A PROJECT REPORT

STUDY ON “FINANCIAL PLANNING OF SALARIED INDIVIDUALS”

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

AWARD OF THE DEGREE OF

MASTER IN BUSINESS ADMINISTRATION

SUBMITTED TO

SAVITRIBAI PHULE UNIVERSITY OF PUNE

SUBMITTED BY

VIRAJ VISHNU KASAB

2017-2019
 ALL INDIA SHRI SHIVAJI MEMORIAL’S SOCIETY, PUNE

A PROJECT REPORT

STUDY ON “FINANCIAL PLANNING OF SALARIED INDIVIDUAL”

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE

AWARD OF THE DEGREE OF

MASTER IN BUSINESS ADMINISTRATION

SUBMITTED TO

SAVITRIBAI PHULE UNIVERSITY OF PUNE

SUBMITTED BY

KASAB VIRAJ VISHNU

2017-2019
 CERTIFICATE

This is to certify that Mr.Viraj Vishnu Kasab has successfully completed his summer internship
on the project titled A PROJECT REPORT STUDY ON “FINANCIAL PLANNING OF
SALARIED INDIVIDUAL” with reference to MONEY PLANT CONSULTANCY.

Sign of the Director Sign of the Faculty Guide

 DECLARATION

I, hereby, declare that the work which is being submitted as a Project Report entitled
“FINANCIAL PLANNING OF SALARIED INDIVIDUAL”, in partial fulfilment of the
requirements for the award of the Masters in Business Administration to the University of Pune
is an authentic record of my own work carried out during a period from 16thMay 2018 to 31st
July 2018 under the guidance of Dr. Gauri Prabhu.

The matter presented in this Project Report has not been submitted by me for the award of any
other degree elsewhere.

Name & Signature of the Student

This is to certify that the above statement made by the student is correct to the best of my
knowledge.

Signature of Faculty Guide

Date: Name & Designation

 TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr. Viraj Vishnu Kasab has worked as a trainee from 16th May 2018 to
31stJuly 2018 in our organization. During his summer internship, he has worked on the titled A
PROJECT REPORT STUDY ON “Financial Planning of Salaried Individual” with reference to
MONEY PLANT CONSULTANCY. He has been sincere and hardworking in his work.

We wish him luck in his future endeavours.

Signature
 ACKNOWLEDGEMENT

I would like to place on record my deep sense of gratitude to Mr Rishabh Parakh (company
Guide) For his generous guidance, help and useful suggestions.

I express my sincere gratitude to Dr. Gauri Prabhu (Faculty Guide), for her stimulating
guidance, continuous encouragement and supervision throughout the course of present work.

I am extremely thankful to Dr. Abhijit Mancharkar, Director, AISSMS, Pune, for continuously
motivating me, without which this work would not have been possible.

Signature of the Student

 TABLE OF CONTENTS

Sr. No. Details Page. No.

1 Abbreviations and Nomenclature

2 Executive summary

3 Introduction

4 Literature Review

5 Organization Profile

6 Research Methodology

7 Data Analysis

8 Learning outcomes of the project

9 Findings and Observations

10 Conclusion suggestions and Limitations

11 Reference

12 Appendices
 1.ABBREVIATIONS

1. ETF- Exchange traded fund

2. CBDT- Central board of direct taxes

3. ULIP- Unit Linked Insurance Plans

4. CAGR- Compounded annual growth rate

5. GPF- General Provident Fund

6. IRA- Individual Retirement Arrangement

7. ELSS- Equity Linked Provident Fund

8. EPF- Employee Provident Fund

9. TDS- Tax Deducted at source

10. NPS- National Pension Scheme

11. KYC- Know Your Customer

12. NSC- National Saving Scheme

13. FY- Financial Year

14. SSY- Sukanya Samridddhi Yojana

15. SCSS- Senior Citizen Saving Scheme

16. PAN- Permanent Account Number

 2. EXECUTIVE SUMMARY

Financial planning is the process of assessing financial goals of individual, taking an inventory
of the money and other assets which the person have, determine life goals and then take
necessary steps to achieve goals in the stipulated period. It is a method of quantifying a
person’s requirement in terms of money.

It was a great opportunity to work with Money Plant Consultancy. I got to know the
organisational structure and various business models of the company. The various financial
services it carried out and also the working of the organisation

Financial services refer to services provided by the finance industry. The finance industry
encompasses a broad range of organizations that deal with the management of money. Among
these organizations are banks, credit card companies, insurance companies, consumer finance
companies, stock brokerages, investment funds and some government sponsored enterprises.
Financial Planning is one such advisory service, which is yet to get recognition from investors.
Although financial planning is not a new concept, it just needs to be conducted in organized
manner. Today we avail this service from Insurance agent, Mutual fund agents, Tax consultant,
Equity Brokers, Chartered Accountants, etc. Different agents provide different services and
product oriented. Financial Planner on other hand is a service provider which enables an
individual to select proper product mix for achieving their goals.

The major things to be considered in financial planning are time horizon to achieve life goals,
identify risk tolerance of client, their liquidity need, the inflation which would eat up living and
decrease standard of living and the need for growth or income. Keeping all this in mind
financial planning is done with six step process. This are self- assessment of client, identify
personal goals and financial goals and objective, identify financial problems and opportunities,
determining recommendations and alternative solutions, implementation of appropriate strategy
to achieve goals and review and update plan periodically.

A good financial plan includes Contingency planning, Risk Planning (insurance), Tax Planning,
Retirement Planning and Investment and Saving option.

Contingency planning is the basic of financial planning and also the most ignored.
Contingency planning is to be prepared for major unforeseen event if it occurs. These events
can be illness, injury in family, loss of regular pay due to loss of job. Such events are not
certain but may have financial hardship if they occur. Thus a person should have enough
money in liquid form to cover this risk

Risk Coverage is done through insurance. Risk can be classified into life risk, health risk and
property risk. Today we have different insurance which covers different risk. Everyone is
exposed to life risk but the degree of risk varies. Life insurance provides an economical support
to the family and dependents. Apart from life risk we are also exposed to health risk. Health
insurance covers health risk by funding medical expenses and hospital charges. Also we have
property insurance to cover risk attached to house property like theft, fire,damage, etc. and
various auto insurance.

Tax planning is what every income earner does without fail and this is what financial planning
is all to them. A good plan is one which takes the maximum advantage of various incentives
offered by the income tax laws of the country. However, do understand that the tax incentives
are just that, only incentives. Financial planning objective should be getting maximum
advantage of various avenues. It is to be remembered that tax planning is a part and not
financial planning itself. There are many investments which do not offer tax shelter that does
not mean they are not good investments. The prudent investment decision made and the returns
that accrue will more than offset the tax outgo. In any case the primary objective of a good
financial plan is to maximize the wealth, not to beat the taxmen. However many investment
provides great returns which can offset the tax on it. A detailed study of various investment
which provides deduction and exemption is given in report.

Retirement Planning is also an important aspect of financial planning. To a greater extend

most earning people do retirement planning. There are various schemes in market through
which a person can do his retirement planning. To list a few are Annuity Insurance Plan, PPF
and EPF.

