A Project Report On

Financial Planning for Government Employee by Bajaj Capital (Nagpur)

Submitted to Rashtrasant Tukadoji Maharaj Nagpur University. In partial fulfilment of degree of Master of Business Administration in the Faculty of Commerce. Submitted By Trupti Shastrakars Under The Guidance Of Joyti Mahajan mam

Wardhaman Bahuddeshiya Sansthas Institute Of Management &Research (2010 - 2011)

Declaration
I, Trupti Shastrakar hereby declare that the Project entitled Financial Planning for Government Employee by Bajaj Capital (Nagpur) is my own work to the best of my knowledge and belief is not submitted to any university for any degree. .

Place: Nagpur

Signature

Date:

Trupti Shastrakar

Certificate
Department of Master of Business Administration

This is to certify that Trupti Shastrakar Has presented his project on Financial Planning for Government Employee by Bajaj

Capital (Nagpur)
Under my supervision in partial fulfilment for his final project work during the session (2011-2012) prescribed by Rashtrasant Tukadoji Maharaj Nagpur University.

Principal
Dr Ravindra Aher

Project Guide
Joyti Mahajan

Acknowledgement
It is my pleasure to place on record my sincere gratitude towards my guide Joyti Mahajan mam , who spent his precious time providing continuous ideas and expert guidance to my project work. It was his direction and encouragement at every moment and step that motivated me to steer the research work confidently and successfully. I am also grateful to principal Dr ravindra Aher and

for their encouragement, moral support and the valuable guidance. I am indebted to my respected parents because of whose blessings I have been able to carry out this work successfully. I am also thankful to all those who have directly or indirectly helped me for this project work

(Signature) Trupti Shastrakar

INDEX
Sr. No. Chap. 1 Chap. 2 2.1 2.2 2.3 Chap. 3 3.1 3.2 Chap. 4 4.1 4.2 Chap. 5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 Chap. 6 Chap. 7 Chap. 8 Chap. 9 Chap. 10 Topics Executive Summery Introduction Introduction of Financial Planning Objectives of Financial Planning Importance of Financial Planning Research Methodology Primary Data Secondary data Company Profile Company Profile History Of Company Bajaj Capital's 360 Financial Planning Introduction of Bajaj Capital's 360 Financial Planning Investment Planning Cash Flow Management Tax Planning Insurance Planning Children Future Planning Retirement Planning Small Saving Schemes Valued Client Form Financial Planning For Client Analysis & Finding of study Conclusion Recommendations Bibliography Pg. No. 1 2 10 11 12 13 14 17 21 25 26 29 33 34 36 38 45 48 60 64 65 66

 Executive Summary :This study was basically concerned with the financial planning for the customer in future life to achieve the financial goals easily. Financial Planning helps in reducing the uncertainties which can be a hindrance to growth of the company. This helps in ensuring stability and profitability in concern. Financial planning helps to achieve the financial goals in our life like home purchase, car purchase, jewellery purchase or purchase any property, child education, child marriage, retirement planning. This requiress Investment Planning, Retirement Planning, Children Future Planning, Tax Planning, Insurance Planning, and Cash Flow Planning and so on. This project was carried out at Bajaj Capital Ltd. Nagpur Branch. The Project title is THE STUDY OF FINANCIAL PLANNING BY BAJAJ CAPITAL LTD.. The duration of the project was one month from 7th July 2011 to 8th Aug 2011.

 1 Financial Planning:What is Financial Planning?

Financial Planning is the process of meeting your life goals through the proper management of your finances. It involves the process of assessing your financial situation, determining your objectives and formulating a plan to achieve them. The objective of financial planning is to ensure that the right amount of money is available in the right hands at the right point in the future to achieve an individual's life goals. It also allows you to understand how each financial decision you make affects other areas of your finance.

Which are the broad areas in which Financial Planning can be undertaken?
Cash Flow Management Insurance Asset Allocation Investment Planning Retirement Planning Taxation Estate Planning

Who requires Financial Planning?

It is useful to everyone. Very few can consider themselves too rich to engage in Financial Planning. There are many instances of highly paid employees who came to financial grief merely because they did not plan for their post-career years. Similarly even people earning small amounts of income should undertake this process, as it will help them in prioritizing their goals so that their limited income can be used more efficiently.

How is it different from Wealth Management?

Wealth management means taking care of the needs of affluent clients, their families and their businesses as part of a long-term, consultative relationship. While this sounds similar to Financial Planning (FP), it differs in the sense that Financial Planning is for one and all while Wealth Management (WM) is only for a select few. WM relates more the management of plenty, while FP aims at getting the most out of limited resources.

Why should you make a financial plan?

Financial planning provides direction and meaning to your financial decisions. It allows you to understand how each financial decision you make affects other areas of your finances. For example, buying a particular investment product might help you save adequately to finance your child's higher education or it may provide enough for a comfortable retirement. You can also adapt more easily to life changes and feel more secure that your goals are on track.

After a plan is developed, what next?

The best plan is useless unless it is put into action. Your financial planner will assist you completely in implementing the plan.

How often should you update the plan?

It is good to review the plan when there is a lifestyle changes such as marriage, birth, death or divorce. Any change in financial position should be evaluated as well. Most people have an annual update that reviews how the plan is being implemented.

How much should I be saving?

It is hard to apply a rule of thumb toward savings, because it varies with age and income level. About twenty to thirty percent of your income is a good start. If you find that is too high for you, don't let that deter you. You can start by putting a little aside each month and then slowly increasing it.

Who is a financial planner?

A financial planner is someone who uses the financial planning process to help you determine how to meet your life goals.

Can you do your own financial planning?

