A STUDY ON FINANCIAL PLANNING FOR INDIVIDUAL,

SALARIED EMPLOYEE AND STRATEGIES FOR TAX EXEMPTION

A project report
Submitted in partial fulfillment of the requirements for the
award of the degree of
MASTERS DEGREE
IN
BUSINESS ADMINISTRATION
BY
K.SRAVANI (ROLL NO: 121723602026)

Under the Guidance of

Mrs. G.KASTHURI, Asst. Professor

GITAM INSTITUTE OF MANAGEMENT

Rushikonada, Visakhapatnam.
(Established U/S 3 of UGC Act, 1956)
(Deemed to be University)
(2017-2019)
A
(ROLL NO: 121723602026)

Under the esteemed guidance

I declare that the project entitled “A STUDY ON FINANCIAL

PLANNING FOR INDIVIDUAL, SALARIED EMPLOYEE
ANDSTRATEGIES FOR TAX EXEMPTION” submitted by me for
the award of the degree Master of Business Administration,
GITAM (Deemed to be University) is original and has not been
submitted previously in part or full to the University for the
Award of degree.

Place: Visakhapatnam K. Sravani

Date: 121723602026
 ACKNOWLEDGEMENT

It gives me immense pleasure, to express my unfeigned and

sincere thanks and gratitude to MR. P V S KOTESWARA RAO
(GM) for his valuable guidance during the course of the project.

I am thankful to all the staff members for their inputs and

constant encouragement during my internship at Karvy Stock
Broking Ltd., Kukatpalli.

Finally, I thank College of business, Management, Economics &

Commerce, Gitam Institute of Management (Deemed to be
university) for giving me this wonderful opportunity to pursue
my internship at Karvy Stock Broking Ltd., Kukatpalli.
 GITAM INSTITUTE OF MANAGEMENT
Rushikonada, Visakhapatnam.
(Established U/S 3 of UGC Act, 1956)
(Deemed to be University)

CERTIFICATION
This is to certify that the project report entitled “A STUDY ON
FINANCIAL PLANNING FOR INDIVIDUAL, SALARIED EMPLOYEE
AND STRATEGIES FOR TAX EXEMPTION” by K. Sravani, bearing
regd. No: 121723602026, MBA 1st year, Sec-B, GITAM Institute
of Management (Deemed to be University), Visakhapatnam
during the academic period 2017-2019 is a bonfire record of
the students own work carried out under our supervision and
guidance.

Place: Visakhapatnam PROJECT GUIDE

Date: G. Kasthuri
(Assistant Professor)
 EXECUTIVE SUMMARY

Financial planning is the process of assessing financial goals of individua

l, taking aninventory of the money and other assets which the person h
ave, determine life goals andthen take necessary steps to achieve goals
in the stipulated period. It is a method of quantifying a person’s require
ment in terms of money.It was a great opportunity to work with ADA Gr
oup, India’s leading business group.Reliance Money a subsidiary of Reli
ance Capital is among top financial companies. Wewill get to know the
organisational structure and various business models of the company.
The business of Reliance Money can be broadly classified as Trading, Dis
tribution andOTC Service.Financial services refer to services provided b
y the finance industry.
The finance industryencompasses a broad range of organizations that d
eal with the management of money.Among these organizations are ban
ks, credit card companies, insurance companies,consumer finance com
panies, stock brokerages, investment funds and some governmentspon
sored enterprises. Financial Planning is one such advisory service, which
is yet to getrecognition from investors. Although financial planning is n
ot a new concept, it just needsto be conducted in organized manner. To
day we avail this service from Insurance agent,Mutual fund agents, Tax
consultant, Equity Brokers, Chartered Accountants, etc. Differentagents
provide different services and product oriented.
Financial Planner on other hand is aservice provider which enables an in
dividual to select proper product mix for achievingtheir goals.
The major things to be considered in financial planning are time horizon
to achieve lifegoals, identify risk tolerance of client, their liquidity need
, the inflation which would eat upliving and decrease standard of living
and the need for growth or income. Keeping all thisin mind financial pla
nning is done with six step process.
This are self assessment of client,identify personal goals and financial g
oals and objective, identify financial problems andopportunities, deter
mining recommendations and alternative solutions, implementation of
appropriate strategy to achieve goals and review and update plan perio
dically.A good financial plan includes Contingency planning, Risk Plannin
g (insurance), TaxPlanning, Retirement Planning and Investment and Sa
ving option.Contingency planning is the basic of financial planning and a
lso the most ignored.Contingency planning is to be prepared for major
unforeseen event if it occurs. Theseevents can be illness, injury in famil
y, loss of regular pay due to loss of job. Such eventsare not certain but
may have financial hardship if they occur. Thus a person should haveen
ough money in liquid form to cover this risk.
 COMPANY PROFILE

