Presented by Ashoka Rajan MBA, CFPCM

Inflation the villain

1985 Petrol 8 2012 70 2030 298

Toothpaste
Sugar Movie Milk

5
4 15 4

70
40 150 32

407
185 697 128

Inflation the villain

House hold expenses (today)

25000.00 After 30 years

House hold expenses

250000.00

Higher education
Engineering (today)

500000.00

After 10 years
Expenses on engineering study

1300000.00

Higher education
MBA (today)

300000.00

After 10 years
Expenses on MBA study

780000.00

Child Marriage
Today

1000000.00

After 20 years
Expenses on Marriage

4500000.00

Investments tools
Conventional products
Low risk products High risk products

Conventional products
Low risk and low returns Bank FD / RD 9.00% Post office 8.00%-8.50% NSC PPF RD Investment through LIC Overall ve returns will not beat inflation

Conventional products
High risk & High returns (uncertain) Gold ----liquid but work when uncertainty world wide Properties---illiquid and geographical specific
There are crises in properties Japan USA subprime crises

Corporate bonds
Depends upon rating
Higher the rating lower the returns High returns ----fraud and scams

CRB Capital Co-operative Banks and Societies

Ponzy schemes
CRB capital fiasco
Gold Sukh Speak Asea Stock guru

Stock markets and Mutual fund

High risk and high returns Scams
Harshad Mehta scam
Ketan parikh scam IPO scandle

Stock markets and Mutual fund

Long term stable returns 1979----100 2012---18500 Returns---17% yoy Very high liquidity Individual stocks---too risky and need constant monitoring

Mutual funds
Retail investor ---pool their money Professional fund managers Trustees are big names SBI HDFC ICICI PNB TATA BIRLA RELIANCE Regulated by SEBI

How financial planning help us

Case study
Yogesh mathur Age- 30 years

Retirement age 60 years

Life expentancy80 years Current monthly Income 4.36 lac per annum

Current house hold expenses 2.40 lac per annum

Case study contd

Family WifeSangita ( age -28 years) House wife Son Ankur Age 1 year Daughter Rashi Age 3 year

Case study contd

Financial goals
Daughter Rashi higher studies

Current cost4.00 lac

Daughter marriage Current cost10.00 lac

Case study contd

Financial goals
Son Ankur higher studies

Current cost4.00 lac

Son Ankur marriage Current cost8.00 lac

Case study contd

Financial goals
Yogesh retirement corpus

Assumptions Inflation 10% (higher education) Inflation 08% (marriage and house expenses)

Case study contd

Future price of Daughter Rashi higher studies Daughter Rashi marriage Son Ankur higher studies Son Ankur marriage Yogesh retirement corpus Human life value of Yogesh
16.70 lac 46.60 lac 20.20 lac 50.72 lac 195.00 lac 45.00 lac

Case study contd

Now we have future projections We can plan them today

Case study contd

Yogesh retirement plan term 30 years Future value 2.00 crore
Rate 8% 12% 15%

Per Month Investment

13,330

5,665

2,853

Case study contd

Yogesh retirement plan Rate 15% per annum Future value 2.00 crore
Time period ( years)

20 13,193

25 6,089

30 2,853

Per Month Investment

Who need financial planning?

Whatever may be level of your income or assets, you

need financial planning.

It is a myth that only rich people need financial

planning
Financial planning is a scientific methods

Investment strategies
Risk profiling
Age

Risk taking capacity

Income generation consistency Dependency on invested money Equity (100-age)

Which type of Life Insurance plan?

Term Insurance It is purest form of insurance
Do not buy Endowment, Money back, Capital

protection plan, Children plan or Unit Linked Plans ULIP

Best option is Term Insurance + PPF / ELSS scheme of

mutual fund

Past performance
Open ended schemes (through SIP)
S.No. Name of the Scheme DSP Black Rock Equity HDFC Equity Reliance Growth SBI Magnum Equity Tata Ethical Fund

10 years Return (%)

21.70 21.82 22.98 18.39 17.90

15 years Return (%) 21.20 25.74 26.79 17.23 16.94

1 2 3 4 5

Past performance
Tax saving (ELSS) under sec. 80C (through SIP)
S.No. Name of the Scheme Birla SL tax relief 96 HDFC Taxsaver Principal Taxsaver SBI Magnum Taxxgain TATA Tax saving

10 years Return (%)

13.77 20.96 13.65 22.42 15.49

15 years Return (%) 21.00 27.71 18.71 21.53 16.57

1 2 3 4 5

Past performance of any mutual fund scheme is no guarantee of future performance

Asset allocation
Diversification
Never put all your eggs in one basket Different assets give better returns for specific

duration
94% of portfolio return will depend on Asset

allocation

Thanks
Ashoka Rajan 9460293293