Some personal finance software packages, magazines or self-help books can help you do your own financial planning. However, it is advisable for you to seek help from a professional financial planner if: You need expertise, which you don't possess in certain areas of your finances. For example, a planner can help you evaluate the level of risk in your investment portfolio and revise your asset allocation; You don't feel you have the time to spare to do your own financial planning; You know that you need to improve your current financial situation but don't know where to start; you feel that a professional advisor could help you improve on how you are currently managing your finances.

Why do I have to provide so much personal information?

Consider a visit to your doctor. Without complete and fully accurate details, your doctor cannot prescribe the best course of action. The same applies to financial planning. In order to obtain the best service for your 'financial health' all details and specifics must be disclosed.

What type of information do I provide?

Typically, information regarding investments held, number of dependants, income and expenditure details, savings and financial planning needs, etc. The more accurate information you give, the better the quality of advice can be.

How we can help you?

The areas where we as Financial Planners can help you are:

Helping you in better understanding your present financial position

The questions contained in the Financial Questionnaire require you to list down your assets, liabilities, incomes and expenditures. This is a process of virtually drawing

up your own Balance Sheet and will help you gain a better grip on your present financial position.

Cash Flow and Debt Management

Incomes and expenditures can be better matched through the Plan. It also will assist you in identifying whether your borrowings are within prudent limits. More...

Risk Management
We can help you in identifying your life and property insurance requirements. Evaluating your insurance needs is part of personal financial planning. Insurance usually takes care of your unpredictable needs and as these needs can arise at anytime, insurance is extremely important.

How you can help us?

The quality of the Plan depends on the quality of information provided by you. You can help us by providing the requisite information in as detailed manner as is feasible and also sparing the time to meet us at least a couple of times for the same. On our part, we will guarantee complete confidentiality of the information you will provide and also assure you of the requisite due diligence in plan preparation. We realize that no two clients' needs are the same and will take care to tailor our plans accordingly.

How an individual taxpayer can lower tax bill under the present Income tax act?
Taxes are said to be as inevitable in life as death and it is our social responsibility to pay them. Taxes are burdensome for all taxpayers. Saving money in taxes is high priority in Financial planning exercise.

What should be adequate life cover and how it is computed?

While life insurance is critical to meet financial responsibilities, adequate insurance cover is the key for meeting your responsibilities. So having a cover is not enough - having adequate cover is critical. Life insurance has moved from protecting life to protecting lifestyle. Financial needs can be classified broadly into following two categories. Protection: if anything happens to the breadwinner, the family continues to be financially protected and maintain the same life style. Savings: one should be able to generate required corpus to meet milestones such as education / marriage expenses of children, buying a house.

What is the relevance of `Risk Profiling' in the financial planning process?

There are different life stages for an investor and at each life stage his risk profile could be different. Risk profiling helps investor to find appropriate asset allocation strategy at different stage of life. Like fingerprints, investment profiles of people are always unique. Age, Life stage, income, savings, dependents and mindsets are factors that define a person's attitude towards investments. Risk taking ability and mental frame of mind plays a key role in determining where the investor ultimately puts his money. The first step in asset allocation is `Risk Profiling'. Risk Profiling combines two key areas: 1) 2) Estimating financial risk-taking capacity and

Understanding the (psychological) risk tolerance level of an individual.

Risk profiling can unlock far more value for both investor and financial advisor. It provides advisor clear understanding of investor's mental frame of mind and his personal and financial circumstances.

What are the salient features of Small Savings schemes like PPF, NSC, KVP, RBI bonds, Senior Citizens Savings Scheme, Post office Monthly Income Scheme, and Post office Recurring Deposit? With increased volatility in capital markets, there is a surge in demand for small saving schemes as a safe haven. Some of these options such as PPF and senior citizen schemes need to be part of asset allocation for investors. Although, it is good to keep some risk free investment in your portfolio as a part of overall asset allocation, there are certain pitfalls.

What is asset allocation?

Asset allocation refers to the process of allocating your investments between different asset classes. Asset allocation means diversifying your money among different types of investment categories, such as stocks, bonds, gold, property and cash. The goal is to help reduce risk and optimize returns. The goal of asset allocation is to create an optimum mix of asset classes that have the potential to appreciate while meeting your risk tolerance level and financial goals.

What is Asset Re-balancing and how it is done?

The Process of rearranging assets to bring allocations to predetermined original level as per Financial Plan. Over time some of your investments may become out of alignment with your investment goals. You'll find that some of your investments will grow faster than others. By rebalancing, you'll ensure that your portfolio does not overemphasize one or more asset categories, and you'll return your portfolio to a comfortable level of risk. Asset Rebalancing forms part and parcel of every Financial Plan.

Objectives of Financial Planning :

Financial Planning has got many objectives to look forward to: Determining capital requirements- This will depend upon factors like

cost of current and fixed assets, promotional expenses and long- range planning. Capital requirements have to be looked with both aspects: short- term and long- term requirements.

Determining capital structure- The capital structure is the composition

of capital, i.e., the relative kind and proportion of capital required in the business. This includes decisions of debt- equity ratio- both short-term and long- term.

Framing financial policies with regards to cash control, lending,

borrowings, etc.

Importance of Financial Planning :

Financial Planning is process of framing objectives, policies, procedures, programmers and budgets regarding the financial activities of a concern. This ensures effective and adequate financial and investment policies. The importance can be outlined as Adequate funds have to be ensured. Financial Planning helps in ensuring a reasonable balance between

outflow and inflow of funds so that stability is maintained. Financial Planning ensures that the suppliers of funds are easily

investing in companies which exercise financial planning. Financial Planning helps in making growth and expansion programmes

which helps in long-run survival of the company. Financial Planning reduces uncertainties with regards to changing

market trends which can be faced easily through enough funds.

RESEARCH METHODOLOGY :

Data Collection is an important step in methodology of any project and success of any Project will be largely depend upon how much accurate you will be able to collect and how much time, money and efforts will be required to collect the necessary data.

