Financial Planning

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Financial Planning
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• What is Financial Planning?
• Financial Planning is an exercise aimed at
  identifying all the financial needs of an
  individual and translating these needs into
  monetarily measurable goals at different times in
  the future. Financial Planning ensures that right
  amount of money is available in the right hands
  at the right time in the future to achieve an
  individuals financial goals

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• Objectives Of Financial Planning
• Identifying the requirement for money for
  different purposes and prioritising them
• Converting these requirements into specific
  needs, in terms of money, and the time when it is
  required
• Taking stock of the investors current financial
  position to ascertain their net worth and net
  income / expenses
• Planning savings and investments in a manner that
  would enable the investors to achieve their
  pre-determined goals
• Optimising returns through adequate
  diversification in sync with the investors risk
  return frame work

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• Why do we need Financial Planning?
• To fund our future needs through right mix of
  investments
• To protect our future from unforeseen
  contingencies
• To maintain the same standard of living even
  after retirement
• To enable risk management through diversification
  
• To choose assets commensurate with the investors
  life and wealth stages
• To beat the ravages of inflation

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Inflation erodes the value of your money

The slide illustrates the value of Rs 1 Lakh at
different stages assuming an average inflation
rate of 6
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• Can you do your own Financial Planning?
• Will your family be financially secure in the
  event of your unfortunate illness / demise?
• Will the stream of cash flows arising from your
  asset holdings be sufficient to match the
  expected liability structure?
• Are your finances inherently tax efficient?
• Have you made adequate provisions for your
  childrens education and marriage?
• Are you confident enough to enjoy your
  post-retirement life?
• If your answer is NO to any one or all of
  the above questions, you need a specialist to
  handle your finances...

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Asset Allocation Strategies
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• Asset Allocation
• In simple words, it means determining the
  percentage of the total investments to be made in
  equities, bonds and money market / cash
  instruments.
• Empirical studies indicate that over 94 of
  the returns on a managed portfolio can be
  attributed to the right mix of asset allocation

Here we seek to address the basic questions of
how, where and when to invest taking in to
consideration the market conditions and the
investors risk-return frame work
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• Concept of Mutual Funds
• Mutual Fund is an instrument where a number
  of investors contribute to form a common pool of
  money. This pool of money is invested in
  accordance with a pre-determined objective. The
  ownership of the fund is thus joint or Mutual
  and the fund belongs to all the investors in the
  same proportion as the amount of contribution
  made by each one of them

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• Why Mutual Funds?
• Mutual Funds provide the services of experienced
  and skilled professionals backed by a dedicated
  research team
• They enable efficient risk management by
  diversifying across a wide variety of sectors and
  companies
• They are less expensive vis-à-vis direct
  investment in equities as they seek to reap the
  benefits of economies of scale
• Performance and other investment details of
  individual schemes are disclosed on a regular
  basis
• Mutual funds facilitate investment of small
  amounts in a number of schemes to suit the
  investors risk - return framework
• 
  

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• Systematic Investment Plan (SIP)

The Smart Investors Preference
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• Myth Timing is essential to generate high
  returns
• Reality It is the time and not the timing that
  matters

Is it worth the risk or the tension? Who can
time the market to perfection? Not even the
experts can !!
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• 
  

It is the small drops that make an ocean!! We
earn regularly We spend regularly Shouldnt we
also invest regularly?
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• What Is Systematic Investing?

• It simply means investing Fixed Amount every
  month
• A method of investing regularly to benefit from
  the stock market volatility
• The first step that may take you a long way
  towards achieving your financial goals and
  objectives

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• Why Should One Invest Systematically?
• 
  

• To imbibe financial discipline
• To eliminate the need to time the markets
• To successfully achieve the financial goals and
  objectives
• To harness the power of compounding by investing
  with a long term perspective

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• Power Of Compounding
• The most powerful force in the universe is the
  power of compounding
• 
  -Albert
  Einstein
• If you invest Rs 1000 for 50 years at 10
  returns p.a., you would receive Rs 100 every year
  for 50 years. So WITHOUT any compounding you
  would have Rs 6000 (initial investment Rs 1000
  interest for 50 years Rs 5000) at the end of 50
  years. However WITH compounding, the same Rs 1000
  at 10 returns p.a. would mount up to Rs 1,17,391
  at the end of 50 years
• 
  