KARVY GROUP
The Karvy Group is a premier integrated financial services provider,
ranked among the top-5 in
the country across its business segments. The Group services over 70
million individual investors
in various capacities, and provides investor services to over 600
corporate houses. Karvy Group
established its presence through a wide network of over 450 branches,
(or 900 offices) covering
in excess of 400 cities and towns.
Karvy covers the entire spectrum of financial services, viz stock broking,
depository participant,
distribution of financial products (including mutual funds, bonds and
fixed deposits),
commodities broking, personal finance advisory services, merchant
banking & corporate finance,
wealth management, NBFC, among others.
The Group is professionally managed and ranks among the best in
technology, operations and
research across the financial industry. The Karvy Group has evolved
over the last three decades
and today it assumes many avatars.
Broadly the group pursues two lines of businesses and can be
graphically represented as follows:
FINANCIAL SERVICES
• Equity Broking
• Depository Participant
• Wealth Management
• Commodities Broking
• Currency Derivatives
• Non-banking Financial Services
• Distribution of Financial Products
• Realty
• Registry services for Corporate and Mutual
funds
• Investment Banking
• Insurance Repository
• The Finapolis
• Forex & Currencies
Non Financial services
• Data Management Services
• International BPO
• Alternate Energy
• Data Analytics
• Market Research

KARVY GROUP PROMOTORS AND MANAGEMENT

PROMOTERS
Mr. C. Parthasarathy(Chairman & Managing Director)
Mr. C. Parthasarathy is the Chairman and Managing Director of the
diversified financial services
Karvy group. C Parthasarathy (CP as he is better known in the Industry),
has the uncanny knack
of staying ahead of the curve and the foresight to spot opportunities
that seem invisible on the
horizon for the others.CP is one of the pioneers of financial inclusion.
Under his leadership
Karvy has won numerous industry awards and accolades. He also is an
independent Director in
many listed companies.
Mr. M. Yugandhar(Managing Director)
Mr. M Yugandhar, Managing Director is a founder member of the
KARVY Group. He is a
Fellow Member of the Institute of Chartered Accountants of India and
has varied experience in
the field of financial services spanning over 30 odd years.Karvy under
his guidance has helped
create the equity cult and substantially built retail investor wealth. He is
an Independent Director
on the board of several reputed companies.
Mr. M. S. Ramakrishna(Director)
Mr. M S Ramakrishna, Director, founder member of KARVY GROUP, he
is the orchestrator of
technology initiatives such as the call center in the service of the
customer.
MANAGEMENT TEAM
Mr. V. Mahesh(Managing Director – Karvy Data Management)
Mr. V Mahesh, is the Managing Director of Karvy Data Management
and has work experience
spanning over 2 decades with in depth exposure to operations on most
financial services
businesses.
Mr. V. Ganesh (CEO – Karvy Computershare)
Mr. V Ganesh is a Chartered and Cost Accountant by profession and has
over 2.5 decades of
experience in the financial services space and is part of Karvy Group’s
leadership team
Mr. Sushil Sinha (Whole time Director - Karvy Comtrade)
Mr. Sushil Sinha, the Country Head of Karvy Comtrade Ltd, has
successfully made Karvy
Comtrade a force to reckon with in the marketplace. With over 10 years
of expertise in the
broking sector, he is a well-known face today in the electronic and print
media.
Mr. P. B. Ramapriyan (Vice-President and Head - Financial Product
Distribution)
Mr. Ramapriyan is working with Karvy for over 2 decades, He has
strength of sorts in the
distribution of financial products includingEquity, Bonds, Fixed Deposits
and Auto Finance.
Mr. Rajiv R. Singh(Vice-President and Business Head - Karvy Stock
Broking Limited)
Mr. Rajiv R. Singh is the Vice President & Business Head of the Equity
Broking business. He
has been associated with Karvy for more than a decade. He joined
Karvy in 2001 and moved up
the corporate ladder with his sheer dedication, commitment and hard
work.
Mr. Deepak Gupta(Group Head – HR)
Mr. Deepak Gupta brings with him over 20 years of experience in HR,
spanning financial
services, ITes and manufacturing. Prior to joining Karvy, he was Chief
People Officer, Human
Resources, with Bajaj Finance Limited, a Rahul Bajaj Group Company,
based at Pune.
Mr. G. Krishna Hari(Group Head – Finance)
Mr. G. Krishna Hari holds a Bachelor’s degree in Commerce and is
associate member of the
Institute of Chartered Accountants of India (ICAI). He has over 27 years
of experience in the
areas of finance and accounts functions encompassing fund raising