3.1 Primary Data

The Primary Data is a fresh and first hand data which is collected for the first time and happen to be original in character. We have collected the information and data through formal and informal discussions with our professional guide in the organization, and through personal interviews, questionnaire, observation etc. which are methods available for primary data collection

Observation under the observation I studied the inventory structure,

and the companies environment.

Discussion help of the discussion with the executive officer I

collected the information about inventory and company.

3.2 Secondary Data

The secondary data is the data which have already collected and stored. We can easily get secondary data from records, journals, annual reports, newsletters and books. It will save the time, money and efforts in collecting the data. We also have collected the data from annual reports, website of M&M, newsletters etc. Books: - with helps of books and magazine I understand the concept of inventory. Website - I have collected information related to the company from web sites.

1 Company Profile:

Bajaj Capital is one of Indias leading Financial Services companies offering Free Advice on Investments, Insurance, Tax Saving, Retirement Planning, Financial Planning, Childrens Future Planning and other services. We also have a wide range of products and services for Corporates, High Networth Individuals, and NRIs all under one roof.

At Bajaj Capital, we believe in dreaming big. Dreams inspire us to excel. They ignite hope and kindle in us the passion to stretch our limits. We also believe that nothing can or should stop us from realising our dreams and financial constraints should be the last thing to stop anyone. Four decades of excellence For over four decades, we have been helping people realize their aspirations by helping them make their wealth grow, and plan their financial lives. Today, we are a one of the largest financial planning and investment advisory companies in India, with a strong presence all over the country. We take pride in serving our customers both individual and institutional and are known for our strong professionalism and work ethics.

Wide range of services

We offer a comprehensive range of services including financial planning and investment advice, and the entire gamut of financial instruments and investment products of almost all major companies, both public and private. In addition, we also provide investment assistance by helping you complete all the formalities, and help you keep regular track of your investments. These services and products are delivered through our network of 134 Bajaj Capital Investment Centers located all over the country. We are also a SEBI-approved Category I Merchant Banker. We raise resources for over 1,000 top institutions and corporate houses every year, and offer specialised services to Non-Resident Indian (NRIs) and High Net worth Clients.

What one can expect from Bajaj Capital

Sound, research-based advice Unbiased, independent and need-based advice Prompt, courteous service Honest, ethical dealings Accessibility

PRODUCTS &SERVICES :

PRODUCTS
Govt Savings Schemes PO and RBI

Life Insurance All Companies

General Insurance All Companies

Pension Schemes Mutual Funds Fixed Deposits Tax Saving Schemes Equity IPOs

SERVICES
Cash Flow Planning Investment Planning Tax Planning Children Future Planning Retirement Planning Risk Protection Planning

4.2

The History of Bajaj Capital :

Bajaj Capital has contributed to the growth of the Indian Capital Market at every step. In 1965, we were the first to innovate the Companies Fixed Deposit. Today, we are playing an active role in the growth of the Indian Mutual Fund industry. We are also working closely with private insurance companies to deepen India's insurance market. Here is a brief gist of our journey through the years.

1964 Bajaj Capital sets up its first Investment Centre in New Delhi to guide individual investors on where, when and how to invest. India's first Mutual Fund, Unit Trust of India (UTI) is incorporated in the same year. 1965 Bajaj Capital is incorporated as a Company. In the same year, the company introduces an innovative financial instrument the Company Fixed Deposit. EIL Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.) becomes the first company to raise resources through Company Fixed Deposits. 1966 Bajaj Capital expands its product range to include all UTI schemes and Government saving schemes in addition to Company Fixed Deposits.

1969 Bajaj Capital manages its first Equity issue (through an associate company) of Grauer & Wells India Ltd.; right from drafting the prospectus to marketing the issue. 1975

Bajaj Capital starts offering 'need-based' investment advice to investors, which would later be known as 'Financial Planning' in the investment world. 1981 SAIL becomes the first government company to accept deposits, followed by IOC, BHEL, BPCL, HPCL and others; thus opening the floodgates for growth of retail investment market in India. Bajaj Capital plays an active role in all the schemes as 'Principal Brokers' 1986 Public Sector Undertakings (PSUs) begin making public issues of bonds MTNL, NHPC, IRFC offer a series of Bond Issues. Bajaj Capital is among the top ranks of resource mobilisers.

1987 SBI leads the launch of Public Sector Mutual Funds in India. Bajaj Capital plays a significant role in fund mobilisation for all these players. 1991 SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the top mobiliser with collections of over US $20 million.

1993 The first private sector Mutual Fund Kothari Pioneer is launched, followed by Birla and Alliance in the following years. Bajaj Capital plays an active role and is ranked among the top mobilisers for all these schemes. 1995 IDBI and ICICI begin issuing their series of Bonds for retail investors. Bajaj Capital is the co-manager in all these offerings and consistently ranks among the top five mobilisers on an all-India basis. 1997

Private sector players lead the revival of Mutual Funds in India through Openended Debt schemes. Bajaj Capital consolidates its position as India's largest retail distributor of Mutual Funds. 1999 Bajaj Capital begins marketing Life and General Insurance products of LIC and GIC (through associate firms) in anticipation of opening up of the Insurance Sector. Bajaj Capital achieves the milestone of becoming the top 'Pension Scheme' seller in India and launches marketing of GIC's Health Insurance schemes. 2000 Bajaj Capital implements its vision of being a 'One-stop Financial Supermarket.' The Company offers all kinds of financial products, including the entire range of investment and insurance products through its Investment Centers. Bajaj Capital offers 'full-service merchant banking' including structuring, management and marketing of Capital issues. Bajaj Capital reinvents 'Financial Planning' in its international sense and upgrades its entire team of Investment Experts into Financial Planners.