In market there are different instruments which can be adapted to full fill the need of various
planning objective. These instruments are different from each other in terms of returns, risk,
fund allocation, charges, investment term, tax incentives, etc. A detail description
of instruments like Life insurance, Equity, Mutual Funds, PPF, Investment in Gold, Investment
in Real Estate, Deposits with Banks and Post Office, etc. are covered in this report. This will
help the investor to make their investment decisions.
 OBJECTIVES

 To understand the importance of tax planning

 To understand the importance of financial planning

SCOPE OF STUDY

This study is conducted as internship training at “Money Plant Consultancy a leading Chartered
Accountant Firm in Pune from “16thMay 2018 to 31stJuly 2018”. Salaried Individual
employees are taken as sample for the study. It includes:

a. Male employees
b. Female employees
c. Senior Citizen

RESEARCH METHODOLOGY

The study was all about to find various avenues available for an individual to invest and ways
to achieve long term and short term financial goals through financial planning. A sample size
of50 people were considered. Analysis is made based on the actual response.
 3. INTRODUCTION

FINANCIAL PLANNING

Financial planning is the process of estimating the capital required and determining its
competition. It is the process of framing financial policies in relation to procurement,
investment and administration of funds of an enterprise.

Financial planning is done to determine the capital requirement, capital structure, to frame
financial policy and to ensure that the scarce financial resources are maximally utilized in the
best possible manner.

It involves framing objectives, policies, procedures, programmes, and budgets regarding the
financial activities of a concern. This ensures effective and adequate financial and investment
policy.

A salaried person is required to pay some portion of his income as tax to the government. This
portion depends on the tax slab of the concerned financial year’s slabs which may change at the
end of the financial year.

To enhance the investment habits of the individual’s government has given some areas of
investment as tax free investments, i.e. by investing in these sections an assesses is barred from
paying tax. That means he/she can save tax.

But every salaried individual was not aware of these tax saving investment avenues by
investing in which he can save the tax.
This problem laid down the need of tax planner to guide the assesses about the various tax
saving avenues.

Study of various factors

Things to consider while doing financial planning are:

Time Horizon and Goals

It is important to understand what individual’s goals are, and over what time period they want
to achieve their goals. Some goals are short term goals those that people want to achieve within
the year. For such goals it is important to be conservative in one’s approach and not take on too
much risk. For long term goals, however, one can afford to take on more risk and use time to
one’s advantage.
Risk Tolerance
Every individual should know what their capacity to take risk is. Some investments can be
more risky than others. These will not be suitable for someone of a low risk profile, or for goals
that require being conservative. Crucially, one’s risk profile will change across life’s stages. As
a young person with no dependants or financial liabilities, one might be able to take on lots of
risk. However, if this young person gets married and has a child, person will have dependants
and higher fiscal responsibilities. So persons approach to risk and finances cannot be the same
as it was when they were single.

Liquidity Needs
When is money needed to meet the goal and how quickly one can access this money. If
investment is made in an asset and expects to sell the asset to supply funds to meet a goal, then
it needs to be understood how easily one can sell the asset. Usually, money market and stock
market related assets are easy to liquidate. On the other hand, something like real estate might
take a long time to sell.

Inflation
Inflation is a fact of the economic life in India. The bottle of cold drink that is brought today is
almost double the price of what would be paid for ten years ago. At inflation or slightly above
4% per annum, a packet of biscuits that costs Rs 20 today will cost Rs. 30 in ten years’ time.
Just imagine what the cost of buying a car or buying a home might be in ten years’ time! The
purchasing power of money is going down every year. Therefore, the cost of achieving goals
needs to be seen in what the inflated price will be in the future.

Need for Growth or Income

As person make investments think about what is required, whether capital appreciation or
income. Not all investments satisfy both requirements. Many people are buying apartments, but
are not renting them out even after they take possession. So, this asset is generating no
income for them and they are probably expecting only capital appreciation from this. A young
person should usually consider investing for capital appreciation to take advantage of their
young age. An older person however might be more interested in generating income for
themselves
Six step process of Financial Planning
1. Self -assessment:
Clarify present situation, this is a preliminary step someone has to complete prior to planning
their finance. Doing a Self -assessment enable a person to understand their present wealth
status and responsibilities. Self- assessment should contain following
Prospective retirement age
Main source of income
Dependents in family
Expenses and monthly savings
Current investment status one should identify their wealth status prior to move with financial
planning.

2. Identify financial, personal goals and objectives

Each individual aspires to lead a better and a happier life. To lead such a life there are some
needs and some wishes that need to be fulfilled. Money is a medium through which such needs
and wishes are fulfilled. Some of the common needs that most individuals would have are:
creating enough financial resources to lead a comfortable retired life, providing for a child's
education and marriage, buying a dream home, providing for medical emergencies, etc. Once
the needs/ objectives have been identified, they need to be converted into financial goals. Two
components go into converting the needs into financial goals. First is to evaluate and find out
when it is needed to make withdrawals from investments for each of the needs/ objectives.
Then person should estimate the amount of money needed in current value to meet the
objective/ need today. Then by using a suitable inflation factor one can project what would be
the amount of money needed to meet the objective/ need in future. Similarly one need to
estimate the amount of money needed to meet all such objectives/ needs. Once person have all
the values they need to plot it against a timeline.

3. Identify financial problems or opportunities:

Once goals and current situation are identified, the short fall to achieve the goal can be
assessed. This short fall need to be covered over a period of time to full fill various needs at
different life stages. Since future cannot be predict, all the contingencies should be considered
will doing financial planning. A good financial plan should hedge from various risks. A flexible
approach should be taken to cater to changing needs and should be ready to reorganize our
financial plan from time to time.
4. Determine recommendations and alternative solutions:
Now review various investment options such as stocks, mutual funds, debt instruments such as
PPF, bonds, fixed deposits, gilt funds, etc. and identify which instrument(s) or ac combination
thereof best suits the need. The time frame for investment must correspond with the time period
for goals.

5. Implement the appropriate strategies to achieve goals:

Until person put things into action everything is waste. Necessary steps need to be taken to
achieve financial goals this may include gathering necessary documents, open necessary bank,
demat, trading account, liaise with brokers and get started. In simple terms, start investing and
stick to the plan.

6. Review and update plan periodically.

Financial planning is not a one-time activity. A successful plan needs serious commitment and
periodical review (once in six months, or at a major event such as birth, death, inheritance).
Person should be prepared to make minor or major revisions to their current financial situation,
goals and investment time frame based on a review of the performance of investments

Constitute of Financial Planning

A good financial plan should include the following things
Contingency planning
Risk Planning (insurance)
Retirement Planning
Tax Planning
Investment and Savings Option

Contingency planning
Contingency means any unforeseen event which may or may not occur in future. Contingency
planning is the basic and the very first step to financial planning. It was found that a large
number of people have invested in financial planning instrument but have ignored their
contingency planning. Why it is more important to have a contingency plan?

Maybe you have planned for their future that’s a great thing, this would definitely help in long
run. But there is always a million-dollar question to be asked, what about today, is there a plan
in place? Everyone would think that they have a secure present with regular salary, but what if
suddenly something happens and it is not possible to draw that monthly income. There are
many possibilities that due to illness, injury or to care of family member a huge amount of
money is required. Moreover in this era of pink slip and job hopping it’s not assured that the
next job will be available at the earliest. This are temporary situation and for a short phase but
cannot be ignored. If person is not planned for contingencies he will use his long term
investment to fund such crises. It is possible that long term investment may not give enough
returns if withdrawn early there is also a possibility of capital erosion. In such situation all the
financial plans made are of waste. With long term planning person also need to take care of
present situation in order to truly achieve financial goals. It is a thumb rule that one should have
three times money of monthly salary in liquid form to support contingency.

