PERSONAL FINANCIAL

MANAGEMENT
FINANCICIAL MANAGEMENT

 INCOME – POSITIVE / NEGATIVE.

 SAFETY.
 GROWTH.
 GOALS.
 PREVIEW
 PHASE I. Concept of Fin Mgt.

 PHASE II. Understanding Goals and Income Incl

Safety and Insurance Reqmts.

 PHASE III. Instruments Available for Investment and Fin

Growth.

 PHASE IV. Problems in Pers Fin Mgt amd Guidelines for

Better Fin Health.

 PHASE V. Discussion.
 PHASE – I
CONCEPT OF FIN MGT
 PERS FIN MGT
 Set Achievable Goals.
 Max +ve Income / Min -ve Income.
 Ensure Safety of Income.
 Ensure Wealth Growth.
 Reassess Goals and Midcourse corrections.
 Achieve Fin Goals.
 PRESERVATION AND
APPRECIATION OF WEALTH
 Insurance - Life, Health, Wealth, Property,
Income etc.
 Bal investment portfolio.
 Reassess fin needs and reconcile investments with
goals at various life stgs.
 Invest in +ve growth instruments.
 Understand your Goals and reqmts.
 Take info decisions.
 Proactive fin mgt.
 PHASE –II
GOALS AND INCOME
 GOALS
 Short Term Goals.
 Emergent Needs.
 6-9 Months Reqmt.
 Adequate Liquidity.
 Imdt Availability.

Reassess Goals at
 Medium Term Goals.
 3-5 Yrs Horizon.
Frequent Intervals
 Eg. Buying a House. and Affect
corrections in Fin
 Long Term Goals. Plg
 10 Yrs Plus Horizon.
 Children’s Edn.

 Retirement Goals.
 Safety.
 Regular Income.
 Med Security.
 Routine Expenses.
ILLUSTRATION
 INCOME
 Money coming in  Outflow of Money :
hand : Positive Income. Negative Income /
 Eg : Salary, Income Expr.
from Property  Eg : Loans, Debts,
/Agriculture, Sale of Household Expr etc.
MFs/Shares etc.

Regular Income
Unplanned Income
Max +ve Income Min -ve Income/Expr

 Controlled Investment. Tax Planning.

 Audacious Investment Controlled Expr.
Portfolio. Min Loans.
 Investment in Min Expr on Conspicuous
Appreciating Assets. Consumption.
Understand Your
Reqmts.
Understand Product /
Service Specifications.
 INSURANCE
o What is reqd to be insured?

o Who requires insurance?

o How to calculate insurance?

o Types of Insurance.

o Life Insurance Policies.

 Term Plans
 Endowment Plans
 ULIP
o How to assess insurance reqmt?

o Public and Pvt Sector Players – LIC, ICICI

Prudential Life Insurance Co. Ltd.

o IRDA.
LIFE INSURANCE PLANS

Safety

Investments Tax Benefits

 Term Plans.
 Min premiums.
 Fixed pd plans.
 Large cover incl covering Home loans.
 No returns/ min returns(ROP Plans).
 Suitable for incr cover BUT not investments.
 Low Tax Benefits.
 Endowment Plans.
 Fixed pd plans
 High premium with reasonably high returns.
 Comparatively less cover.
 Suitable for enhancing cover with return on investments.
 Large Tax benefits.
 To cater for certain types of medium to long term goals.
 ULIPs.
 Harness fin market power to enhance RoIwhile providing life cover
 Value add ons.
 Flexibility of term and investment portfolio.
 Wk like MFs – based on NAV.
 Better returns.
 PHASE –III
INSTRUMENTS FOR FIN GROWTH
Common Investment Options.
 Property/ Immovable Assets.

 Provident Fund.

 Life Insurance Policies – Endowment Plans (gen through PF).

 Share Market.

 Bank FDs.

 Gold.
Recommended Investment Options
 Immovable Assets /Property.
 Bulk expr.
 Medium to long term horizon.
 Slow appreciation.
 Adequate liquidity.
 Tax implication – Rebate/ Property tax.