2002 The company focuses on creating investor awareness for Financial Planning and need-based investing. To achieve this goal, the company introduced the International College of Financial Planning. The graduates of this institute become Certified Financial Planners (CFPs), a coveted professional qualification.

2004 Bajaj Capital obtains the All India Insurance Broking Licence. Simultaneously, a series of wealth creation seminars are launched all over the country, making Bajaj Capital a household name. 2005 Bajaj Capital launches 360 Financial Planning, a software-based programme aimed at encouraging scientific and holistic investing.

2007 Bajaj Capital launches Stock Broking and Depository (Demat) Services. 2008 Bajaj Capital launches Just Trade, an online Platform for investing in Equities, Mutual Funds, IPO's

1 Introduction of Bajaj Capital's 3600 financial planning

The only thing permanent in life is change. Times change. People change. So does life. You expect life to be much better tomorrow than it is today. Tomorrow, you hope to fulfill all your dreams and aspirations. But what happens if things take an untoward turn? Or, if there is an eventuality? Perhaps it's time for you to change the way you plan your investments...

Following are the details about Bajaj Capital's 360 Financial Planning Why do you need Bajaj Capital's 360 Financial Planning? Who needs 360 Financial Planning? What is 360 Financial Planning all about? How will 360 Financial Planning help me? How do I get my FREE personalised 360 Financial Plan created?

Dont just dream... Plan! Financial Planning is becoming increasingly popular in developed countries all over the world. Now, with a little help from Bajaj Capital, you too can give yourself the 360 Financial Planning edge! Get your Financial Plan prepared absolutely Free, only at Bajaj Capital! Financial Planning is a paid service abroad, requiring investors to pay up to US $100 per session, and up to US $1,000 for a complete financial plan. Now, Bajaj Capital brings you the same service ABSOLUTELY FREE! Why do you need Bajaj Capital's 360 Financial Planning? You may have many dreams, needs and desires. For example, you could be dreaming of: Owning a new car Buying a dream house Providing your children with

the best education Planning a grand wedding for your children Having a great time after your retirement

But in today's world of skyrocketing costs and increasing inflation, how many of these dreams can you hope to turn into reality? By planning well, you can utilize your limited resources to the fullest.

360 Financial Planning helps you see the big picture and invest for specific long-term and short-term goals well in time.

Who needs 360 Financial Planning?

Everyone does! Because everyone has a right to dream. And realizing dreams is easier when you work to a plan that's: Reliable Realistic Proven

Bajaj Capital's 360 Financial Planning Programme could make a difference to all those who wish to lead a worry-free, financially secure life.

What is 360 Financial Planning all about?

360 Financial Planning is a unique software-based simulation that takes a holistic view of your life-long financial needs and charts a personalised investment strategy to help you meet them. Broadly, it involves: Identifying your current financial status Listing and prioritising your

goals Creating a sound investment plan to achieve them Monitoring the plan to facilitate swift corrective action,

360 Financial Planning is based on the premise that every individual has certain basic financial needs that are expressed at various stages of life (getting married, buying assets like homes, vehicles, or providing for your children's education and wedding). With the help of 360Financial Planning, you can prepare yourself well in time for all these goals.

How will 360 Financial Planning help me?

Instead of investing in an ad-hoc manner, 360 Financial Planning helps you take a holistic, all-round view. Briefly, 360 Financial Planning comprises: requirements secure future worried. Retirement Planning: Because retirement is a time to relax, not to get Tax Planning: To save on taxes and increase your income Insurance Planning: To protect yourself, your family and your assets Children's Future Planning: To give your children a financially Investment Planning: To make your wealth grow Cash Flow Planning: To provide for assets and meet the periodic cash

How do I get my FREE personalised 360 Financial Plan created?

Heres how Financial Plans are prepared: The process begins with identifying your needs with the help of the Need Analysis Form. Our Financial Planners then use the especially-created 360 Financial Planning software to generate a personalised Snapshot. The Snapshot gives you a graphic account of all your financial requirements, at every stage of your future life. Based on the Snapshot, our experts work out an investment strategy. Once implemented, our experts keep regular track of your investments.

5.2 Investment Planning:

Everyone needs to save for a rainy day. Once you have saved enough to take care of emergencies, you should start thinking about investing and to make your money grow. We can help you plan your investments so that you can reap adequate benefits and achieve your financial goals.

Bajaj Capitals Investment Planning Service includes:

(SIP) Regular review of progress and Portfolio Rebalancing Risk Profiling Asset Allocation and Portfolio Construction Creation and Accumulation of Wealth through Systematic Investment Plans

Essentially, Investment Planning involves identifying your financial goals throughout your life, and prioritizing them. Investment Planning is important because it helps you to derive the maximum benefit from your investments. Your success as an investor depends upon your ability to

choose the right investment options. This, in turn, depends on your requirements, needs and goals. For most investors, however, the three prime criteria of evaluating any investment option are liquidity, safety and return.