KARVY GROUP COMPANIES

• Karvy Stock Broking LTD:-Equity Broking, Depository Participant,
Distribution of
Financial Products (Mutual Funds, FD and Bonds), Wealth Management
Services,
Currency Derivatives, Portfolio Management Services
• Karvy Comtrade LTD:-Commodities Broking
• Karvy Capital LTD:-NBFC & Portfolio Manager
• Karvy Investment Advisory Services LTD:-Investment Advisory
Services
• Karvy Holdings LTD:-Core Investment Company
• Karvy Middle East LLC:-Wealth Management Products for NRI's
• Karvy Realty (India) LTD:-Realty Services
• Karvy Financial Services LTD:-Non-Banking Financial Services
• Karvy Insurance Repository LTD:-Insurance Repository services
• Karvy Forex & Currencies Private LTD:-Currency and forex services
• Karvy Consultants LTD:-Consultancy and Advisory Services,
Publications
• Karvy Computershare Private LTD:-Registrar and Share Transfer agent
• Karvy Computershare W.L.L:-Agent for Custody & Registration of
Securities,
Registered Administrator
• Karvy Data Management Services LTD:-Data Management Services
• Karvy Investor Services LTD:-Merchant Banking and Corporate
Finance
• Karvy Insights LTD:-Market Research
• Karvy Analytics LTD:-Analytics
• Karvy Solar Power LTD:-Power Generation
• Karvy Global Services LTD:-Business Process Outsourcing
• Karvy Global Services Inc., USA:-Business Process Outsourcing
• Karvy Inc., USA:-Institutional Broking
KARVY STOCK BROKING LIMITED
Karvy Stock Broking Limited (KSBL) which is the broking arm of Karvy
Group, a welldiversified conglomerate whose business encompasses
the entire financial services spectrum
along with data processing and managing segments.
Karvy’s financial services business is ranked among the top-five in the
country across its
business segments. The Group services over 70 million individual
investors in various capacities
and provides investor services to more than 600 corporate houses,
comprising the best of
Corporate India.
Karvy prides itself on being extremely customer centric at all times
providing leading edge
technology combined with professional management and servicing
through a wide network of
offices across India.
Karvy Stock Broking Limited (KSBL) is among the country’s leading
financial services
organizations renowned for its quality of investment and advice. KSBL
through its wide network
of offices across India offers customized investment solutions to
corporate, institutions and
individual investors.
KSBL helps investors construct a portfolio by factoring in their risk
profile and future financial
needs so that their investments achieve an optimal balance between
risk and returns.
Our comprehensive trading account helps clients approach various
investment avenues in an
integrated fashion, providing them the facility to transact with ease.
We have a combined
account facility that caters to all investment opportunities such as trade
in Equities, Derivatives,
Currency and also investing in IPOs, Mutual funds and NCDs.
KSBL was awarded BSE Order of Merit award and the SKOCH – BSE
Aspiring Nation award in
recognition to its efforts to educate, empower and help create financial
markets literacy among
investors. It has received the NSDL Star Performer Award 2014 for
highest asset value generated
SERVICES OF KARVY STOCK BROKING LIMITED
1. EQUITY BROKING SERVICES: Karvy has the largest-owned network
among financialservices companies in India. Given the wide network,
there are a number of trading terminals
that provide retail stock-broking facilities. The services have
increasingly offered customeroriented convenience with dedication
and competence. Karvy offer online trading on both key
platforms “National Stock Exchange and Bombay Stock Exchange”.
Trading is made sale to the
maximum possible extent by accounting for several risk factors and
planning accordingly. Karvy
is assisted by in-depth research, constant feedback and sound advisory
capabilities. Their highly
skilled research team—comprising technical analysts and fundamental
specialists secure resultoriented information on market trends, market
analysis and market predictions.
2. DEPOSITORY PARTICIPANT SERVICES: KSBL as an electronic custodian
registered
with the National Securities Depository Ltd (NSDL) and Central
Securities Depository Ltd
(CSDL) in 1998. KSBL is a powerful medium for trading and settlement
of dematerialized
shares.
3. DISTRIBUTION OF FINANCIAL PRODUCTS: With wide portfolio
offerings, they
occupy all segments in the retail financial services industry. This has
propelled Karvy to become
one of the top distribution houses for equity and debt issues, with an
estimated market share of
15% in terms of applications and amount mobilized. The edge that they
have over the
competitors is the sheer depth of our portfolio of offerings and our
professional expertise. The
investment planning for each customer is done with an unbiased
attitude so that the service is
truly customized.
4. CURRENCY DERIVATIVES: Karvy Currency Derivatives Segment, a
specialized group
vertical within Karvy stock broking limited, has been established in 2008
to cater to the growing
needs of corporate houses to manage currency exchange rate risk.
5. WEALTH MANAGEMENT SERVICES: Karvy Private Wealth (KPW) was
set up to cater
to HNIs, keeping in mind that they require a different kind of financial
planning and
management. Services include planning and protection of finances,
planning of business and
retirement needs, and a host of other services, which will help augment
their existing as well as
future finances and lifestyle. They combine a hard-nosed business
approach with a soft touch of
personalized attention and dedicated customer care.
6. PORTFOLIO MANAGEMENT SERVICES: Portfolio management
services are meant for
high net worth individuals or institutions who want a personalized
management of their finances.
A team of expert professionals conduct extensive research on markets
to provide a customized
solution to achieve unique investment objectives.
5. WEALTH MANAGEMENT SERVICES: Karvy Private Wealth (KPW) was
set up to cater
to HNIs, keeping in mind that they require a different kind of financial
planning and
management. Services include planning and protection of finances,
planning of business and
retirement needs, and a host of other services, which will help augment
their existing as well as
future finances and lifestyle. They combine a hard-nosed business
approach with a soft touch of
personalized attention and dedicated customer care.
6. PORTFOLIO MANAGEMENT SERVICES: Portfolio management
services are meant for
high net worth individuals or institutions who want a personalized
management of their finances.
A team of expert professionals conduct extensive research on markets
to provide a customized
solution to achieve unique investment objectives.