Risk Coverage
Every individual is exposed to certain type of risk whether it is due to loss or damage
of personal property, loss of pay due to illness or disability; or even due to death. Such
risk cannot be determined but on occurrence there may be a financial loss to the individual or
their family. Proper personal financial planning should definitely include insurance. One main
area of the role of personal financial planning is to make sure that one has the ability to carry
on living in case of some unforeseen and unfortunate event. Basically, insurance provides a
safety net to provide the necessary funds when one meets with events like accidents, disabilities
or illnesses. One main contribution of insurance is that it helps provides peace of mind,
knowing that enough funds are at hand in the event when things do not go the way it should be.
This peace of mind leaves one with the energy and confidence to move forward.

Health Risk
Lifespan of Indian is known to have increased nowadays, and senior citizens strive to stay
healthy and active as they age. However, the older person gets the more extensive healthcare is
needed. Though staying forever young remains a dream unattainable, living a long and safe
quality life at peace is quite an achievable goal. Health insurance is an insurance Policy that
insures against any medical expenses. Insured medical expenses
will be taken care of by the insurance company provided person pays their premium regularly.
Cover extends to pre-hospitalisation and post-hospitalisation for periods of 30days and 60 days
respectively. Domiciliary hospitalisation is also covered. There are various type of health
insurance. Disability insurance can protect against the loss of a person's ability to earn a living.
Critical illness insurance can afford some protection from expending reserved financial
resources due to an unforeseen major illness.
Property Coverage
Property Coverage insures personal property from damage, destroy or stolen. Dwelling
coverage also known as Homeowners Insurance offers protection against direct physical
damage caused to the dwelling, including rooms, fireplaces, carpeting, tile floors and elements
of decor. Structures, which are attached to the insured dwelling on the same foundation, such as
a garage, are also liable to coverage under this section of Home owners Insurance. Besides, this
section of policy covers materials and supplies necessary to rebuild or repair home. Person
Property Coverage can insure the contents of home, i.e. the items person regularly use which
are not a permanent part of their house's or apartment's structure, such as furniture, television
sets, bikes, clothing, appliances, utensils and tools. Personal Property Coverage can be used in
appliance to valuable information saved in a hard-copy form or as electronic data. Auto
insurance is compulsory in most states, and the insurance has different types of benefits or
coverage.

Tax Planning

A good plan is one which takes the maximum advantage of various incentives offered bythe
income tax laws of the country.However, do understand that the tax incentives are just that,
only incentives. Financial planning objective should be getting maximum advantage of various
avenues. It is to be remembered that tax planning is a part and not financial planning
itself. There are many investments which do not offer tax shelter that does not mean they
are not good investments. The prudent investment decision made and there turns that accrue
will more than offset the tax outgo. In any case the primary objective of a good financial plan is
to maximize the wealth, not to beat the taxmen. However many investment provides great
returns which can offset the tax on it. But with the knowledge of the Income Tax (IT) Act one
can reduce income tax liability. It also helps to decide, where to invest and to claim deductions
under various sections. The income earned is subject to income tax by the government. The rate
of income tax is different for different income levels, and thus, the income tax payable depends
on the total earnings in a given year.

Tax saving options in India:

The most popular tax-saving options available to individuals and HUFs in India are under
Section 80C of the Income Tax Act. Section 80C includes various investments and expenses
that can be used to claim deductions. The Section 80C limit is ₹1.5 lakh in a financial year,
which means that you can use this entire amount to reduce your taxable income.
SEC 80C:

Equity Linked Saving Scheme (ELSS)

These are tax-saving mutual funds that invest at least 65% of their assets in the stock markets.
Investments of up to Rs 1.5 lakh in ELSS funds can earn a tax break under Section 80C. The
advantage of ELSS funds is that they come with the lowest lock-in among all tax-saving
investments–just 3 years. Apart from that, because of their equity exposure, ELSS funds are
best placed to help you earn inflation-beating returns over the long-term. Even though these
tax-saving mutual funds don’t offer guaranteed returns, the best performing ones have
generated 12-15% returns over the long-term through the power of compounding interest.
Additionally, since ELSS funds are equity-oriented funds, all gains on investments held for
over one year are tax-free for the investor.

EXAMPLE:

Let’s assume you invest Rs. 1 lakh this year in an ELSS scheme and you are in the highest tax
bracket.
Invested Amount = Rs. 1,00,000/-
Income Tax saved = Rs. 30,000 (30% tax slab)
Net amount Invested = Rs. 70,000/- (I have deducted the 30,000 because you get it back up
front after your investment as income tax benefit and you effectively invested only Rs. 70,000)
Let us assume your equity investment grows at the rate of 15% per annum.
Investment value at the end of the First year = 1,15,000/-
Investment value at the end of the Second year = 1,32,250/-
Investment value at the end of the Third year = 1,52,087/-
Assuming you encash your investment at the end of the 3rd year you will get Rs. 1,52,087/-
Profit you realized = Rs. 82,087/- (You invested only Rs. 70000 effectively :) remember the tax
saved)
Profit percentage = 117% (For 3 years together)
Returns % per year = 39%
A Returns of 39% per annum is something we cannot expect in any other form of investment.

Public Provident Fund (PPF)

Deposits made in a PPF account are eligible for tax deductions under Section 80C. A maximum
of Rs 1.5 lakh can be claimed in one financial year. PPF gives guaranteed interest that is fixed
by the Finance Ministry for every financial year. The current interest from the PPF for FY2016-
17 is set at 8.1% that is compounded annually. The PPF has a tenure of 15 years, after which
the withdrawals are tax-free. While the PPF doesn’t allow premature withdrawals, the account
holder can take loans against the corpus in their PPF account.

Additionally, an employer’s contribution to the Employee Provident Fund (EPF) account also
earns a tax break under Section 80C of up to Rs 1.5 lakh

 Interest rate : 7.8%

 Duration of scheme : 15 years
 Minimum deposit amount (per year) : 500
 Maximum deposit amount (per year) : 1,50,000
 Number of instalments every year : 1 (Min) to 12 (Max)
 Number of accounts one can open : Only One
 Lock-in period : 15 years (partial withdrawals can be made from the sixth year)
 Extension of PPF Account : After the maturity period (15 years), it can be extended for a
period of 5 years
 Tax savings (contribution) : under section 80C (up to 1.5 L)
 Tax savings (interest earned and final amount) : fully exempted from wealth tax

Employee Provident Fund (EPF)

An employee’s contribution to the Employee Provident Fund (EPF) account also earns a tax
break under Section 80C of up to Rs 1.5 lakh. This amounts to 12% of salary that is deducted
by an employer and deposited in the EPF or other recognised provident fund. The current
interest rate on the EPF is 8.8%.

EPF is a long term investment option especially designed for salaried individual to help them
after retirement. The fund collected in EPF is through salary of an employee and the
contribution amount is 12% of the basic salary of an salaried person and another 12%
contributed by the employer. And this total amount of 24% is contributed every month. The
amount is deposited at the Employee Provident Fund Organization (EPFO). This creates a good
corpus and aims to make an individual financially secure after the retirement.