5.3 Cash Flow Management :

We hardly take time out to find out what are our sources of income and what are our expenses. Cash flow planning refers to our inflows (income) and outflows (expenses) of money as mentioned below. Sources of income may include the following: Salary, bonus or business income Interest, dividend from investments Rental income Pension

Outflows may include the following: Living expenses including food, clothing, travel & entertainment Utilities and taxes Insurance premium (life, car, health) Charity, Gift Contribution superannuation Loan EMIs (House, car, credit card, personal loan) to retirement assets Pension, gratuity, PPF,

Cash flow planning is a regular exercise for companies but at an individual level we ignore the importance of the cash flow planning process. Companies need to

have a positive cash flow for expansion, diversification, distribution of earnings etc. Similarly, at an individual level cash flow planning is required to identify the major income and expenditures in future (both short-term and long-term) and making planned investments so that the required amount is accumulated within the required time frame. Without having personal budget of income and expenditure, expenditure may exceed income and our investment plan and financial goals may go for a toss. Without proper cash flow planning one could easily get caught in the debt trap. Creating a plan is not enough. One also needs to implement the plan, besides bringing about a change in the spending habits. Cash flow planning is the preliminary step and it lays foundation in the financial planning exercise. Cash flow planning is done prior to starting an investment exercise, because it gives projection of finances and what is it that you can invest without causing a strain on yourself. It also enables to understand if a particular investment matches with your flow requirement. Once the financial goals are set, the amount of investment required to realize the goal are set aside considering inflationary factor. Cash flow planning is power fool tool as it enables to: Identify areas where expenses can be reduced and allocate money towards achieving financial goals, reduce debt level. Assess your ability to meet your financial goals. Positive cash flow helps in planning paying off costly loans like credit card and personal loan Project your future cash flow needs Enables one to take tax efficient decision depending upon your tax bracket and personal situation.

What Is Cash Flow Planning?

In simple terms, cash flow refers to the inflow and outflow of money. It is a record of your income and expenses. Though this sounds simple, very few people

actually take the time out to find out what comes in and what goes out of their hands each month. Cash flow planning is the first thing that should be done prior to starting an investment exercise, because only then will you be in a position to know how your finances look like, and what is it that you can invest without causing a strain on yourself. It will also enable you to understand if a particular investment matches with your flow requirement.

Why is cash flow planning important? Cash flow plans are commonly used by business houses. Without a viable cash flow plan, a company could easily spend more than its revenue, putting it in peril. Unfortunately, most of us do not realise that a cash flow plan is as important for people like us as well. The principles that apply to corporate finance and to our personal lives are largely the same. There has never been a bigger need than today for families and individuals to work out cash flow plans. Without proper cash flow planning one could easily get caught in the debt trap. Of course, it goes without saying that creating a plan is not enough. One also needs to implement the plan, besides bringing about a change in the spending habit.

Tax Planning :

Introduction Proper tax planning is a basic duty of every person which should be carried out religiously. Basically, there are three steps in tax planning exercise. These three steps in tax planning are: Calculate your taxable income under all heads ie, Income from Salary, House Property, Business & Profession, Capital Gains and Income from Other Sources. Calculate tax payable on gross taxable income for whole financial year (i.e., From 1st April to 31st March) using a simple tax rate table, given on next page. After you have calculated the amount of your tax liability. You have two options to choose from: Pay your tax (No tax planning required) Minimise your tax through prudent tax planning.

Most people rightly choose Option 'B'. Here you have to compare the advantages of several tax saving schemes and depending upon your age, social liabilities, tax slabs and personal preferences, decide upon a right mix of investments, which shall reduce your tax liability to zero or the minimum possible. Every citizen has a fundamental right to avail all the tax incentives provided by the Government. Therefore, through prudent tax planning not only income-tax liability is reduced but also a better future is ensured due to compulsory savings in highly safe Government schemes. We sincerely advise all our readers and clients to plan their

investments in such a way, that the post-tax yield is the highest possible keeping in view the basic parameters of safety and liquidity.

Taxation Tips to lower your Tax bill

Taxes are said to be as inevitable in life as death and it is our social responsibility to pay them. Taxes are burdensome for all taxpayers. Saving money in taxes is high priority in Financial planning exercise. There are legally permissible ways to reduce taxes and retain more of your hard-earned money in your savings kitty. There are various tax deductions available under the present Income tax act and you should take advantage of them. Here are some tips to lower your tax bill:

Deductions under Section 80C

Section 80C tends to be most popular since you can get an exemption of up to Rs 1 lakh on contributions to a wide range of investments. Broadly these deductions can be classified into two options: Non -Investment Oriented options would comprise of the following. Section Payments for acquisition of a residential house Tuition fees paid for education of children 80C provides for an outright deduction on certain

contributions/payments subject to following conditions: - The contributions/payments must have been made during the relevant previous year

- The aggregate amount qualifying for deduction should not exceed Rs.1 Lakh.

Section 80 D - Medical insurance

If you take a medical insurance plan for yourself, your spouse, dependent parents and dependent children, you can under Section 80D claim deduction up to Rs 15,000 for the premium paid. A bonanza is available in the form of an additional deduction of Rs.15,000 towards medical insurance premium paid for your patents. For senior citizen taxpayers, the limit now has been enhanced to Rs.20,000. One condition being that the premium should be paid through a cheque. In case you have paid any amount for the medical treatment of any disabled person dependent on you then again you are entitled to a deduction in the range of Rs. 40,000 to Rs. 75,000. However, to claim any deduction under this section, certification by a medical authority is mandatory.

Interest component of home loan - Sec 24 (b)

Your home is not only your living shelter but also your tax shelter. You can claim a deduction for the interest paid on a housing loan, even on loans taken for repair, renewal or reconstruction of an existing property. The interest component of home loan is allowed as a deduction under the head 'income from house property' under Section 24(b) up to a limit of Rs 1.5 lakh a year in case of self-occupied house. One condition being that your house must have been financed by a housing loan taken after April 1, 1999. It is also essential that the acquisition or the construction of the property is completed within three years from the end of the financial year in which the loan is taken.

Cash gifts

Cash gifts received from specified relatives are exempt from income tax, and there is no upper limit also. Similarly, cash gifts of any amount and from anyone received during your childbirth, marriage or any other specified event are totally taxfree. However, if you receive a cash gift of more than Rs 50,000 from a friend, you are required to pay tax on the excess amount exceeding Rs 50,000.

Charity - Sec 80 G
You get a tax relief if you donate to institutions approved under Section 80G of the Income Tax Act. The rate of deduction is either 50 or 100 per cent, depending on the choice of fund. There is no restriction on the amount of charity. However, donations must be made only to specified trusts. Also, only donations of up to 10 per cent of your total income qualify for such a deduction.