 Metals.
 Precious/ industrial metals.
 Universal appeal.
 Secured investments.
 Adequate liquidity.
 High appreciayion.
 Grey/Black/Open mkt.
 Provident Fund.
 DSOPF/ PPF.
 Ltd liquidity.
 Tax exemptions.
 Forced savings.
 Safe appreciation.
 No limit in DSOPF
 Ltd investment in PPF
 PPF offers flexibility in investments.
 Debt Instruments.
 Eg. Govt Bonds/NSC/KVP/Bank FDs/Loans/Safe rated Co.
securities etc.
 Primarily guaranteed /secured loans by Govt/Banks/Safe Co.
 Tax benefits.
 Mixed liquidity.
 SIPs/SWPs.
 Share Market.
 High retuns / high losses.
 Real time monitoring.
 Very small window of oppurtunity.
 Tax implications – Long/ Short term Capital Gains tax.
 Fin Services.
 Eg. MFs/ Professional Advisors/ ULIPs.
 Professional Mgt.
 Regulated by RBI/SEBI/IRDA/AMFI.
 Track records.
 Have medium to long term horizon.

 Self Handled Trading.

 Requires real time monitoring.
 Lack of knowledge. - Small/Medium/Large cap stks/Sector stks.
 Primarily acting on other’s advice.
 Most people don’t understand stks.
 Anything new may not appreciate.
 Life Insurance Policies.
 Tax benefits.
 Growth + Cover.
 Addl value added benefits.
 Traditional plans/Term plans.
 ULIPs to harness mkt power.
 Built in safety.
 Adequate mix .
 Home Loans.
 Long term plans.
 Tax benefits.
 Fixed vs floating rates of interest.
 Investment in an appreciating asset.
 PHASE-IV
PROBLEMS AND SOLUTIONS
 PROBLEM AREAS - PERS FIN

 Lack of Confd in Professional Help.

 Lack of Knowledge / Will.
 ‘I’ Factor.
 Actions under Influence.
 Vary of market / missed the Boat.
 What clicks for One may not click for Other.
 Changing Laws.
 Conspicuous Consumption.
Guidelines for Better Fin Mgt
 Seek professional help.

 Goals.
 Set achievable fin goals.
 Reqmt of money at various life stgs be assessed realistically.
 Review goals periodically to affect midcourse corrections.

 Income.
 Segregate your monthly expr.
 Incorporate all incidental expenses.
 Assess reqmt of addl redundant expr.
 Identify investible surplus.
 Build up fin res upto 6-9 months expr – FDs, SIP/SWP etc.
  Available investible surplus to be invested across varied investment
instruments.
 Equity.
 Debt.
 Insurance.
 Tax Saving products.
 Exposure to equity = (100-Age).

 Insurance.
 Avoid under / over insurance.
 Income and life style dictates insurance cover reqmts.
 Insurance to incorporate Investment Plans. Bal cover to be met through
term plans.
 Review insurance reqmts periodically.
 ULIPs reqiure tracking equity market.
 Avail tax benefits.
 Endowment plans may be used for loans, if reqd.
 Equity.
 Understand Equity market – Domestic and International.
 Check – Exposure to International Mkts, Capital, PE, Bal Sheet, Co.
Accts, Past Records, Credit Ratings and Audit Reports.
 Volatility can be overcome by longer term.

 Metals.
 Have healthy exposure for appre and safety.
 Buy genuine.
 If reqd, loan can be procured against precious metals.

 Debt.
 In addn to DSOPF open PPF.
 NSC/ KVP etc formedium term needs.
 Open recurring acct linked with MIS for better returns.
 Tax benefits as applicable.
 In case of Bank FDs Form 15H be submitted.
 Home loan is preferred.
 Avoid pers loans.
 Plan an SIP for regular savings and beating mkt fluctuations.
 Plan SWP for planned expdr.
 PHASE –V
OPEN HOUSE