EXAMPLE:

Let us assume your basic pay is INR 20000. So here is the breakup of EPF contribution will
look like:
1) Employees Share (12%) in EPF i.e. 12% of 20000 = INR 2,400

2) Employer’s Share in EPF (3.67%) i.e. 3.67% of 20000 = INR 734

3) Employer’s Share in EPS (8.33%) i.e. 8.33% of 20000 = INR 1,666

(Employer’s EPF contribution is EPF+EPS)

4) Employer’s Share in EDLIS (0.5%) i.e. 0.5% of 20000 = INR 100

5) Employer’s Administration Charges (1.11%) i.e. 1.11% of 20000 = INR 222

Adding 1 to 3, total amount of INR 4, 800 gets deposited every month as a part of EPF.

Tax-saving Fixed Deposits (FD)

Tax-saving FDs are like regular fixed deposits, but come with a lock-in period of 5 years and
tax break under Section 80C on investments of up to Rs 1.5 lakh. Different banks offer
different interest on the tax saving FD’s which range from 7-9%. The returns are guaranteed
and the FDs offer 100% capital protection. But upon maturity, the interest is added to the
investor’s taxable income.

-Short Lock period with guaranteed rate of return

-Tax saving rates differ from bank to bank starts with 8%

-Tax saving FD have a lock period of 5 years

-Only HUFs and Individual can invest in tax saving FD

-Interest payable monthly quarterly (3m).

EXAMPLE:

Ritwik falls in the 20% tax bracket. He has 2 Fixed Deposits with a bank of Rs 1,00,000 each
for a period of 3 years @ 8% interest per annum. In the first year Ritwik’s interest income is Rs
8,000 from each of the FDs, total interest accrued is Rs 16,000 in the first year. Bank deducts
TDS @ 10% of Rs 800 on both the FDs.
Total interest income of Ritwik = Rs 16,000 total TDS deducted = Rs 1,600. Total tax payable
by Ritwik based on his slab rate is Rs 3,200; therefore balance tax payable by Ritwik is Rs
1,600.

National Pension Scheme (NPS)

The NPS is a pension scheme that has been started by the Indian Government to allow the
unorganised sector and working professionals to have a pension after retirement. Investments
of up to Rs 1.5 lakh can be used to avail tax deductions under Section 80C.

An additional Rs 50,000 can also be invested in the NPS for tax deductions under Section
80CCD(1B). The NPS offers different plans that the subscriber can choose as per their risk
profile.

But the highest exposure to equity is capped at 50%. An option to change designated pension
fund managers is also allowed. However, a major disadvantage of the NPS is that the proceeds
upon maturity are taxable. Furthermore, there is no guarantee of the returns that can be earned
from the NPS.

Any Indian citizen between 18 and 60 years can join NPS. The only condition is that the person
must comply with know your customer (KYC) norms.

EXAMPLE:

If a subscriber aged 35 goes in for the NPS, the scheme reaches maturity when the subscriber
attains the age of 60 so that leaves him/her with 25 years of contributing time. Let us assume
the contribution made is Rs 2000 per month and the expected interest or rate of return is taken
as an average of 8% then the calculator will show vital stats such as the total invested principle
which in the following case will be Rs 6,00,000 and the interest earned on this which is
compounded monthly and comes up to Rs 12,98,372. The total pension wealth generated in this
case is Rs 18, 98,372 with a total tax saving of Rs 1, 80,000. If the subscriber makes a
withdrawal of a lump sum of 20% and invests the remaining 80% of the pension wealth into the
annuity plan with the expected interest rate of 8%, the subscriber stands to earn monthly
pension of Rs 10,124 and the lump sum withdrawn is Rs 3,79, 674

National Saving Certificate (NSC)

The National Savings Certificate (NSC) is an investment scheme floated by the Government of
India. It is a savings bond that allows subscribers to save income tax. There is no maximum
limit on the purchase of NSCs, but investments of up to Rs 1.5 lakh in the scheme can earn a
tax break under Section 80 C of the Income Tax Act. The certificates earn a fixed interest,
which is currently at the rate of 8.1% per annum. This interest is added back to the investment
and compounded annually .These certificates can also be used as collaterals while taking loans
from banks.

These can be bought from designated post offices and come with a lock-in period of 5 years.

The interest is compounded annually but is taxable. The current interest rate for FY2016-17 on
NSC is 8.1% which is fixed for the entire lock period.

The Principle amount invested in NSC is deducted under sec 80C together with other tools like
insurance premiums PPF, tuition fees, house loans Principle amount repayment etc. But the
limit is 1.5lakh

EXAMPLE:

An Employee has a basic salary of 36000 out of which his contribution towards his EPF is 12%
i.e. Rs4000 per month and annually 480000 .The employer will also pay 12% i.e. 48000
towards his EPF .So his total contribution would amount to Rs 96000 .Now he wants to make a
fresh investment of 70000 in NSC here he call avail exemption only up to 54000 (150000-
96000) as his upper limit is 1.5lakh. And the remaining 16000 (96000+70000-150000) cannot
be availed by him under sec 80C.

Unit linked Insurance Plan (ULIP)

ULIPs are a mix of insurance and investment. A part of the invested amount in ULIPs is used
to provide insurance and the rest of the amount is invested in the stock markets. Investments of
up to Rs 1.5 lakh in ULIPs are eligible for tax breaks under Section 80C. ULIPs don’t offer
guaranteed returns because they are an equity market-linked product. The disadvantage of
ULIPs is that they don’t offer clarity on where the investments are made and how much of the
invested amount is deducted for commissions and expenses.

SukanyaSamriddhiYojana (SSY)
Deposits of up to Rs1.5 lakh can be added to a SukanyaSamriddhiYojana account for tax
saving under Section 80C. The current interest rate for FY2016-17 on
SukanyaSamriddhiYojana deposits has been set at 8.6%. Deposits in this scheme have to be
made for a girl child by the parent or guardian. The interest is compounded annually and is
fully exempt from tax. The receipts upon maturity are also tax-free.The
SukanyaSamriddhiYojana account matures 21 years after opening the account. A partial
withdrawal of up to 50% of the previous year’s balance is allowed after the account holder turn
18.

Silent features of (SSY)

1. It can be opened in the name of the girl child till she attains the age of 10 years .In simple
words, you can open this account any time before a girl attains the age of 10 years.
2. Only One account for one girl child is allowed to a maximum of two accounts for two girl
children.
3. The account can be opened at authorised banks and Post offices.
4. Parents or legal Guardian can open the account in the name of the girl child only. The
account shall be operated on behalf of the girl by the parents/guardian till she reaches 18 years
of age.
5. Rate of Interest on SukanyaSamriddhi Account was @8.6% per annum for first two quarters
of the financial year 2016-17. The interest rate has been further lowered by 0.1 percent for the
3rd quarter.
So, interest rate on SSY for Oct’16 to Mar’17 is 8.5% p.a.(this scheme was introduced with an
interest rate of 9.2% initially.)The interest is not fixed and will be decided by the government
every year.
Note : SSY Interest rate for first quarter of Financial year 2017-18 i.e. Apr-Jun’17 has
been reduced to 8.4% p.a.
6. Minimum Investment required is Rs.1000 to a maximum of Rs.150000 in a financial year.
7. You can deposit till completion of 14 years only from date of opening of account.
8. Partial withdrawal maximum up to 50% of balance at end of preceding financial year can be
taken when girl attains 18 years of age.

9. The account can be closed after completion of 21 years only. If the account is not closed, the
balance will continue to earn interest at the specified rates. Normal premature closure will be
allowed after completion of 18 years provided the girl is married.
10. You can claim a Tax deduction under sec 80C of The Income Tax Act, up to a maximum of
Rs.1.5 lakhs for the amount contributed towards this scheme during a particular financial year.
11. The interest received and total maturity amount will both be tax free just like PPF. Getting
tax free returns at maturity is the major factor attracting the investors to consider Sukanya
Scheme in their long term investment plans.