Education Sec 80 EIn case you have availed of a loan for

higher education of your child or your spouse, then you can claim a deduction of the interest paid on such loan. Tax Liability for A.Y 2009 - 2010 Taxable income slab (Rs.) Up Up to to 1,80,000 (for 1,50,000 women) Nil R ate (%)

Up to 2,25,000 (for resident individual of 65 years or above) 1,50,001 - 3,00,000 3,00,001 - 5,00,000 5,00,001 upwards 10% 20% 30%

*A surcharge of 10 per cent of the total tax liability is applicable where the total income exceeds Rs. 1,000,000. Education cess is applicable @ 3 per cent on income tax, inclusive of surcharge if there is any.

5.5 Insurance Planning :

"Insurance is not for the person who passes away, it for those who survive," goes a popular saying that explains the importance of Insurance Planning. It is extremely important that every person, especially the breadwinner, covers the risks to his life, so that his family's quality of life does not undergo any drastic change in case of an unfortunate eventuality. It is extremely important that every person, especially the breadwinner, covers the risks to his life, so that his family's quality of life does not undergo any drastic change in case of an unfortunate eventuality. Insurance Planning is concerned with ensuring adequate coverage against insurable risks. Calculating the right level of risk cover is a specialized activity, requiring considerable expertise. Proper Insurance Planning can help you look at the possibility of getting a wider coverage for the same amount of premium or the same level of coverage for the same amount of premium or the same level of coverage for a reduced premium. Insurance, simply put, is the cover for the risks that we run during our lives. Insurance enables us to live our lives to the fullest, without worrying about the financial impact of event.

Children's Future Planning :

Like every parent, you too must be overjoyed to watch your child grow. All parents want to give the best possible upbringing to their children. This includes good education and security, in case of any eventuality. Soon, your little bundle of joy will grow up, and it will be time to provide for his or her higher education and wedding. The purpose of Children's Future Planning is to create a corpus for foreseeable expenditures such as those on higher education and wedding, and to provide for an adequate security cover during their growing years. Children's Future Planning acquires added importance because children's education and wedding are high priority life goals, which can neither be postponed nor can there be a compromise on the amount. Like most parents, you might be saving regularly to ensure a safe tomorrow for your child. However, savings alone is no longer enough. For ensuring adequate funding of your child's education, you as a parent, need to do two things:

Invest appropriate amount systematically and at regular intervals Provide for a financial security blanket to cover any eventuality

Retirement Planning :
Some like it. Some dont. But retirement is a reality for every working person. Most young people today think of retirement as a distant reality. However, it is important to plan for your post-retirement life if you wish to retain your financial independence and maintain a comfortable standard of living even when you are no longer earning. This is extremely important, because, unlike developed nations, India does not have a social security net. Retirement Planning acquires added importance because of the fact that though longevity has increased, the number of working years havent.

Bajaj Capitals Retirement Planning Service involves:

Computing that amount that would be required post-retirement. This is done after taking inflation and time value of money into account. Building your Retirement Corpus using Systematic Investment Plans (SIPs) and other long-term growth orient products

Ensuring adequate post-retirement income through safe investments. The asset allocation and selection of investment vehicles keep changing as your riskbearing capacity diminishes.

Details regarding retirement planning:Retirement is the period of your life when you are no longer working and you need to fund your day today expenses from your savings. Retirement planning is a part of overall financial planning process and it enables a person to enjoy the desired post retirement lifestyle. When you stop earning, you would certainly want to maintain the same (or even better!) standard of living. Post retirement, a person does not have his monthly paycheck and will have to depend on the annuity he receives from his investment corpus. Planning for the sunset years acquires added importance because people over-estimate what they have and under-estimate how much they need post retirement. People live longer today and are lot healthier today. They spend more years in retirement and therefore they need to save more to cover the risk of living more than their life expectancy. Retired people love pursuing new interests such as playing golf, going abroad etc and therefore post retirement life style is extravagant than those prior to retiring.

To compute retirement corpus, following variables are considered: Life expectancy Rate of return from existing equity and fixed income securities. Annuity from insurance schemes, pension schemes from Govt. / Pvt. sector etc. Tax slabs. Rate of inflation. Growth rate in salary / business income. Household expenses and saving rate.

Small Savings Schemes

Stock market is down by around 50% since January last years, while most of the mid cap & large cap mutual fund schemes have generated around 45% to 60% negative returns in the same period. The bloodbath in Indian and global financial markets along with slowdown in industrial and GDP growth numbers have made retail investor less risk averse and they are shifting their investments towards safer instruments such as PPF, Fixed deposits with Public sector banks, Senior Citizen schemes, Gilt funds, assured return plans of insurance companies etc. Some of these schemes are not only safe and risk free but also offers tax benefits. With increased volatility in capital markets, there is a surge in demand for small saving schemes as a safe haven. Some of these options such as PPF and senior citizen Senior Particul Citizens ars Savings Scheme Rate Of Interest 9% Nation Post Post al office KisanVik office Saving Monthly as Recurring s Income Patra Deposit Certifi Scheme cate 8% 7.50% 8% 8.40%

RBI Savings Bonds 8%

PPF

8%

Interest paymen Half t Quarterly Yearly / frequen Cumulative cy Above 60 Eligible Above 55 Age NA for VRS (Years) retirees 5 years Extendabl Tenure e by 3 6 years more years Premat ure After 1st Not withdra year Available wal Can be Transfe gifted NA rability to close relatives Taxabili ty of Fully Fully Interest Taxable Taxable Income Max Investm ent 15,00,000 ceiling Rs.