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• Equity Markets SIP
• 
  

• Equity markets are synonymous with uncertainty
  and
• volatility
• The average investor invariably suffers from
  such
• market gyrations
• SIP - A strategy of not only preserving capital
  but
• also translating into substantial creation of
  wealth
• in long run
• If you want to stay calm and sail smoothly in
  turbulent times GO FOR SIP

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• Financial Planning Through Insurance

Insurance is not for the one who passes away, it
is for those who survive

- Anonymous
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• Why do we need Insurance?
• To ensure adequate coverage and protection
  against the risks and uncertainties of life
• To ensure a decent standard of living to the
  dependants in the event of unexpected demise of
  the bread winner
• To provide a feeling of security and financial
  support during critical hours and periods of
  crisis in life
• Reduced mortality rates, increased life
  expectancy and rising medical and hospitalisation
  expenses
• Emergence of nuclear family system reduced
  dependency on other family members
• 
  

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• Term Insurance
• Sum assured is payable only at the death of the
  policy holder
• Provides only risk cover with no savings elements
• Low Premium High Coverage
• Endowment Policy
• In this policy the insured amount is payable at
  the end of specified period or upon the death of
  the insured person whichever is earlier.
• Moderate Premium
• High Bonus
• High Liquidity
• Savings Oriented

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• Unit Linked Insurance Plans

• A policy, which provides for life insurance where
  the policy value at any time varies according to
  the value of the underlying assets at the time.
  Investors can also take a SIP route of
  investment. ULIP distinguishes itself through
  the multiple benefits that it provides to the
  consumer. The plan is a one-stop solution
  providing
• Investment and Savings
• Life protection
• Flexibility
• Adjustable Life Cover
• Tax benefit (as per Section 80C of Income Tax
  Act)
• Transparency
• Options to take additional cover against
  - Death due to accident -
  Disability - Critical Illness -
  Surgeries

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• Need for Health Insurance
• Reduced human mortality rates and increasing life
  spans due to advancements in medical science
• Rising hospitalisation and medication expenses
• Compensates the loss of income to the family due
  to accident/disability to the earning member
• Vehicle Property Insurance
• Covers the risk of loss/damage to your movable
  and immovable assets
• Also provides adequate coverage to any financial
  liability arising from the risk of loss/damage to
  the life and property of third parties

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• Tax Planning With Mutual Funds
• 
  

• The Equity Linked Savings Schemes (ELSS) are
  equity-oriented schemes that offer the twin
  benefits of tax savings and the potential to earn
  higher returns
• The traditional products such as post-office
  schemes and bonds do not offer high returns and
  are not tax efficient
• ELSS power packs both these benefits with a
  minimal lock-in period of three years
• Under section 80C of Income Tax Act, investment
  made in ELSS up to Rs 1lakh qualifies for
  deduction
• An investor can either make a lump sum investment
  or choose to take the SIP route to counter market
  volatility

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SIP with Sundaram BNP Tax Saver
As on 30/06/2009
For growth option on a compounded annual basis
Launched November 1999
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Personal Income Tax Structure 2009-10

• Note
• In case of resident women below age of 65 years,
  the basic exemption limit is
  Rs 1,90,000/-
• In the case of resident individual of the age of
  65 years and above, the basic
  exemption limit is Rs 2,40,000/-
• The Finance Bill 2009 has abolished surcharge
• Education cess is applicable at 3 on income tax

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Tax Slab 2009 - 10 Equity Oriented
Schemes
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Other Schemes

The Finance Bill 2009 has abolished surcharge
in case of Resident Individuals, HUF, Partnership
Firms, AOP, BOI on the amount of income tax. For
others including corporate bodies, 10 surcharge
on tax payable Secondary and Higher Education
Cess To be levied at the rate of 3 calculated
on tax payable plus applicable surcharge
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• Bank FDs vs. Debt Funds
• Investors in higher tax brackets are better
  off investing in debt funds as against bank FDs
  as debt funds are inherently more tax efficient
• For example consider an investor in the
  highest tax bracket. Interest from his investment
  in bank FDs would attract the maximum marginal
  tax rate (inclusive of cess 30.90) applicable
  to him. If a one year bank FD fetches around
  10(pre-tax), his post-tax returns would be a
  meager 6.91
• As opposed to this, if he had invested in a
  short term debt fund (dividend option) which also
  delivers close to 10 average annualized returns
  (over 1 year period) and distributes it among the
  unit-holders in the form of dividends. The
  dividend income will be tax-free in his hands but
  the mutual fund will be paying a dividend
  distribution tax of 14.16 (which is indirectly
  borne by the investor). So he will be getting a
  net effective return of 8.58 p.a. which is much
  higher as compared to the post tax returns on FDs
  