Senior Citizens Savings Scheme (SCSS)

The SCSS is a scheme exclusively for anyone who is over 60 years old or someone over 55
who has opted for retirement. The scheme has a maturity period of 5 years and gives 8.6% per
annum. Investments of up to Rs 1.5 lakh in SCSS can be made to save taxes under Section
80C.

Comparison of popular 80C Investment

Investment Risk Profile Interest Guaranteed Lock-in period

Returns

ELSS Equity-related 12-15%expected No 3 years

risk

PPF Risk-Free 8.1% Yes 15years

FD Risk-Free 7-9%expected Yes 5 years

NPS Equity-related 8-10%expected No Till retirement

NSC Risk-Free 8.1% Yes 5 years

ULIP Equity related 8-10%expected No 5 years

risk

SSY Risk Free 8.6% Yes 21 years

SCSS Risk Free 8.6% Yes 5 years

Medi claim (Sec 80D)

Individual and Hindu Unified Families (HUF) are eligible for deduction under Section 80Dfor
medi claim premium paid. Deduction can be claimed on premium paid for
assesse,spouse, dependent children and dependent parents. The criteria of dependency isn’tappl
icable in case of a spouse (i.e. she/he may even be independent, but the assesse can still pay the
premium on his/her life to get tax benefits for the same).

Deduction
For non-senior citizens: The amount of medi claim insurance premium paid or Rs.
15000,whichever is less For senior citizens: The amount of medi claim insurance premium paid
or Rs. 20000,whichever is less.

EXAMPLE:

Karthik pays health Insurance of Rs. 20,000 for self, spouse, and children. In addition, he pays
a health Insurance premium of Rs. 22,000 for parents whose age is above 60.

Karthik will be allowed following deduction under Section 80D:

Rs. 15,000 for Medical Insurance for self, spouse, and children. Although, the amount paid is
Rs. 20,000, the deduction allowed will be limited to 15,000 Rupees as per Section 80D.

Rs. 20,000 for Medical Insurance for Karthik’s parents as they are above the age of 60 years.

Hence, the total deduction allowed to Karthik is Rs. 35,000.

Education Loan (Sec80E)

If you take any loan for higher studies, tax deduction can be claimed under Section 80E for
interest that you pay towards your Education Loan. This loan should have been taken for higher
education for you, your spouse or your children or for a student for whom you are a legal
guardian. Principal Repayment on educational loan cannot be claimed as tax deduction.

There is no limit on the amount of interest you can claim as deduction under section 80E. The
deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.
Donations (Sec 80G)

To Promote the concept of charity and donations towards the poor and the needy the
Government of India has been regularly encouraging people to donate and this donation can
be claimed under Sec 80G for the amount which has been deducted .

Donations made are eligible to be claimed as a deduction under sec 80G in all cases except in
case where the donation has been made in kind (e.g. Food cloths medicine etc.)

In order to claim this deductions the donor is also required to furnish a proof of payment .A
stamped receipt is issued by the recipient trust in this regard , details of which should be
mentioned by the taxpayer while filing his income tax return.

The recipient should necessary mention the following details:

1. The name and address of the trust

2. The name of the donor
3. The amount donated (mention in words and figures)
4. The registration number of the trust , as given by the income tax department u/s80G
along with its validity.
Interest and Dividend Received (sec 80L)
Deduction up to a maximum of Rs. 15,000 (out of which Rs. 3,000 is specially dedicated to
government securities) is allowed from the taxable income in respect of aggregate earnings
from some specified sources. The schemes are Deposits with Banking Company, Co-operative
Banks & Co-operative Societies.

Approved financial corporations or public companies to provide long-term finance for

industrial or agricultural development or for construction of purchase of residential houses it
may be noted that the 'Home Loan Account Scheme' of National Housing Bank is not covered
by Sec. 80L but it enjoys the benefit of tax rebate u/s 88.
 4. LITERATURE REVIEW

The financial industries companies run mainly on the factors such as availability, service frequency,
and affordability, marginal offers to client, goal and market. Availability is plays a vital role because
purchasing power is depend upon availability of that services, in case client service matter a lot.
Company includes all the activity in selling goods or service directly to the customers or personal
nonbusiness use.

The project delves into the workings from the distribution aspect of a financial services organization,
in detail. Money plant consultancy, being a financials services company, attaches a lot of significance
to the distribution aspect of its business. The distribution channel of financial product holds a lot of
potential in affecting the demand of mutual fund, insurance, portfolio management products through
financial or increasing profit and services.

Indian financial product and services sector has become one of the most powerful and fast growing
markets in the world. The Indian financial services industry has presently emerged as one of the most
dynamic and fast paced industries as several players have started to enter the market. It accounts for
over 10 per cent of the country’s gross domestic product (GDP) and around ten per cent of the
employment in India. The country is today the sixth largest global destination in the world for financial
product like portfolio management and other financial services.

With the growth in the financial industry, the corresponding demand for real estate is also being
created. Further, with the online medium of financial product gaining more and more acceptance,
there is a tremendous growth opportunity for financial companies, both domestic and international.

Portfolio management after arranging the desk at the company clients uses to come and I use to
prepare portfolio. Insurance agents also dealing with various insurance products and according
to the needs of the customer I give him advice. I also give advises of mutual funds regarding
their correct investments While preparing their portfolio I was taking into consideration of tax
planning and help them to make proper tax planning and increase their wealth by correct
investments products.
 5. ORGANISATIONAL PROFILE

1) ABOUT MONEY PLANT CONSULTANCY

Moneyplant Consultancy Group facilitates outsourcing the non-core activities and

provides knowledge-driven financial services. Moneyplant Consultancy Group is a premier
outsourcing & a financial services provider which aims to offer solutions for financial needs
and queries of individuals. They are a leading wealth management, capital markets and
advisory company with over 100 man years of consulting & investing experience.

Moneyplant Consultancy Group was promoted by Mr.RishabhParakh (Director). He

holds a professional degree of CA from the Institute of Chartered Accountants of India. He
started Money Plant Consultancy with an aim to outsource the non-core activities of corporate
clients and to offer personal income tax/ financial market related services to individual clients.

Since its Inception they have been successful in providing seamless service and
significant advantage for clients with their extremely competent team of qualified professionals
comprising CA's and MBA's & in house Knowledge pool of financial markets, instruments and
products. Their aim is to ensure that clients benefit from the professional expertise, technical
knowledge and experience. They have been recognized for expertise in the financial arena by
highly reputed institutions and clients. They strive to provide transparent, ethical and research-
based investments and wealth management services.

2) ORGANIZATION HIERARCHY

 The organization is headed by RishabhParakh who is the founder and director.

 The organization has 3 departmental heads vis-à-vis HR & Admin
 Operations and Products & Services.
 The Finance department is headed by the director himself.
 The organization is 50 employee strong
 Employees are from diverse backgrounds like CAs, MBAs and Software professionals.