Introduction to Financial Planning

Financial Planning is the process of meeting life goals through the prope
r management of finances. Financial planning is a process that a person
goes through to find out where theyare now (financially), determine wh
ere they want to be in the future, and what they aregoing to do to get t
here. Financial Planning provides direction and meaning to personsfina
ncial decisions. It allows understanding of how each financial decision a
person makesaffects other areas of their finances. For example, buying
a particular investment productmight help to pay off mortgage faster or
it might delay the retirement significantly. Byviewing each financial dec
ision as part of the whole, one can consider its short and long-
term effects on their life goals. Person can also adapt more easily to life
 changes and feelmore secure that their goals are on track.In simple Fin
ancial Planning is what a person does with their money. Individuals hav
ebeen practicing financial planning for centuries. Every individual who r
eceived money hadto make a decision about the best way to use it. Typi
cally, the decision was either spends itnow or save it to spend later. Eve
ryone have to make the same decision every time theyreceive money.
Does it need should be spend now or to save it to spend it later?
Today in India financial planning means only investing money in the tax
savinginstruments. Thanks to the plethora of tax exemptions and incent
ives available undervarious sections and subsections of the Income Tax
Act. This has led to a situation wherepeople invest money without reall
y understanding the logic or the rationale behind theinvestments made.
Further the guiding force in investment seems to be the ‘rebate’ theyre
ceive from the individual agents and advisors. The more the rebate an a
gent gives, themore smug person are in the belief that they have made
an intelligent decision of choosingthe right agent who has offered them
more rebate. In the process what is not being realizedis the fact that th
e financial future is getting compromised.
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, Andover what
time period they want to achieve their goals. Some goals are short ter
m goalsthose that people want to achieve within the year. For such goal
s it is important to beconservative 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. Somei
nvestments can be more risky than others. These will not be suitable fo
r someone of a lowrisk profile, or for goals that require being conservati
ve. Crucially, one’s risk profile willchange 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
a child, person will have dependants and higher fiscal responsibilities. S
o personsapproach to risk and finances cannot be the same as it was w
hen they were single.
Liquidity Needs
: When does money is needed to meet the goal and how quickly one ca
naccess this money. If investment is made in an asset and expects to sel
l the asset to supplyfunds to meet a goal, then it needs to be understoo
d how easily one can sell the asset.Usually, money market and stock ma
rket related assets are easy to liquidate. On the otherhand, something li
ke 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 isbrought today is almost double the price of what would be paid f
or ten years ago. Atinflation or slightly above 4% per annum, a packet o
f biscuits that costs Rs 20 today willcost Rs. 30 in ten years time. Just im
agine what the cost of buying a car or buying ahome might be in ten ye
ars time! The purchasing power of money is going down everyyear. The
refore, the cost of achieving goals needs to be seen in what the inflated
price willbe in the future.
Need for Growth or Income
: As person make investments think about what is required,whether ca
pital appreciation or income. Not all investments satisfy both requirem
ents.Many people are buying apartments, but are not renting them out
even after they takepossession. So, this asset is generating no income f
or them and they are probably expectingonly capital appreciation from
this. A young person should usually consider investing forcapital apprec
iation to take advantage of their young age. An older person however
mightbe more interested in generating income for themselves.
1.3. Six step process of Financial Planning
1. Self assessment:
Clarify present situation, this is a preliminary step someone has to com
plete prior toplanning their finance. Doing a self assessment enable a p
erson to understand their presentwealth status and responsibilities. Sel
f 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 pla
nning.

2. Identify financial, personal goals and objectives

Each individual aspires to lead a better and a happier life. To lead such a
life there aresome needs and some wishes that need to be fulfilled. Mo
ney is a medium through whichsuch needs and wishes are fulfilled. Som
e of the common needs that most individual
Would have are:creating enough financial resources to lead a comforta
ble retired life,providing for a child's education and marriage, buying a
dream home, providing formedical emergencies, etc.Once the needs/ o
bjectives have been identified, they need to be converted into financial
goals. Two components go into converting the needs into financial goal
s. First is toevaluate and find out when it is needed to make withdrawal
s from investments for each of the needs/ objectives. Then person shou
ld estimate the amount of money needed in currentvalue to meet the o
bjective/ need today. Then by using a suitable inflation factor one canpr
oject what would be the amount of money needed to meet the objectiv
e/ need in future.Similarly one need to estimate the amount of money
needed to meet all such objectives/ needs. Once person have all the val
ues 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 beassessed. This short fall need to be covered over a perio
d of time to full fill various need atdifferent life stages. Since future can
not be predict, all the contingencies should beconsidered will doing fina
ncial planning. a good financial plan should hedge from variousrisk. A fl
exible approach should be taken to cater to changing needs and should
be ready toreorganize our financial plan from time to time.
4. Determine recommendations and alternative solutions:
Now review various investment options such as stocks, mutual funds, d
ebt instrumentssuch as PPF, bonds, fixed deposits, gilt funds, etc. and id
entify which instrument(s) or acombination thereof best suits the need.
The time frame for investment must correspondwith the time period f
or goals.
5. Implement the appropriate strategies to achieve goals:
Until person put things into action everything is waste. Necessary steps
needs to be takento achieve financial goals this may include gathering n
ecessary documents, open necessarybank, demat, trading account, liais
e with brokers and get started. In simple terms, startinvesting and stick
to the plan.

