THE ART OF FINACIAL PLANNING

SYNOPSIS

Submitted in the partial fulfillment of requirement of Bachelors of business administration (BBA)

Submitted to Internal guide :Chania dhal External guide :Naveen gupta

Submitted by Ravneet singh (00714101709)

Index
DESCRIPTION 1.Executive summary 2.Objectives of project 3.Financial planning 3.1 Introduction to financial planning 3.2 Factors affecting financial planning 3.3 Six step process 3.4 What is comprehensive financial planning ? 3.4.1 Contingency planning 3.4.2 Risk planning or management 3.4.3 Retirement planning 3.4.5 Investment planning 4.Investment avenues 4.1 Life insurance 4.2 Equity 4.3 Mutual fund 4.4 Certificate of deposit 4.5 PPF 4.6 Real estate 4.7 Gold 4.8 Investments in banks 4.9 Investments through post office 5.Limtation ,Conclusion and Suggestion 6. Research methodology 7.Data analysis & Interpretation 8.Conclusion & Recommendation 9.Annexure 10. Bibliography PAGE NO.

CHAPTER 1
EXECUTIVE SUMMARY
Financial planning is the process of assessing goals of individual, taking an inventory of the money and other assess 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 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, charted 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.

CHAPTER 2
Financial planning
Introduction
Financial decisions are the basis to most of what we do in our lives. Poor financial decisions can cause great anxiety and lead to bankruptcy, whereas well thought out sound financial decisions can lead to a prosperous lifestyle.

We are confronted by countless financial difficulties and opportunities daily.

We need to understand the complexities of our financial circumstances to make sound decisions to overcome the difficulties or to make best out of the opportunities. Everyone has concern about their personal finances which may range as follows: Growing and protecting their financial wealth: Manage and pay their debts; Saving for their children education; How to make maximum out of the tax benefits ; Saving for retirement to maintain their lifestyle prior retirement ; and Inheritance planning and leaving the heirs wealthier.

Study of various factors

Time horizon and goals Risk tolerance Liquidity needs Inflation

Six step process of financial planning

Self assessment Identify financial, personal goals and objectives Identify financial problems or opportunities Determine recommendations and alternative solutions Implement the appropriate strategies to achieve goals Review and update plan periodically

CHAPTER 3

Comprehensive financial planning A good financial should include the following things: Contingency planning Risk planning or management Retirement planning Tax planning Investment planning

CHAPTER 4
INVESTMENT AVENUES
1. Life insurance : Life insurance is a policy provided by an insurance company, according to which in exchange for a premium payments the insurer is obliged to pay certain (a lump sum or portions of smaller sums) to the beneficiary in the event of insured death . Types of insurance Term insurance Endowment insurance Whole life insurance Money back plan ULIP Annuities & pension

2. Equities: Equities are a type of security that represents the ownership in a company. Equities are traded (bought & sold) in stock markets. Alternatively they can purchased via the initial public offering(IPO) route, i.e. directly from the company. Investing in equities is a good long term investment plan option as the returns on equities over a long time horizon are generally higher than most other investment avenues. However, along with the possibility of greater returns comes greater risk. 3. Mutual funds: A mutual fund allows a group of people to pool their money together and have it professionally managed, in keeping with a predetermined

investment objective. This investment avenue is popular because of its cost efficiency. 4. Certificate of deposit : certificate of deposit was introduced in India in 1991 its a scheme of raising funds by commercial banks, except rural banks and is a negotiable receipt of funds. Due to their negotiable nature they also called NEGOTIABLE CERTIFICATE OF DEPOSIT (NCD) 5. Public provident fund: The Public Provident Fund Scheme is a statutory scheme
of the Central Government of India. The Scheme is for 15 years. The rate of interest is 8% compounded annually. The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year. One deposit with a minimum amount of Rs.500/- is mandatory in each financial year. The deposit can be in lumpsum or in convenient installments, not more than 12 Installments in a year or two installments in a month subject to total deposit of Rs.70,000/-. It is not necessary to make a deposit in every month of the year. The amount of deposit can be varied to suit the convenience of the account holders. The account in which deposits are not made for any reasons is treated as discontinued account and such account can not be closed before maturity. The discontinued account can be activated by payment of minimum deposit of Rs.500/with default fee of Rs.50/- for each defaulted year.

6. Real estate investment: Indian real estate has huge potential demand in almost
every sector especially commercial, residential, retail, industrial, hospitality, healthcare etc. Commercial office space requirement is led by the burgeoning outsourcing and Information Technology Industry. The leaders of the IT/ITES world have set up or are setting up their centers in India. Estimated demand from IT/ITES sector alone is expected to be 150mn sq.ft. of space across the major cities by 2010. In residential sector there is housing shortage of 19.4 million units out of which 6.7 million are in urban India. The increase in purchasing power and exposure to organized retail formats has redefined the consumption pattern. As a result the country has experienced mushrooming of retail projects across the cities. The main growth thrust is coming due to favorable demographics, increasing purchasing power, existence of customer friendly banks & housing finance companies, professionalism in real estate and favorable reforms initiated by the government to attract global investors.

7. Gold: Sales of gold jewelry across Asia are surging as the local economies boom and
private investment grows. China's gold investment demand grew by 20% in 2007, while Indian consumers bought a record 900 tonnes well over one-fifth of the total world market. Gold buyers in Asia tend to think of their jewelry as a form of gold investment. Prevented from owning gold bullion until very recently, they buy gold to protect their savings from inflation and currency shocks. That's why the most popular form of gold jewelry in Asia heavy chains and bracelets is known as "investment jewelry" in the gold industry.

8. Investment in bank: An investment bank is a financial institution that assists

individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provide ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (GlassSteagall Act) until 1999 (GrammLeachBliley Act), the United States maintained a separation between investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation. There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is the "sell side", while dealing with pension funds, mutual funds, hedge funds, and the investing public (who consume the products and services of the sell-side in order to maximize their return on investment) constitutes the "buy side". Many firms have buy and sell side components. An investment bank can also be split into private and public functions with a Chinese wall which separates the two to prevent information from crossing. The private areas of the bank deal with private insider information that may not be publicly disclosed, while the public areas such as stock analysis deal with public information.

9. Investment through post office: Why should you invest in Post Office Schemes

These schemes are offered by the Government of India. Safe, secure and risk-free investment options. No Tax Deduction at Source (TDS). Nomination facility is available. Nomination can be changed at any time The instruments are transferable to any Post Office anywhere in India. Attractive rates of interest.

Post Office Schemes: Post Office Monthly Income Scheme Post Office Time Deposit Scheme Post Office Savings Account National Savings Certificate Kisan Vikas Patra