Compoun Compoun Compound Half Monthly ded ded ed Yearly quarterly annually annually

NA

NA

NA

NA

NA

5 years Extendabl 8 years 7 6 years e by 5 6 years Months more years After 1st After 1st year year

15 Years

After After 7 years 4th Available (Conditions year apply) Yes Yes NA

NA

NA

Fully Taxable 4,50,000 in Single Name 9,00,000 in Joint Names

Fully Fully Fully Taxabl Fully Exempt Taxable Taxable e

NA

NA

NA

NA

70,000 p.a

Min Investm ent 1,000 1,000 1,500 10 100 500 ceiling Rs. Nomina Availa tion Available Available Available Available Available ble facility Demat, Mode of Bond ledger Demat, Physical Physical Physical Physic Holding a/c Physical al Taxbene Not Not Not Not Availa Not fit u/sec Available Available Available Available ble Available 80 C schemes need to be part of asset allocation for investors.

500

Available Physical Available

The following chart shows comparison of various investment avenues for retail investors.

A word of caution:
Although, it is good to keep some risk free investment in your portfolio as a part of overall asset allocation, there are certain pitfalls as under. Excessive investment in such schemes may keep you away from your financial goal. Some of the investment plans are neither tax efficient nor do they beat inflation. You need to look at post tax return and real rate return. Despite higher interest rate, the real rate of interest may be negative because of higher inflation. Some of the schemes like NSC are illiquid. Although, there is no credit or market risk in such schemes, there could be reinvestment risk, as the interest rate may be lower at the time of renewal. Investors need to match their time horizon with a suitable product and thus reduce some of the risks on investment. To accomplish financial goals within the desired time it is always prudent to have exposure to equity, real estate, gold and other assets. One should diversify investment into various investment options and across companies. Depending upon the time horizon for a financial goal, calculated risk might be taken with the investment.

Public Provident Fund

During the process of asset allocation, financial advisors will generally recommend an allocation to Public Provident Funds in the debt portfolios of their clients. Debt allocations are meant to reduce volatility of returns and provide stability to the portfolios. Amongst various instruments available to individual investors, the PPF is a must have for the following benefits.

Safety of returns - The PPF is a statutory scheme of the Central Government. Tax Free returns - 8 % compounded annually is tax-free Scheme qualifies for Section 80 C benefits Deposits are exempt from wealth tax. The balance amount in PPF in PPF account is not subject to attachment under any order or decree of court in respect of any debt or liability.

Other features
The minimum deposit is 500/- and maximum is Rs. 70,000/- in a financial year. PPF can be opened in minors name too Minimum time period is 15 years which can be extended in blocks of five years with or without contributions

Limitations of the Scheme

1.Limited Liquidity- The PPF does not allow for premature closure or withdrawal of funds. Part withdrawals are allowed after 7th year only. 2. The rate of interest of 8 % is not contractual. The government can change the rate any time even on existing accounts. Of course this is with prospective effect i.e. applicable to the period from which change is made. One must open PPF accounts in all family members name (including minors) as part of their long-term debt allocations. Over 15 years a sum of Rs. 70000 invested every year grows to Rs.2, 05,270 tax free and safe (subject to the interest rate reminding at 8 %). If invested in a disciplined manner in other family members name as well, the corpus will be sizable for meeting major milestone expenses like child's education, marriage and retirement too. Of course starting early is the key.

Employers Provident Fund Most salaried individuals would have a part of their salary going into the EPF scheme from their monthly salaries. The employer also invests 12 % of employee's basic salary into the fund. The EPF scheme ensures systematic investments into debt, and has the advantage of being 100 % safe .In these times of job-hopping most individuals simply encash their EPF investments when they move to the new employer. If their EPF contributions are less than 5 years old such withdrawals are subject to tax in the year of withdrawal. To avoid this scenario it is highly recommended that one should simply transfer the EPF to new employer by submitting form 13. This form will be available with the HR department of all companies .

What are the salient features of SENIOR CITIZENS SAVINGS SCHEME,2004? Main features of the scheme are as follows:

- The person should be above the age of 60 years to apply for this scheme. Citizens who have retired under a voluntary or a special voluntary retirement scheme and have attained the age of 55 years are also eligible, subject to specified conditions. - The 9% p.a interest, which is payable quarterly, is fully taxable. - The scheme will have a 5-year term, extendable by 3 more years. - Premature withdrawal facility is available after one year. The penalty for premature withdrawal is 1.50 % of the deposit amount if withdrawn after 1 year but before 2 years. However, if the deposit is withdrawn after 2 years, it will attract penalty of 1 % of the deposit amount. - The interest will be credited to the Post Office Savings Account or it can be withdrawn in cash. The Department of Post has decided to issue post dated cheques and eventually move towards Electronic Clearing System (ECS). - If husband is applying, only wife can be the second holder and vice versa. Each senior citizen can apply for 15,00,000/-, if husband is applying and wife is not a senior citizen still she can be the joint holder and vice versa.

- Deposit cannot be pledged for loan. - Nomination can be cancelled or revoked. - Non-Resident Indians and Hindu Undivided Families are not eligible to invest in the scheme. Which banks are permitted to handle SCSS, 2004?

At present there are 24 Nationalised banks and one private sector bank which are handling the SCSS, 2004. The list is given below: 1. State Bank of India 2. State Bank of Hyderabad 3.State Bank of Indore 4.State Bank of Bikaner and Jaipur 5.State Bank of Patiala 6.State Bank of Saurashtra 7.State Bank of Mysore 8.State Bank of Travancore 9.Allahabad Bank 10.Bank of Baroda 11.Bank of India 12.Bank of Maharashtra 13.Canara Bank 14.Central Bank of India 15.Corporation Bank 16.Dena Bank 17.Indian Bank 18.Indian Overseas Bank 19.Punjab National Bank 20.Syndicate Bank 21.UCO Bank 22. ICICI Bank Ltd. etc It may be noted that only designated branches of these banks have been authorized to handle SCSS, 2004.