6. Review and update plan periodically.

Financial planning is not a one-
time activity. A successful plan needs serious commitmentand periodica
l review (once in six months, or at a major event such as birth, death,in
heritance). Person should be prepared to make minor or major revision
s to their currentfinancial situation, goals and investment time frame ba
sed on a review of the performanceof 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 i
n future.Contingency planning is the basic and the very first step to fina
ncial planning. It was foundthat a large number of people have invested
in financial planning instrument but haveignored their contingency pla
nning. Why it is more important to have a contingency plan?

May will have planned for their future that’s a great thing, this would d
efinitely help inlong run. But there is always a million dollar question to
be asked, What about today, isthere a plan in place? Everyone would th
ink that they have a secure present with regularsalary, but what if sudd
enly something happens and it is not possible to draw that monthlyinco
me. There are many possibilities that due to illness, injury or to care of f
amily membera huge amount of money is required. Moreover in this er
a of pink slip and job hopping itsnot assured that the next job will be av
ailable at the earliest. This are temporary situationand for a short phase
but cannot be ignored.If person is not planned for contingencies he will
use his long term investment to fund suchcrises. It is possible that long
term investment may not give enough returns if withdrawnearly there i
s also a possibility of capital erosion. In such situation all the financial pl
ansmade are of waste. With long term planning person also need to tak
e care of presentsituation in order to truly achieve financial goals. It is a
thumb rule that one should havethree times money of monthly salary i
n liquid form to support contingency.

Risk Coverage
Every individual is exposed to certain type of risk whether it is due to lo
ss 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 occurren
ce there may be a financial loss to the individual ortheir family. Proper
personal financial planning should definitely include insurance. Onemai
n area of the role of personal financial planning is to make sure that on
e has the abilityto carry on living in case of some unforeseen and unfort
unate event. Basically, insuranceprovides a safety net to provide the ne
cessary funds when one meets with events likeaccidents, disabilities or i
llnesses. One main contribution of insurance is that it helpsprovides pea
ce of mind, knowing that enough funds are at hand in the event when t
hings
do not go the way it should be. This peace of mind leaves one with the
energy andconfidence to move forward.

Life Risk
Every individual is prone to risk of losing life it’s a naked truth but what
is not certain isthe time of death. In this sense everyone is prone to life
risk, but the degree of risk mayvary. In terms of financial planning, cove
ring life risk means insuring the life of the personthrough proper life ins
urance plan. Life insurance, simply put, is the cover for the risks thatper
son run during their lives. Insurance enables us to live our lives to the fu
llest, withoutworrying about the financial impact of events that could h
amper it. In other words,insurance protects us from the contingencies t
hat could affect us. Life insurance providesan economical support to th
e family and dependents. It is extremely important that everyperson, es
pecially the breadwinner, covers the risks to his life, so that his family's
qualityof life does not undergo any drastic change in case of an unfortu
nate eventuality. There arevarious plans insurance plan offered by insur
ance companies that can suite various needsof individual.
Health Risk
Lifespan of Indian is known to have increased nowadays, and senior citi
zens strive to stayhealthy and active as they age. However, the older pe
rson gets the more extensive healthcare is needed. Though staying fore
ver young remains a dream unattainable, living a longand safe quality lif
e at peace is quite an achievable goal. Health insurance isan insurance P
olicy that insures against any medical expenses. Insured medical expens
eswill be taken care of by the insurance company provided person pays
their premiumregularly. Cover extends to pre-hospitalisation and post-
hospitalisation for periods of 30days and 60 days respectively. Domicilia
ry hospitalisation is also covered. There arevarious type of health insura
nce. Disability insurance can protect against the loss of aperson's ability
to earn a living. Critical illness insurance can afford some protection fro
mexpending reserved financial resources due to an unforeseen major ill
ness.
Property Coverage
Property Coverage insures personal property from damage, destroy or s
tolen. Dwellingcoverage also known as Homeowners Insurance offers p
rotection against direct physicaldamage caused to the dwelling, includi
ng rooms, fireplaces, carpeting, tile floors andelements of decor. Struct
ures, which are attached to the insured dwelling on the samefoundatio
n, such as a garage, are also liable to coverage under this section of Ho
meownersInsurance. Besides, this section of policy covers materials and
supplies necessary to rebuildor repair home.Person Property Coverage
can insure the contents of home, i.e. the items person regularlyuse whi
ch are not a permanent part of their house's or apartment's structure, s
uch asfurniture, television sets, bikes, clothing, appliances, utensils and
tools. Personal PropertyCoverage 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 in
surance hasdifferent types of benefits or coverage.
RETIREMENT PLANNING:

