Presented by Ashoka Rajan MBA, CFPCM
Inflation the villain
1985 Petrol 8 2012 70 2030 298
Toothpaste
Sugar Movie Milk
5
4 15 4
70
40 150 32
407
185 697 128
Inflation the villain
House hold expenses (today)
25000.00 After 30 years
House hold expenses
250000.00
Higher education
Engineering (today)
500000.00
After 10 years
Expenses on engineering study
1300000.00
Higher education
MBA (today)
300000.00
After 10 years
Expenses on MBA study
780000.00
Child Marriage
Today
1000000.00
After 20 years
Expenses on Marriage
4500000.00
Investments tools
Conventional products
Low risk products High risk products
Conventional products
Low risk and low returns Bank FD / RD 9.00% Post office 8.00%-8.50% NSC PPF RD Investment through LIC Overall ve returns will not beat inflation
Conventional products
High risk & High returns (uncertain) Gold ----liquid but work when uncertainty world wide Properties---illiquid and geographical specific
There are crises in properties Japan USA subprime crises
Corporate bonds
Depends upon rating
Higher the rating lower the returns High returns ----fraud and scams
CRB Capital Co-operative Banks and Societies
Ponzy schemes
CRB capital fiasco
Gold Sukh Speak Asea Stock guru
Stock markets and Mutual fund
High risk and high returns Scams
Harshad Mehta scam
Ketan parikh scam IPO scandle
Stock markets and Mutual fund
Long term stable returns 1979----100 2012---18500 Returns---17% yoy Very high liquidity Individual stocks---too risky and need constant monitoring
Mutual funds
Retail investor ---pool their money Professional fund managers Trustees are big names SBI HDFC ICICI PNB TATA BIRLA RELIANCE Regulated by SEBI
How financial planning help us
Case study
Yogesh mathur Age- 30 years
Retirement age 60 years
Life expentancy80 years Current monthly Income 4.36 lac per annum
Current house hold expenses 2.40 lac per annum
Case study contd
Family WifeSangita ( age -28 years) House wife Son Ankur Age 1 year Daughter Rashi Age 3 year
Case study contd
Financial goals
Daughter Rashi higher studies
Current cost4.00 lac
Daughter marriage Current cost10.00 lac
Case study contd
Financial goals
Son Ankur higher studies
Current cost4.00 lac
Son Ankur marriage Current cost8.00 lac
Case study contd
Financial goals
Yogesh retirement corpus
Assumptions Inflation 10% (higher education) Inflation 08% (marriage and house expenses)
Case study contd
Future price of Daughter Rashi higher studies Daughter Rashi marriage Son Ankur higher studies Son Ankur marriage Yogesh retirement corpus Human life value of Yogesh
16.70 lac 46.60 lac 20.20 lac 50.72 lac 195.00 lac 45.00 lac
Case study contd
Now we have future projections We can plan them today
Case study contd
Yogesh retirement plan term 30 years Future value 2.00 crore
Rate 8% 12% 15%
Per Month Investment
13,330
5,665
2,853
Case study contd
Yogesh retirement plan Rate 15% per annum Future value 2.00 crore
Time period ( years)
20 13,193
25 6,089
30 2,853
Per Month Investment
Who need financial planning?
Whatever may be level of your income or assets, you
need financial planning.
It is a myth that only rich people need financial
planning
Financial planning is a scientific methods
Investment strategies
Risk profiling
Age
Risk taking capacity
Income generation consistency Dependency on invested money Equity (100-age)
Which type of Life Insurance plan?
Term Insurance It is purest form of insurance
Do not buy Endowment, Money back, Capital
protection plan, Children plan or Unit Linked Plans ULIP
Best option is Term Insurance + PPF / ELSS scheme of
mutual fund
Past performance
Open ended schemes (through SIP)
[Link]. Name of the Scheme DSP Black Rock Equity HDFC Equity Reliance Growth SBI Magnum Equity Tata Ethical Fund
10 years Return (%)
21.70 21.82 22.98 18.39 17.90
15 years Return (%) 21.20 25.74 26.79 17.23 16.94
1 2 3 4 5
Past performance
Tax saving (ELSS) under sec. 80C (through SIP)
[Link]. Name of the Scheme Birla SL tax relief 96 HDFC Taxsaver Principal Taxsaver SBI Magnum Taxxgain TATA Tax saving
10 years Return (%)
13.77 20.96 13.65 22.42 15.49
15 years Return (%) 21.00 27.71 18.71 21.53 16.57
1 2 3 4 5
Past performance of any mutual fund scheme is no guarantee of future performance
Asset allocation
Diversification
Never put all your eggs in one basket Different assets give better returns for specific
duration
94% of portfolio return will depend on Asset
allocation
Thanks
Ashoka Rajan 9460293293