3) CORE FUNCTIONS OF MONEY PLANT CONSULTANCY GROUP

a) Fund management
1. Loan syndication & project Appraisal
2. Deployment of surplus funds
3. Decision on short/long term investment planning

b) Insurance:
The firm has experience in Life & General Insurance advisory, which covers
following types of risks:

1. Online Health & Marine insurance.

2. Commercial & Liability insurance, etc.
3. Group gratuity & group term insurance.

c)Taxation
1. Consultation on income tax & fringe benefit tax
2. Assessment and Appellate proceedings
3. Transfer pricing

d) Employees’ Taxation and Investments

1.Conducting seminar, orientation and induction program for the employees.
2. Preparation & Submission of income tax returns for corporate employees.
3. Tax &Financial planning.

e)Investment Advisory services:

The firm has rich experience in advising clients in:-
1. Mutual fund investments / financial planning.
2. Deployment of surplus funds.
3. Decision on short/long term investments.

c) Taxation
1. Expert advice on tax planning and salary structuring.

2. Assessment and appellate cases.

3. Preparation & submission of Tax returns.

d) Loans
Home loans / Personal loans / Car loans / Credit cards.

e) Insurance (Life & General)

 1. Health, travel & Car insurance
2. Term insurance / Traditional plans/ ULIP / Pension Plans

VISION AND MISSION

We aim to outsource all your tax worries by providing timely tax advice & the way it’s meant
to be: i.e., fast , secure & accurate and yet the most cost-effective .Our aim is to strive towards
making your dealing with taxes a smooth and efficient experience.

Why choose us to be your personal CA

o We are the no. 1 tax filing service provider in Pune.

o A dedicated C.A to help you round the year.
o Back up of all your tax related documents –both in online and physical mode.
o 100% Online/ physical filing – complete processing from our end only.
o 24/7 Online access to our website to track your tax filing/refund status.
o Refund follow ups& tips on tax planning
o Round the year support for any income tax related queries.
o Personal visits, reviews & discussion by CA.
o Reconciliation of form 26 AS & preparation of balance sheet.
o Advance tax payment at regular intervals.
Some of the Corporate Clients with whom Money Plant Shares Professional Relationships
with!!!
 6. RESEARCH METHODOLOGY

Research Methodology refers to search of knowledge .one can also define research
methodology as a scientific and systematic search for required information on a specific topic.
The word research methodology comes from the word “advance learner ‘s dictionary meaning
of research as a careful investigation or inquiry especially through research for new facts in my
branch of knowledge for example some author have define research methodology as
systematized effort to gain new knowledge.
The research was entirely done on primary data.

SURVEY TECHNIQUE

 The survey was conducted by me for a period of one month from 1st June2017 – 31st
July2017. During this survey a Questionnaire was prepared by me, which was
distributed among a population of 50 people in Chinchward Area.
 The technique used was Random Samplingin which a group of subject (sample) for
study was selected from among a large population.
 Here each individual was chosen entirely by chance and each member of the population
had an equal chance of being included in the sample.
 At the end of each working day, the data collected was sorted and analysis was done on
a weekly basis.

DATA COLLECTION
Once the research objective and design are through, the next and most important step is
collection.
Data are facts, figure and other parameters from both past and present which serves as a basis
for study and analysis.
Data is classified as follows-

Primary Secondary
Data Data

Data
Primary Data
Primary data is that data is collected for a specific purpose.
It is customized according to the needs of the researcher and focuses exclusively on the current
problem. It requires a great deal of resources and skill sets in collection of primary data.
In this particular research problem, it was a paramount importance to garner primary data as
there was very little available by way of previous of Secondary data.

Primary sources of data:

In the primary sources of data, Money plant consulting have data of over 1,00,000 customers. I
used this data for call back and follow-up.
There are two methods employed for collection of primary data namely
1. Questionnaires
2. Interviews
The study was all about to find various avenues available for an individual to invest and ways
to achieve long term and short term financial goals through financial planning. It intend to
study the pattern in which individual allocates his savings in various asset class. It describes the
awareness of investor about various alternatives available to them. It also aims at creating
awareness of financial planning. The data required for the study would be acquired through
personal interview and questioner and it was collected by means of cold calling (Cold calling is
the process of approaching prospective customers or clients, who were not expecting such an
interaction),and the research period was spread out in thirty days.
The data available before hand was that of a similar but no so extensive and exhaustive.Hence
data had to be collected first hand; hence primary data
 7. DATA ANALYSIS

1.ANALYSIS ON THE BASIS OF AGE GROUP

Age Group Respondent
Age No of Respondent
Group (Total 50) Percentage
21-30 17 34%
30-45 18 36%
45-60 11 22%
above60 4 8%
Total 50 100%

Age Group Respondent

20 18
18 17
16
14
12 11
10 No of Respondent
8 (Total 50)
6 4
4
2
0
21-30 30-45 45-60 above60

AGE -Almost 70% of respondent was from age group 21yrs to 45yrs this is considered to
be most active age group. During this age, life of an individual changes very drastically. The
career is in growing stage in starting few years and there are hardly any responsibilities, at this
time there is a lot of funds available for disposal. It is this age where maximum risk can be
taken and a greater period can be given to grow the amount invested. As a person enter in to
their 30’s they have increased family responsibility and gradually the risk taking ability reduces
with the age. With a greater portion of such population included in data collection a greater
degree of understanding can be gained how financial planning is done by young India.
2. INCOME DISTRIBUTION

Income Distribution
Respondent
Income (Total 50) Percentage
Upto 2,00,000 18 36
2,00,000-3,00,000 13 26
3,00,000-4,00,000 9 18
4,00,000-5,00,000 6 12
above 6,00,000 4 8
Total 50 100

Income Distribution
20 18
18
16
14 13
Respondent (Total
12 50)
10 9
8 6
6 4
4
2
0

INCOME- Financial planning is about assessing our present cash flows; estimating the
required cash flow after a certain period of time and to determine the steps required to achieve
this over a period. The amount of disposable income at hand determines various investment
decisions. It also helps in making tax plans so that maxim benefit can be gained through
various tax exemptions. So it is necessary to know the income inflow of an individual. The
above graph shows that a major portion of respondent are in income slab of up to Rs.2,00,000
p.a.; this indicates that the persons may be in the beginning stage of career. With increasing
income slab the no of respondent are reduced.
3.PEOPLE WILING TO TAKE RISK

People willing to take Risk

Willingness to take risk Total
Age Group High Moderate Low
21-30 8 8 1 17
31-45 7 9 2 18
46-60 2 4 5 11
above 60 1 1 2 4
Total 50

10
9
9
8 8
8
7
7
6
5 High
5
4 Moderate
4
Low
3
2 2 2
2
1 1 1
1
0
21-30 31-45 46-60 above 60

WILLINGNESS TO TAKE RISK- The investment decisions are more based on the
willingness to take the risk rather than the ability to take risk. The above graph describes the
willingness to take risk at various life stages. At the younger age people are more willing to
take risk which reduces over the years as responsibility increase. Although different individual
may have different preferences which could contradict their age. Many a time investment is a
function of willingness rather than ability which is clearly described by above graph
4.INVESTMENT PATTERN

Investment pattern
Avenue Respondent Percentage
Life Insurance 50 100
FD 31 62
MF 29 58
Equity Market 14 28
Gold 6 12
PPF 41 82
Post Office Deposit 24 48