A retirement plan
is an assurance that person will continue to earn a satisfying income an
denjoy a comfortable lifestyle, even when they are no longer working.
Due to the improvedliving conditions and access to better medical facili
ties, the life expectancy of people isincreasing. This has led to a situatio
n where people will be spending approximately thesame number of yea
rs in retirement what they have spent in their active working life. Thusit
has become imperative to ensure that the golden years of the life are n
ot spent worryingabout financial hardships. A proper retirement planni
ng, to a very large extent, will ensurethis.Planning ahead will let enjoy t
he retirement that is deserve. The retirement strategiesdecide upon no
w makes a fundamental difference to the degree of financial freedom o
newill experience when they do decide to take their pension.Planning f
or retirement and choosing a pension strategy to safeguard financial se
curity canbe a minefield. In the last few years, there have been many ch
anges; the volatility of thestock market, reduction of final-
salary pension schemes, the rise of buy-to-
let propertyportfolios and changes in taxation and pension legislation. T
hese changes underline theimportance of both setting a retirement pla
n in place and of keeping it up

Reasons for doing Retirement planning can be understood with the foll
owing:
Life expectancy
With advancement in technology life expectancy is likely to increase.
Which means aperson would be spending a large amount of time in his p
ost retirement period.Thus one needs to have a regular income to susta
in living which is only possible ifprepared for it when earning.
Medical emergencies
With age come health problems. With health problems, come medical e
xpenditure whichmay make a huge dent in post retirement income. Fail
ure here could lead to liquidate (sell)assets in order to meet such expen
ses. Remember mediclaims do not always suffice.
Nuclear families
Independence is the new way of life, gone are the days when people us
e to have an entirecricket team making a family. Today's youth prefer n
ot more than two children. Withwesternisation coming in, the culture o
f joint family is changing. Most prefer independenceand stay away from
their family. Hence people have to develop a corpus to last themthroug
h their retirement without any help from family.
No government sponsored pension plan
Unlike the US and UK where they have IRA and state pension respective
ly as socialsecurity benefit during retirement, the government of India d
oes not provide such benefits.So, persons are responsible for themselve
s now.

Job hopping
With youngsters hopping jobs regularly they do not get benefit of plans
like super annuityand gratuity. Both these require certain number of w
orking years spent in the service of a particular employer.

STRATEGIES FOR TAX EXEMPTION:

The Indian Income Tax Act allows for certain deductions which can be
claimed to save tax at the time of filing of Income Tax Return by all
classes of Taxpayers (i.e. Salaried Individuals, Professionals,
businessman etc). These deductions which help in saving tax are only
available if the taxpayer has done proper tax planning during the year.
If an Individual has done proper Tax Planning to save tax, such
deductions would be subtracted from the gross total income and income
tax would be levied on the balance income as per the income tax slabs in
force.

 Recommended Read: Income Tax Slab Rate

7 Most Effective Ways to save Tax

1. Save Tax under Section 80C, Section 80CCC, Section 80CCD
To promote the culture of savings and to direct the savings of the
common man into the rightful resources, the Govt allows certain
deductions provided the amount saved is invested in the Instruments as
specified in Section 80C, Section 80CCC & Section 80CCD.
The maximum combined deduction allowed under these 3 sections is Rs.
1,50,000. If you’ve done proper tax planning during the year, you can
claim these deductions to save tax by investing under any of these
sections alone or in combination but the total deduction allowed would
be limited to Rs. 1,50,000 only.
There are many instruments which are specified by the Govt through
which tax planning can be done and these investments can be claimed
as a deduction to save tax. The most popular instruments for investing
for the purpose of tax planning to save tax are:-

 5 Year Tax Saving Fixed Deposit

 Equity Oriented Mutual Fund
 Pension Plans
 Contribution to Employee Provident Fund
 Life Insurance Policy
 National Savings Certificate (NSC)

All Tax Planning Options to save tax specified below are over and above
the Rs. 1,50,000 deduction allowed under Section 80C, 80CCC & Section
80CCD as specified above.
An additional deduction of Rs. 50,000 under Section 80CCD has also been
introduced for Investment in National Pension Scheme (NPS). This
additional deduction has been introduced vide Finance Act 2015 (Budget
2015) and is applicable from Financial Year 2015-16 onwards.
1. Recommended Read: Additional Deduction of Rs. 50,000 for under
Section 80CCD for Investment in NPS
2. Save Tax under Section 80D, Section 80DD, Section 80DDB
The Income Tax Act also allows for deductions to save tax if the
expenditure has been made by the taxpayer for insuring his own health
or the health of his relatives. Different amount of deductions are allowed
under each of these sections which help in tax saving depending on the
type of Insurance Policy which is as follows:-