New Pension Scheme

From May 1, Indians have access to another investment avenue to plan for retirement in the New Pension Scheme (NPS). Till then, this pension scheme was available only to the central and state government employees.

VALUED CLIENT FORM

Name- Mr. RAHUL DESHPANDE Client Reference No.Occupation - Business Service Professional Retired Others Employer - Government Non- Government Employers Name Easypack Software Inc. Marital Status - Single Married Marriage anniversary Date 12-05-2004 If married, Spouse Name ANJALIDESHPANDE Spouse DOB 29-06-1979 Spouse Occupation - Government Service Professional

Business Private Homemaker Others

FAMILY DETAILS: Name Self Anjali Aarya Relationship With Dependent Wife Daughter Date Of Birth 29/10/1974 14/06/1979 07/09/1906

FINANCIAL GOALS:
Goal House Purchase Child Education Child Marriage Year 2010 2025 2035 No. of Goal Payment 15,00,000 10,00,000 20,00,000 Goal Amount Priority High Medium Low

INCOME & EXPENSES

Self Current Monthly Income Expected Annual Increase In Income 25,000 8% Spouse 25,000 10%

Average Monthly Household Expenses Your Personal Monthly Expenses

20,000 6000

20,000 5000

OTHER INCOME:
Income Type No No. Amount Starting Year Ending Year Growth Rate

CURRENT INVESTMENT PORTFOLIO:

Instrument Cash/Bank Balance/ Liquid Funds Equity-Stock/Equity Mutual Funds/ESOPs Debt-Bonds/FDs/Debt Fund/PPF Current Value

YOUR COMFORT ZONE:

Aggressive - High Risk / High Return Moderate Medium Risk / Medium Return Conservative Low Risk / Low Return

PERSONAL ASSETS & LIABILITIES:

Assets Assets House Car Market Value 1500000 400000 Liabilities If Insured Renewal Date Loan Out Standing 1500000 300000 EMI (Rs.) 16000 7500 Year Rate Of Interest

RETIRMENT PLANNING :
Retirement Age Basic Salary Current Balance In EPF/GPF Monthly EPF/GPF Contribution No.of Year in current Employment Pension from employer after retirement Annual Growth Rate of Pension Post Retirement Monthly Expenses Self 50 25000 2000000 No 10 Year Spouse 40 25000 2000000 No 8 Year

LIFE INSURANCE DETAILS:

Policy Type JiwanSathi JiwanAanad

Owner Self Self

Beginning Year 2007 2007

Ending Year 2027 2027

Goal

Sum Assured 80000 37500

Annual Premium 16000 7500

8. ANALYSIS & FINDING OF STUDY:

I interviewed to the 15 clients in my project work to prepare the Financial Planning. Maximum clients are interested to invest the money in Land. Some of them are interested to invest the money in Insurance Policies, Mutual Funds and Shares. Following figures are shown to how many clients are interested to invest the money in the Land & Building or any Fixed Assets, Insurance Policies, Mutual Funds and Shares. Figure no. 8.1) From 15 Clients interviewed, All 15 Clients interested to invest the money in the Land. Interested 100 Not Interested 0

Figure no. 8.2) From 15 Clients interviewed, 12 Clients interested to invest the money in the Insurance Policies.

Interested 80%

Not Interested 20%

Figure no. 8.3) From 15 Clients interviewed, 7 Clients interested to invest the money in the Mutual Funds.

Interested 46.67%

Not Interested 53.33%

Figure no. 8.4) From 15 Clients interviewed, 5 Clients interested to invest the money in the Shares Interested 33.33% Not Interested 66.67%

CONCLUSION

With all the changes happening today in the finance world,

it is absolutely imperative that you get your financial house in order. This includes coming up with a solid and well-thought out financial plan. We have previously discussed assessing your risk profile as well as making a recession proof portfolio. These two points alone should drive home the point that financial planning is necessary. A financial plan will, at its most basic level, consist of

coming up with a comprehensive budget. You need to list all of your real and potential expenses and get them down on paper. If youd like, you can make two columns: one listing your monthly budget and another listing the actual amount spent. You also need to list the sources of income. Once youve established what you need to spend your money on,

how much you have coming in, and how much of a difference there might be between the two, youre ready to start making a financial plan. This planning phase should include both long and short-term time frames. You need to establish where you want to be in 10 years as well in 10 months.

RECOMMENDATION :

The company should focus on Financial Planning clients. They should maintain a good relationship with the customers. Company should develop their products time to time considering

market competition. Company should focus on heavy promotional activities.

After going through this study I would recommend to Bajaj Capital ltd. That they should try to decrease the cost of to prepare the financial planning for customer and also to decrease the rate of the just in trade.

 Bibliography:
www.bajajcapital.com www.financialplannerpasadena.com www.en.wikipedia.org/wiki www.fpaforfinancialplanning.org www.homebusinesscenter.com/ www.planware.org www.google.com www.justtrade.in www.ppfasltd.com

CHAPTER NO. 1

EXECUTIVE SUMMARY

CHAPTER NO.2

INTRODUCTION

CHAPTER NO.3

RESEARCH METHODOLOGY

CHAPTER NO.4

COMPANY PROFILE

CHAPTER NO.5 BAJAJ CAPITALS 0 360 FINANCIAL PLANNING

CHAPTER NO.6

VALUED CLIENT FORM

CHAPTER NO.7

FINANCIAL PLANNING FOR CLIENT

CHAPTER NO.8 ANALYSIS & FINDING OF STUDY

CHAPTER NO.10

RECOMMENDATION

CHAPTER NO.9

CONCLUSION

BIBLIOGRAPHY