Investment Pattern

24 Life Insurance
50 FD
MF
41
Equity Market
Gold
31
PPF
6 14
Post Office Deposit
29

INVESTMENT PATTERN- A fair idea of asset allocation of individuals in various asset

class can be observed through this. It was observed that the all respondent had a life cover
policy. This shows that the basics of financial planning were achieved. The next major portion
was Provided Fund due to it being more secure investment and also tax exemption offered.
Major investments were also made in Bank Fixed Deposits and Post Office Deposits. Equity
was not a preferred investment among many due to its volatile nature but many used it as a long
term investment by investing in large companies. Investment in gold was more in form
of jewellery which is not a good option as investment. Very few invested in gold coins/bars and
Gold ETFs.
5.SOURCE OF INFORMATION

Source of Information
Source Respondent
News Paper, Media 31
Professionals 22
Agents/Broker 39
Friend/Family/Self 16

Source of Information
45 39
40 Respondent
35 31
30
25 22
20 16
15
10
5
0

SOURCE OF INFORMATION- There are sources of information which are vital in making
investment decision. The graph shows the source of information which is plotted according to
its authentication. We find that major respondent have taken investment decision on the bases
of information provided by Agents & Broker of different financial company. The next major
information source is News papers, publication and media which are considered to be highly
authenticated data. Help of professionals in investment decision is taken not by many, due the
fees charged by various professional for their service. There is less number of respondent
taking their investment decision on information provided by friends. Mostly the information
provide by such people is based on their experience which may not be true for others. That is
the reason, such source of information is considered less organized and reliable.
6.INVESTMENT OBJECTIVE

Investment Objective
Investment Objective Respondent
Safety 9
Maintain Standard of
Living 17
Future Expenses 18
Liquidity 6

Investment Objective

Safety
6 9

Maintain Strandard of
18 Living
17 Future Expenses

Liquidity

INVESTMENT OBJECTIVE- Investment objective to a greater extend determine the

investment tenure and the avenue. Different investment objectives have different investment
avenues to meet them. By determining the objective we can easily determine the investment
vehicle for individuals. The persons looking for principal safety can investment in Post office
schemes, government securities, banks and PPF. Investment in Equity and Mutual funds can
give greater returns which can beat high inflation rate. Term deposits are useful when money is
needed after a fixed period of time.
7.FINANCIAL LITERACY OF RESPONDENT

Financial Literacy of
Respondent
Financial Literacy Respondent
Very Good 17
Good 12
Average 15
Poor 6
Total 50

Financial Literacy Respondent

18 17
16 15
14
12
12
10
8 Respondent
6
6
4
2
0
Very Good Good Average Poor

FINANCIAL LITERACY OF RESPONDENT-The purpose behind knowing the financial

literacy is to get to know how better the respondent can take investment decision individually.
A large portion of respondent stated they have a good knowledge of investment avenues but
their investment portfolio contradicted. Thus it states that many are not ready to acknowledge
that they do not possess the required knowledge. This keeps them into darkness and may lead
to wrong investment decisions, which are hard to correct.
8.DO RESPONDENT HAVE ENOUGH TIME TO MANAGE THEIR INVESTMENT

Time Available
Time Available Respondent Percentage
Yes 18 36
No 32 64

Time Available

18

Yes
32
No

TIME AVAILABLE TO MANAGE THEIR INVESTMENT-It reflects that not many have
time to do financial planning. In such cases it is mostly observed that the investment decision
was influenced by people around.
 8. LEARNING OUTCOMES OF THE PROJECT

Following are the learning outcomes of the project-

The need for financial independence is a must across most of the salaried class people. One has
to be pro active in taking steps towards this financial independence. It is important to
understand the spending and saving patterns.

Here the biggest advantage of a salaried person is that there is a regularity in the flow of
income in the family. This characteristic can be used as a tool for systematic investments for
achievement of financial milestones. Another benefit for a large number of salaried class is risk
coverage provided by employer such as life insurance and health insurance. However it is
advisable that one has his own personal insurance covers rather than relying only on risk covers
provided by employer as the contract of risk cover would cease when the employment contract
comes to an end.

Another part of financial planning is Tax saving. Tax saving should be incidental to the
achievement of financial goals. Taxes need to be planned well in advance right in the beginning
of the financial year and not when the deadline is nearing thereby ending up investing money in
a wrong product.

It is always a good option to take help from a financial adviser or a professional while making
investment.
 9. FINDING AND OBSERVATION

Tax planning with section 80C - An age wise strategy

Typically, most people invest a large part of the money in Public Provident Fund (PPF)and the
rest is taken care of by life insurance premiums and so on. However, investing this amount
blindly is not the best way to go about it. Here’s some help on how to go about allocating this
80C limit depending upon age.

Age 21-30:
In the initial phase of six-seven years of this age bracket, most people are single and little or no
dependents. If there are no dependents, it’s not necessary to have a large life insurance. Instead
focus on returns. Considering the state of the equity markets today, a substantial portion –
around 70 per cent to 80 per cent of the 80C contribution can be made in ELSS, which invests
primarily in stocks. This will ensure that the process of investing for the long term has been
started. Also, since there is a lock-in of three years for these schemes, it will lead to a forced
savings. When choosing an ELSS investment, look at consistency rather than a one-off
performance. Go for fund houses that have a good track record over a long time period. The
balance can go into GPF or EPF

Age 31-45:
By this time, person is expected to be married with small children. Also, there could be
additional liabilities like buying a house or car. The first step that must be taken is to get
adequate life insurance, for dependents and liabilities. Make sure to cover all the liabilities so
that dependents are not under any financial pressure, in case of an unfortunate mishap. Use a
term plan to get the highest possible cover at a low cost. Children college fees can be included
as a part of the 80C benefits. The home loan principal payout can form the second leg of the
contribution for this age group. So, besides EPF contribution, life Insurance premiums and
home loan principal should be sufficient to take care of the entire Rs 1 lakh requirement. If
there is still any shortfall, look at ELSS investments and Provident Fund.

Age 46-60:
Person is probably at the peak of the career or moving towards it. This is most likely the final
phase of earning a regular income. There is a good chance that loans have been paid-off by now
and children are in the stage of becoming independent. The last few years of this phase is when
a lot of families plan and should retire their loans. It is also an age where life insurance is of
extreme importance. Re-evaluate need for life cover at this point of time. If life cover is needed
more, increase it substantially. Health insurance need to be included due to various diseases and
illness taking toll with growing age. Hence, risk management is of extreme importance here.
Once again after person is well-insured, they must contribute as much as they can towards
Provident Fund. This is because it has maximum liquidity and could with draw these tax-free
funds (as would have completed the mandated 5 years). One can also go for PPF first and then
invest the balance in ELSS.

Senior citizens:
In this age group, capital protection and need for regular income are two most important needs.
One must first opt for a Senior Citizens’ Savings Scheme that will give tax benefit. Since SCSS
is generally parked in a lump sum, look at fixed deposits only if they are giving high interest
rates. If interest rates are low, then person should opt for PPF, if person is in the highest tax
bracket as liquidity is still the best (account should have completed 15 years a long time ago)
and can withdraw tax-free amounts comfortably. A minor portion, around 10-15 per cent, of
investments can go into ELSS, as it has the ability to beat inflation and give growth in funds.
However, do this only after income needs are secured.