1. Section 80D: Medical Insurance Premium of Self or Spouse or

Children
2. Section 80DD: Medical Treatment of Handicapped Dependents
3. Section 80DDB: Treatment of Specified Diseases

3. Tax Planning through Home Loan

If you have taken a Home Loan, you are allowed to claim deduction for
repayment of principal amount of home loan u/s 80C.
Moreover, you are also allowed to claim deduction of interest paid on
home loan under section 24. The maximum deduction allowed in some
cases is Rs. 2,00,000 and in some cases there is no maximum limit of
claiming this deduction for payment of interest on home loan.
Tax planning for the purpose of saving tax by taking a Home Loan is
highly advisable as the Deduction allowed for repayment of home loan
can be claimed under 3 different sections resulting in huge tax savings to
the taxpayer.

 Recommended Read: Tax Benefits of Home Loan

4. Save Tax through Education Loan u/s 80E

If a taxpayer has taken an education loan for the higher education of
himself or spouse or children or the student of whom he is the legal
guardian, he can claim deduction under Section 80E and save taxes.
This deduction is only allowed for the repayment of interest and not for
the repayment of principal amount of education loan. There is no
maximum limit for claiming deduction under section for the repayment
of interest on education loan. Deduction under Section 80E is only
available for Individual taxpayers and not to HUF

 Recommended Read: Income Tax Deduction for Education Loan

5. Tax Planning under Section 80CCG: RGESS

A taxpayer having annual income of less than Rs. 12 Lakhs p.a. is allowed
an additional deduction under Section 80CCG for investing in Shares of
specified companies and specified Mutual Funds. This Deduction is called
the Rajiv Gandhi Equity Saving Scheme.
This is a very complicated scheme and deduction is only available to first
time investors and those who have earlier invested in Shares/Mutual
Funds are not eligible for to make use of this deduction for doing tax
planning to save tax.

4. Recommended Read: All about RGESS

6. Tax Planning of Long Term Capital Gains arising on Sale of Property

any Long Term Capital Gain is arising to a taxpayer from the sale of Real
Estate Property which was held as a Long Term Capital Asset, he can
claim exemption from paying such Capital Gain Tax if he invests the
amount of gain from sale of property in specified instruments. Any Asset
is considered as a Long Term Capital Asset if that asset was held by the
taxpayer for more than 2 years.
This Exemption is considered very beneficial while doing the Tax Planning
to save income tax of a taxpayer.

 Recommended Read: Exemption from payment of Long Term

Capital Gains Tax

7. Income Tax Deductions for Donations u/s 80G

If a taxpayer makes a donation for charity, social or philantrophic
purpose or makes a contribution towards National Relief Fund, then this
donation can be claimed as a deduction u/s 80G of the Income Tax Act.
The Finance Ministry has pre-specified the organisations to which the
taxpayer can make the donations and deduction allowed depends on the
purpose for which the donation has been made.
In some cases, 100% of the donation made is allowed to be claimed as a
deduction whereas in certain cases only 50% of the donation made is
allowed to be claimed as a deduction for the purpose of saving taxes.
Donations made in kind are not allowed to be deducted. Only the
deductions made through cash or cheque are allowed to be deducted.
For deductions made through cash, only Rs. 10,000 would be allowed to
be claimed as a deduction. For claiming deductions above Rs. 10,000, the
taxpayer would have to make the donation through cheque (Inserted by
Budget 2012)

5. Recommended Read: Deductions allowed for Donations under

Section 80G

There are several other ways to save tax as well (like Section 80GG,
Section 80U, Section 80GGC etc) but they can’t be applied in case of a
common man to help him do his Tax Planning.
6. Concept & Significance of the Study
Financial Planning is an integral part of any individual life, especial
ly in this modern worldwhere value of everything is expressed in t
erms of money. The active working span of human life is short as c
ompared to the life span. This means people will be spendingappr
oximately the same number of years in after retirement what they
have spent in theiractive working life. Thus it becomes important
to save and invest while working so thatperson will continue to ea
rn a satisfying income and enjoy a comfortable lifestyle.Financial P
lanning enables a person to identify their goals, assess the current
position andtakes necessary steps to achieve the goals. It helps us
to understand how financial decisionsmade effect our life. Financi
al Planning is not just about investment planning but it is aboutlife
 time planning. Thus through proper financial planning a person ca
n have a easy andsecured financial life.
7. Scope
The scope of study is getting familiar with various investment avenues a
vailable in market.To study the life stages of an individual and to identif
y their risk tolerance, income flow,life goals and current investment. St
udy should cover all areas of the individuals financialneeds and should r
esult in the achievement of each of the individuals goals.
Objective of Study
 To identify investment habit of people
 To understand financial planning done in India.
 To analyse the characteristics of different asset class.
 To study changes in financial planning with change in age.
 To identify various avenues for investment.
 To spread awareness of financial planning.
 To examine factors influencing the investment decision