  

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• However, if the investor invests in a debt
  fund with growth option, then the tax treatment
  becomes slightly different. For example, lets
  assume he invests in an Bond Fund for two years.
  Appreciation in the NAV of a debt fund is treated
  as capital gains. Now, at the time of redemption,
  returns from debt funds are taxed as Long Term
  Capital Gains (LTCG) if invested for more than a
  year. Now, based on the option he chooses, LTCG
  is either taxed _at_ 11.33 without indexation or
  22.66 with indexation. Both the options are
  certainly better than the tax treatment of FDs
  where he pays tax at the rate applicable to his
  marginal income
• Moreover, just by investing for a little
  over 12 months in debt funds at the end of the
  financial year, one can reap double indexation
  benefits thereby further reducing his/her tax
  liability
• Put simply, for similar pre-tax returns, debt
  funds provide better post tax returns as compared
  to FDs. Moreover, no TDS is deducted by mutual
  funds in case of resident individuals

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• Golden Rules Of Investing
• Invest early, regularly and systematically for a
  longer period
• Ensure adequate liquidity for contingencies of
  life
• Ensure adequate diversification by investing
  across asset classes and time horizons
• Do not attempt to time the market. Patience is
  the key
• Be realistic in expectations of returns
• Balance investments in accordance with your
  risk-return framework
• 
  

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Factors necessitating Financial Planning
Rising Life Expectancy
Inflation
Financial Planning
Protection against Uncertainty
Balanced Asset Allocation
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Who are we?
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SPRISM Investment Services Pvt Ltd

• Established in the year 2000. One of the leading
  distributors in South India
• Based in Bangalore with presence in Mumbai,
  Chennai, Hyderabad Coimbatore
• Current Assets Under Management Rs.5000 Cr
• Our range of products includes Mutual Funds, PMS,
  Insurance, Bonds, IPO and Fixed Deposits which
  will meet the needs of the investor at every step
  in life

Mumbai
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• Special Attributes
• Clearly defined advisory models with a holistic
  approach
• Dedicated sales team for client servicing
• Seasoned professionals with rich experience in
  the financial service industry
• Offers portfolio tracking, customized reports,
  information alerts event triggers
• A wide array of products to suit the customers
  risk return framework

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• Value Added Services
• SMS Alerts
• Sprismatic Tabloid Newsletter
• Weekly Portfolio Update
• Monthly Portfolio Review
• Client - Fund Manager Interface
• Daily Weekly Market reports
• Monthly Market Report
• Reports on Credit Risk Analysis
• Standard Reports on Equity Schemes
• Weekly Inflation Report
• Adhoc Reports on request
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SPRISM Network
Corporate Office 7/2, 1st Floor, Brunton Road,
Bangalore-560025, Tel[phone],
41503210/11/12/13. Bangalore Sales Office
21,Raja Glitz, 1st Floor, K.H.Road,
Bangalore-560027, PCS Tel [phone],
Retail Tel [phone]. Mumbai 4,
Khaitan Chambers, 2nd Floor, 143-145, Mody
Street, Fort, Mumbai-400001, Tel
022-40991111/12 Chennai 5th Floor, Crown Court,
128, Cathedral Road, Chennai-600086, Tel
044-28112861/62 Coimbatore 42/19, Ahuja Towers,
3rd Floor, T.V. Swamy Road (west), R.S.Puram,
Coimbatore-641002, Tel [phone]. Hyderabad
1-11-222/2, Street No-4, Gurumurthy Lane,
Behind Levis Dockers Showroom, Begumpet,
Hyderabad-500016, Tel [phone]
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Thank You..
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• www.sprisminvest.com