Retirement Planning

A retirement plan is an assurance that person will continue to earn a satisfying income and
enjoy a comfortable lifestyle, even when they are no longer working. Due to the improved
living conditions and access to better medical facilities, the life expectancy of people is
increasing. This has led to a situation where people will be spending approximately the same
number of years in retirement what they have spent in their active working life. Thus it has
become imperative to ensure that the golden years of the life are not spent worrying about
financial hardships. A proper retirement planning, to a very large extent, will ensure this
.Planning ahead will let enjoy the retirement that is deserve. The retirement strategies decide
upon now makes a fundamental difference to the degree of financial freedom one will
experience when they do decide to take their pension. Planning for retirement and choosing a
pension strategy to safeguard financial security can be a minefield. In the last few years, there
have been many changes; the volatility of the stock market, reduction of final-salary pension
schemes, the rise of buy-to-let property portfolios and changes in taxation and pension
legislation. These changes underline the importance of both setting a retirement plan in place
and of keeping it up-to-date Reasons for doing Retirement planning can be understood with the
following:
Life expectancy

With advancement in technology life expectancy is likely to increase.

Which means a person would be spending a large amount of time in his post retirement period.
Thus one needs to have a regular income to sustain living which is only possible if prepared for
it when earning.

Medical emergencies

With age come health problems. With health problems, come medical expenditure which may
make a huge dent in post- retirement income. Failure here could lead to liquidate (sell)assets in
order to meet such expenses. Remember medi claims do not always suffice.

Nuclear families

Independence is the new way of life, gone are the days when people use to have an entire
cricket team making a family. Today's youth prefer not more than two children. With
westernisation coming in, the culture of joint family is changing. Most prefer independence and
stay away from their family. Hence people have to develop a corpus to last them through their
retirement without any help from family.

No government sponsored pension plan

Unlike the US and UK where they have IRA and state pension respectively as social security
benefit during retirement, the government of India does not provide such benefits. So, persons
are responsible for themselves now.

Job hopping
With youngsters hopping jobs regularly they do not get benefit of plans like super annuity and
gratuity. Both these require certain number of working years spent in the service of a particular
employer.
Inflation
One needs to take into account inflation while calculating retirement corpus as well as returns.
With the rising inflation it would only raise the cost of living and it would also eat the return
on the investment. The CAGR (compounded annual growth rate) of inflation over the past 10
years is 5.5 per cent. Assuming an individual at the age of 30, requires Rs25,000 a month to
lead a comfortable life, for the same standard of living after 30 years, he may require Rs 1.25
lakh a month, given the inflation factor. In India persons employed in the organised sector have
some form of social security such as Employees Provident Fund (EPF), Employees Pension
Scheme (EPS) and gratuity. Those who are employed in government and its related arms also
enjoy the benefit of pension along with GPF and gratuity. But these two sections account for
only seven percent of the working population. The remaining 93 per cent of the people have no
form of mechanism to take care of their retirement. Over 80 per cent of Indian employees have
done no retirement planning independent of any mandatory government plans. Those who plan
for retirement have the option of investing in Public Provident Fund(PPF), pension plans and
retirement plans offered by the insurance companies. Currently ,the insurance sector accounts
for 4.1 per cent of the GDP and out of this pension accounts for 1.6 per cent. These numbers
reconfirm that Indians are not well prepared to meet their life post-retirement. Hence, one needs
to plan for retirement in the early part of one’s working life along with other goals.
Retirement planning consists of two parts: one is accumulation of savings and the other is
earning an annuity from the savings. During the accumulation phase, one has to plan for a
required amount at the start of retirement and based on individual risk appetites one can plan to
achieve this through various asset classes. But post-retirement one has to earn interest on the
savings without taking too much of risk. At the same time have to try to outpace the inflation
rate to ensure that person can sustain with the savings for rest of the life .During the
accumulation phase one has to look out for the tax efficient way of savings. For example, PPF,
pension plans offered by the insurance companies and the retirement plans offered by the
mutual funds are very tax efficient. The maturity proceeds of all these plans are tax free. In
selecting a pension plan, one has to keep a watch on the recurring expenses. As the investment
is for the long term, recurring expenses can have the effect of reducing returns over the long
term.
 10. CONCLUSION AND SUGGESTION

CONCLUSION

The Saving behaviour has been changed considerably over the last couple of years. The savings
rate in India is comparatively higher than various other countries. Earlier the trend of saving
was in terms of physical assets but it has started to shift now to financial instruments. This
trend partially reflects the relentless expansion of the various branch networks of the financial
institutions into the county's rural areas and partially holds the increasing trend of the easy
accessibility of the alternative investment opportunities. Today Corporate Securities has
become a part of household savings wherein retail individuals prefer to invest his saving in
security market. The reason for this the growth is seen in the stock market and a low interest
rate and return offered by traditional instruments. Also the growing income of working class
has also contributed largely to the changing pattern of saving in India.

LIMITATIONS

Lack of response from sample:

It is also said as access to resource of information. As the method adopted was cold calling the
respondent were not easily available for discussion.

Unwilling to reveal financial position:

In technical term it can be said as access to information. Many of are not comfortable
to disclose our financial affairs openly. In such a situation researcher had to convince the
respondent a lot more times. Also many a time sonly general discussion would take place.

Time:
Due to lack of time availability of respondent and the period which can be used to collect data
was short the research could not be conducted on a large sample size.

Using organization (company) name:

Many a time to get access to respondent researcher had to revel the organization identity.
People thought that it was for the purpose of sales of promotional activity, which lead to
negative response from many people.

Lack of expertise:
On the side of the researcher there was lack of in-depth information on the topic.
SUGGESTIONS
After all this it can be stated that the fundamental corner stone’s of successful investing are:

Save regularly, Invest regularly

Start Early
Diversify
Use tax shelter

Keep a regular check on investment and modify plans as and when needed People need to be
educated and informed about Financial Planning and this provides a greater opportunity to
financial product distributer like Reliance Money to educate people. Companies can arrange for
seminars and sessions through which they can provide information to people and in return can
get prospective clients from the audience. In this way both the audience and the company can
also be benefited. Financial planning is not a onetime activity; the initiative should be taken by
financial planner to put this forward to their client. Regular meetings should be conducted
between the financial planner and client to review the investment portfolio. Alteration should
be made in portfolio as per need and requirement of the client. This will ensure that the
investment objectives are achieved. It will create goodwill for the financial planner and his
company. This is one area where many planners are lacking today. Follow-up, is need and
it should be understood by financial service provider.
 11.REFERENCE

Websites

http://www.moneycontrol.com/news/business/personal-finance-business/financial-
planning-critical-for-salaried-person-1245137.html
https://www.ibef.org
http://www.mywealthguide.com/persnl.htm
http://www.businessgyan.com
http://finance.mapsofworld.com/savings/india/household
http://www.fpsbindia.org/
http://profit.ndtv.com/PersonalFinance/Insurance.aspx
 12. ANNEXTURE

QUESTIONNAIRE

1. Name: ___________________________ 2. Contact No:_______________

3. Age Group:

21-30 30-45 45-60 <60

4. Annual Income:

Upto2lakh 2-3lakh 3-4 lakh 4-5 lakh

<6lakh

5. Financial assets in which you would like to invest:

Mutual Fund Fixed Deposits Insurance

Equity Market Real Estate Gold

Public Provident Fund Postal Savings Others

6. Reason for your choice of financial instruments:

Return Security Tax Savings Liquidity

7. How much is your risk bearing Capacity:

High Moderate Low

8. What kind of investor are you:

Experienced Inexperienced Somewhat Experienced Expert

9. What is your investment pattern:

SIP Lump sum Both None

10. Your investment decision are influenced by:

F Family Financial Advisor Media Self

Market Conditions Internet Newspaper Other

11. Do You Have enough time to manage your investment

Yes No