Conclusion
The Saving behaviour has been changed considerably over the last coup
le of years.The savings rate in India
is comparatively higher than various other countries. Earlier thetrend of
saving was in terms of physical assets but it has started to shift now to
financialinstruments.This trend partially reflects the relentless expansio
n of the various branchnetworks of the financial institutions into the co
unty's rural areas and partially holds theincreasing trend of the easy acc
essibility of the alternative investment opportunities.Today corporate s
ecurities has become a part of household savings wherein retailindividu
als prefer to invest his saving in security market. The reason sited for thi
s are thegrowth seen in the stock market and a low interest rate and ret
urn offered by traditionalinstruments. Also the growing income of work
ing class has also contributed largely to thechanging pattern of saving in
India.The
Household savings in India
can be broadly categorized into the following types:
Savings in physical properties
Savings in financial instruments or financial household savingsFinancial
household savings in India usually include the following:
Savings deposits with banks
Life insurance policies
Provident funds
Pension funds
Liquid cash of households
Deposits with non-banking financial institutions
Unit Trust of India Investment SchemesThe major portion of financial sa
ving goes into pension funds and life insurance.It has been found recent
ly that the traditional instruments of savings like special taxincentives o
r higher interest rates are not able to increase the rate of private saving
rate inthe long run. It is also found that the response of saving for the i
nterest rate changes inIndia was amongst the lowest in the developing
countries.Over past 30 years, the prime two instruments for household
long term saving like pensionsaving and life insurance have come to an i
dle state. On the other hand, the mutual fundsstarted to become more
successful in the early years of 1990s. Considering these twofactors, we
can conclude two weaknesses of the saving market in India. First, publi
c sectordominates the markets. Second, the allocation of portfolio is un
der control that makes thelow returns from the market developments.

Study of Individual Financial Planning

7.1.1. Financial Planning – Age Approach
Need Analysis-Stage I - Young ProfessionalLife Stage Analysis
Age of 20yrs and 30yrs – young group.
Started with new job or profession.
May or may not have a Spouse.
Ambitious and Career Focused.
Probably do not have any dependents.
Might not have made any Investment.
Likes to Spend.
Financial Needs Analysis
Might have a financial support from parents.
No habit of Investments and likes to spend.
May be thinking of Buying a Home or Car.
Planning to get married.
May be thinking of Higher Education.
Can take high risk
Financial Planning
Understanding the importance of savings and benefits of compound gr
owth returns.
Save more and invest more, its only possible during this stage of life, w
hereresponsibilities are less.
Life Insurance Needs are almost negligible, but should be included in in
vestment asit will not only provide life cover but also would create a ha
bit of Saving. ULIPwould be better option in this stage.
Equity and equity related instrument can occupy a greater portion of po
rtfolio.
Need for liquidity is less but still keeping in mind the era of pink slip con
tingencyplan should be in place.
Should think for building real estate.
Very long term investment
Life Insurance Need Analysis-
Stage II- Newly MarriedLife Stage Analysis
Age of 31yrs to 45yrs.
Married and have Dependents, Kids.
Income on rise.
Might have taken some Loan i.e Home Loan, Car Loan etc.
Have a high Expenditure.

Study of Individual Financial Planning

Effective tax planning is needed.
Might have started some Investments in Equity or Mutual Funds.
Risk appetite is Moderate

Financial Needs Analysis

Have a high Debt Repayment through Installments i.e EMIs
May want to save for Children’s education.
Persons need to financially protect their Family and Dependents from u
nfortunateevents.
Elderly parents also need financial support.
Start saving for retirement

Financial Planning
Need a more stable portfolio, with moderate risk.
Should concentrate on less volatile investment
Insurance is a must, include child plan and retirement plans under this.
Should concentrate on reducing debts
Relatively long term investment
Life Insurance Need Analysis- Stage III-Proud Parents (Pre-
Retirement)Life Stage Analysis
•Age of 45-60 years.
Major expenses goes towards Child higher education and marriage.
•Reduced Loan Burden
•Have a good Income.
•Retirement on mind.
•Low risk taking appetite.

Financial Needs Analysis

•Saving for retirement.
•Childs Higher Education Expenses or Marriage.
•Previous Investments giving Good dividends and Returns.
Financial Planning
•Should invest in instruments which provide regular return, such as fixe
d incomeproducts.
•Major portion of investment should be diverted towards retirement
plan.
•Health insurance should be included.
•Investment should be highly liquid

Bibliography
Websites
http://www.fpsbindia.org/
http://profit.ndtv.com/PersonalFinance/Insurance.aspx
http://profit.ndtv.com/2008/01/16190747/Compare-Different-Insurance-
Pl.html
http://business.rediff.com/report/2009/may/15/perfin-types-of-life-
insurance.htm
http://www.mywealthguide.com/persnl.htm
http://www.kingswoodconsultants.com/LifetimeFinancialPlanning.html
http://www.businessgyan.com
http://www.itrust.in/financial-planning/article.action/What-Is-Financial-
Planning-India
http://www.dnaindia.com/money/report_union-budget-2009-10-
highlights_1271503
http://finance.mapsofworld.com/savings/india/household.html