planning…?
  • Example
  • Michael Gerard Tyson
  • Former American world heavyweight boxing
  • Youngest man to have won a boxing world
    heavyweight title belt.
  • Made US30 million during his career.
  • Declared bankrupt in 2003
  • Reason
  • Indiscriminate Spending
  • No Financial Planning

What if sound financial planning?
  • Example
  • Kapil Dev
  • captained India to their maiden and only Cricket
    World Cup in 1983.
  • His businesses
  • 5 stake in Zicom Electronics
  • Invested money in his own Kapil's Eleven
  • and Kaptain's Retreat Hotel.
  • Established a company Dev Musco Lighting Pvt
  • Result… He is living comfortably even after

Components of financial planning
Insurance Planning
  • Financial planning comprises
  • Insurance Planning
  • Investment Planning
  • Tax Planning
  • Estate Planning
  • Retirement Planning

Why investment Planning
  • Identify Goals that have financial implications
    Dream home, Children's education, marriage,
    managing life post retirement
  • Implement Budgeting and spending plans
  • Optimization of Insurance Premiums
  • Manage Debt Efficiently
  • Identify Investment Asset Allocation to meet the
  • Take maximum benefit of tax laws and regulation
    to create additional surplus for investment
  • Distribute wealth according to ones wish and not
    according to law

What is investment planning ?
Once we have saved enough money for emergencies,
how can we grow our wealth? Investment refers to
a commitment of funds to one or more assets that
will be held over some future time period.
Why investment planning?
All of us work for money. It is equally important
to ensure that money works for us. We invest to
improve our future welfare. Funds to be invested
come from assets already owned, borrowed money,
and savings or foregone consumption. By
foregoing consumption today and investing the
savings, we expect to enhance our future
consumption possibilities. In investment
planning asset allocation plays important role.
Asset allocation
  • Its paramount for wealth creation
  • There is no fixed rule for asset allocation
  • But as the age goes up the risk assets such as
    equity has to be lowered
  • For instance if you are 40 you can restrict your
    exposure to equity between 50-60 per cent.
  • Asset allocation can be in the range of
    50202010(equity,debt,real estate and gold) for
    a conservative investor.
  • Fixing target and profit booking are the two
    important key for wealth creation.

Why insurance planning ?
Needing insurance is like needing a parachute. If
it isn't there the first time, chances are you
won't need it again! Insurance is not for the
person who passes away, it is for those who
what is insurance planning ?
Insurance Planning takes into account the risks
that surround you and then provides an adequate
coverage against those risks. Insurance is the
most common method used for transferring risks.
It shifts the risk from an individual to a group.
It also provides a means for paying unforeseen
losses. Insurance provides an important means of
preventing risk from interfering with your
financial objectives.
Term Insurance
  • If you are 30 years and wish to buy a term
    insurance for Rs 50 lakh till age of 60 the
    premium out go per annum will be Rs 13401 and it
    will be Rs 21067 if you are 40 and if you are 50
    for the same cover it will be Rs 37171 for a
    period of 10 years( till age of 60).How many
    times of my annual earnings I require insurance?
    The idea is to protect monthly income even if
    the bread winner is not there.

Retirement planning?
Some may like it and others may not! But
retirement is a reality for every working person.
It is important to plan for your
post-retirement life if you wish to retain your
financial independence and maintain a comfortable
standard of living even when you are no longer
earning. According to NSSO 93 per cent of working
classes has no social security.
Case Study
  • Assume if you are at 40 and your currently
    monthly expenses is Rs 40000 and annual
    requirement is Rs 4.8 lakhs.Taking a inflation at
    6 per cent at the end of 20 years( at the age of
    60) you need annual pension of Rs 15.4 lakh.To
    get this pension at the time of retirement you
    should have a corpus of Rs 1.63 crore and it
    should earn 8 per cent interest. To reach this
    target he should save monthly a sum of Rs 16340
    for next 240 months and it should earn an
    interest of 12 per cent.

Paying tax
It would be great if all of us could pay our
taxes with a smile on our face, but
unfortunately, this is not so Therefore, the
question arises How to minimize our tax
ways to reduce tax liabilities
  • Three ways used by the taxpayers are
  • Tax evasion
  • Tax Avoidance
  • Tax Planning
  • Tax Evasion means trying to reduce taxes by
    concealing income, inflation of expenses,
    falsification of accounts and wilful violation of
    the provisions of the Income-tax Act.
  • .

ways to reduce tax liabilities contd
Tax Avoidance means minimizing the incidence of
tax by adjusting the affairs in such a manner
that it falls within the four corners of the
laws Tax planning is an arrangement of financial
activities in such a way that maximum tax
benefits, as provided in the income-tax act are
availed of. It envisages use of certain
exemptions, deductions, rebates and relief's
provided in the act.
What is estate planning?
Estate is the total property, real and personal,
owned by an individual prior to distribution
through a Trust or Will. Real property is real
estate and personal property includes everything
else, for example cars, household items, and bank
accounts. Estate Planning distributes the real
and personal property to an individual's heirs.

Why estate planning?
Example Parveen Babi considered to be one of
the most successful Bollywood actresses in the
1970s. She did not leave a will. Result. Fight
s amongst relatives on her property after her
Why estate planning?
  • Dhriubhai Ambani
  • started the Reliance Commercial Corporation
    with a capital of Rs. 15,000
  • passed away on July 6, 2002.
  • Reliance Group had a gross turnover of Rs.
    75,000 Crore or USD 15 Billion at the time of
    his death
  • Had not done proper estate planning. His will
    was not clear.
  • Result…
  • Arguments between his sons for Reliance.
  • Is writing a WILL is difficult?

Thanking you
  • My contact no 98404 54737

Role, Scope and Opportunities for Wealth Creators
in Indian Economy
Retail Financial Services Industry
  • an overview
  • Over 100 Million Retail investors and still
  • 53,000 Bank Branches in the Country
  • 8913 PvtLIC Insurance Branches
  • 10000 Brokerages Service Branches
  • 100,000 CAs
  • Growing number of Financial Products

aspirations to create wealth..
  • Some Statistics from Income Tax dept
  • Rs. 200,000 in mutual funds by 320,000
    investors Rs. 685,000 crore.
  • Rs. 100,000 in primary issues by 60,00,000
    investors Rs. 60,000 crore.
  • Rs 495,000 crore invested in gold
  • Rs. 200,000 spent by 300,000 credit card
    holders Rs. 6400 crore.
  • 1000,000 cars sold Rs. 5000 crores

Confusion Fear
…need for someone Trustworthy, who can hold his
Financial Planning
  • By Suresh Parthasarathy,
  • Sr.Research Analyst,
  • Business Line, Chennai.
  • Mobile 98404 54737
  • E mail

Mutual Fund Products
Life Insurance Products
Health and Property Insurance