FINANCIAL PLANNING

PURPOSE:

1) Wealth creation

2) Conservation

3) Protection

Financial Independence is achieved when your passive income exceeds

your active income.

There are 3 types of incomes:

i. Earned income. e.g. wages and salaries,

commissions

ii. Passive income. e.g. rental income, forex

income

iii. Portfolio income e.g. income derived from

paper assets like stocks and shares, fixed
income securities-Treasury bills and bonds,
commercial papers and MUTUAL FUNDS
(Unit-Linked Investments).

Research over many years has proved that no matter how much you earn, earned
income alone cannot help you to achieve Financial Independence.

Earned income is very linear; for you to earn it you must be there.

Passive income is income you earn without working as shown above (ii).

The Investors Budget

A budget simply put is you directing your money where to go rather than wondering
where it went. All that you will ever earn ends up or should end up with 4 people.
The investor’s budget shows us how to allocate our money to 4 categories of
people.

1).God……………………………….10-20%

2).Yourself…………………………10-50% (you can create multiple streams of

income to achieve this)
 3).Other…………………………….70%

3).Government………………..10-20%

Vision for a brighter future

When you take time to contemplate your future, what do you see? A comfortable
and fulfilling retirement, your children the best education money can buy or simply
the satisfaction of knowing that your financial future is secure? Your hopes and
aspirations will be unique to you. But to make your dreams a reality, you need to
focus on achievable ambitions and stru

2nd 4th 1st 5th 3rd

Unit Real Employme Venture- Stocks&

linked Estate/ nt/ Self- Capitalist Forex
employed trading
Investme Fixed
nts Assets
Pillar no.2 UNIT LINKED INVESTMENTS;

These are mutual funds or collective investment vehicles and are offered by several
insurance companies. They are different from the traditional endowment policies in
that their returns are dependent on the performance of the underlying assets.

Before investing in any of these companies it is prudent to assess the following;

i. History and Ownership of the company.

ii. Historical performance of underlying Assets

iii. Policy fee

iv. Minimum Amount ------------------------------------------

Why invest through Pan Africa Life?

i. The company was formed in the year 1947.PAL is a public company listed at
the NSE.

ii. PAL’s unit price has been increasing steadily over the last 5years at a rate of
10-20% per year thus beating the returns offered by the Fixed Income
Securities and the Fixed Deposit Accounts of commercial banks.

iii. PAL’s policy fee is ksh.75 per month.

iv. With a minimum of ksh.3000 per month you can begin to plan for your future.

There are 5 important considerations one ought to take when deciding on how
much to invest.

1) What are my long term objectives in order of priority?

Basically they are divided into 3 categories;

a) Education plan for our children,

b) Capital accumulation and

c) Retirement planning.

2) What is my Risk Attitude? Am I an aggressive investor or am I a

conservative investor?

Or am I a medium risk taker?

1 2 3 4 5
Low Risk Medium Low Medium Risk Medium High High Risk
Low Return Risk Medium Return Risk High Return
Medium Low Medium High
Return Return

Unit Linked Investments are Medium Risk/ Medium Return Investments (3): Not too
aggressive not too conservative. This is largely due to the diversified investment
portfolio. i.e. Fixed income securities, Equity market and also Real Estate.

3) Time: This directly connected to your investment objective. Investment

plans offered by PAL are in the range of 10 years plus.

4) Flexibility: PAL Unit Linked Investment plans are flexible. This feature gives
PAL an edge over all the other plans in the market.

5) Amount: In order to fulfill my investment objective(s), the minimum

amount I am ready to begin with is :

3000 4000 5000 6000 7000 8000 10000 15000

My dreams are worthless, my plans dust, my goals impossible. All

are of no value unless they are followed by action. I will ACT NOW.

WHAT DO I REQUIRE TO START MY PLAN?

i) Copy of National Identity Card,

ii) Copy of latest Pay slip or

iii) Copy of ATM Card.