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This is a sample financial plan only and the names are fictitious.
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Dear Mr. Rohan, We would like to thank you for choosing our financial planning services. The enclosed plan formalizes our recent discussions on the investment of your available capital, allocation of surplus cash flows and reallocation of some of your existing portfolio. Our objective is to accurately assess your financial needs and to provide quality recommendations and ongoing services in accordance with those needs. The plan is based on the information provided by you on your current circumstances and objectives. Please read the plan carefully to check for accuracy of the information provided. This plan is an important document, in accordance with the best standards of the profession. However, it needs to be regularly reviewed and updated in response to changes in your own circumstances and other factors, such as pension regulation, taxation and market movements. Please feel free to contact us if you have any queries. We look forward to reviewing and implementing these recommendations with you. Yours sincerely, Pankaaj Maalde, CFPCM Head - Financial Planning
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Executive Summary:
The main body of this report describes details of your present situation, your life's objectives and strategy to meet these objectives.
Rohan Mehta Age: 30
Child's Education Planning: You would like to provide for the higher education expenses for your son when he reaches the age of 21 years.
Child's Marriage Planning: You would like to provide for marriage of your son when he reaches the age of 26 years.
Dream Vacation: You would also like to plan for a dream vacation with your family after 7 years which will cost you Rs.2.50 lakhs today.
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Income-Expense Statement
As per the information provided by you, the following are the Cash Inflows and outflows for the current year:
Recommended
Monthly 50,000 50,000 22,500 8,300 8,300 3,117 583 2,533 33,917 16,083 11,700 783 Annual 600,000 600,000 270,000 99,600 99,600 37,400 7,000 30,400 407,000 193,000 1,83,600 9,400
Current Cashflow
13%
Recommended Cashflow
30%
14% 46%
Household Expenses Loan EMI's Insurance Prem ium Actual Investm ents
44%
Household Expenses Loan EMI's Insurance Prem ium Actual Investm ents
6% 20%
27%
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Liabilities
Type Home Loan Total Interest Rate % 12 EMI 13,500 13,500 Outstanding Balance 7,50,000 1,200,000
Net Worth
Total Assets (investment assets) Total Liabilities Your Net Worth 8,40,000 7,50,000 90,000
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Asset Allocation
Investment Avenue Cash & Equivalents Debt & Equivalents Equity & Equivalents Gold & Other Metals Current Allocation 5.00% 63.00% 32.00% 00.00% Recommended Allocation 05.00% 30.00% 60.00% 05.00%
30% Equivalents
Equity & Equivalents
60%
Gold & Other Metals
? Equity and debt, both, have an important role to play in your asset allocation.
Equity can provide superior inflation adjusted returns over the long term and debt protects your capital while growing.
? Self-occupied residential property and Personal Jewelry are not treated as your
investment assets.
? Gold Investment works as a hedge against inflation and provides safety in bad
appreciation and also helps in diversification of your portfolio. However, it is highly capital intensive and most illiquid asset class.
? It is advisable to review and rebalance your investment portfolio periodically.
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Contingency Fund
Current Monthly Expenses Contingency Period (Months) Contingency Funding (Required) 37,700 6 226,200
Contingency Funding
240,000
226,200
Current Contingency Funds Investment Assets Utilized Cash in hand Savings Bank Fixed Deposit Insurance Surrender Value Total Current Value 5,000 35000 125000 75000 240000
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Loan Planning
Particulars Loan Outstanding EMI Rate of Interest Savings in EMI Current Rs. 7,50,000 Rs. 13,500 12.00% Rs. 5,200 Recommended Rs. 7,50,000 Rs. 8,300 10.50%
? Transfer the loan to another lender at prevailing rate i.e. 10.50% ? No pre-payment charges are payable on Floating rate loans.
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Life Insurance
Adequate Life insurance is a must to make sure your familys life style is not affected if you die early. Insurance Need Analysis: Looking at your present age, income, life style and life goals and also taking into consideration your assets and liabilities, your life insurance need is calculated as under:
765,000
Total Assets
? You have bought two traditional plans from LIC and are paying Rs.75,000 p.a. for a
premiums to be paid till maturity we advise you to surrender these policies as IRR of these plans will not beat inflation.
? Your wife is a homemaker and does not require life insurance. ? Buy Avia I-life Plan, an online term plan of Rs.75 lakhs for a term of 30 years,
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General Insurance
This section covers analysis of your current General Insurance policies, Need Analysis of the Client and our recommendations. Needs Analysis Health Insurance (Mediclaim):
A serious illness could be catastrophic to your financial well being therefore, it is imperative you have adequate medical insurance coverage. Current New India Assurance Sum Assured Premium Type Members 3 Lakhs 8000 Floater Self+Spouse+Child Recommended Apollo Easy Health Standard 3 Lakhs 10200 Individual Self+Spouse+Child (Separate Policies) Apollo Optima Plus 5Lakhs 3200 Individual Self+Spouse+Child (Separate Policies)
? Your family floater health insurance is bought from New India Assurance Co. Ltd.
has room rent sub-limit of 1% of sum assured. For impact of sub limit in room rent please read this article, http://india.apnapaisa.com/blog/health-insurance/watchout-room-rent-sub-limit-can-really-limit-your-health-insurance-claims/
? Disability Insurance pays a lump sum in the event of suffering from a debilitating
disease such as cancer, stroke, organ failure or disability arising from an accident.
? You should take an accident insurance policy covering disability for Rs.50 lakhs
and a critical illness policy for Rs. 30 lakhs for yourself. Both these policies put together will cost you around Rs. 17,000 per year.
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Investment Planning
Analysis of Current Investment:
Direct Equity Investment:
? Direct investment in equity is not advised, as it requires
depth research.
? Invest money in good mutual fund schemes. ? Sell your equity investments and reinvest in Mutual Fund
schemes as recommended.
3.
30,000
Karans Education
invest in stocks of many sectors, which give good diversification across sectors. Hence, we recommend switching as above.
? We suggest
you to keep all your Mutual Fund units under Growth option and in recommended Mutual Fund Portfolio. existing investments have been allocated towards your all major goals.
? All your
companies and the balance 20-30% in highly rated debt instruments. They provide an ideal mix of safety (debt instruments) and growth (equity).
? We suggest you to have a periodical review process to monitor your portfolio and
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Retirement Planning
You would like to provide a corpus for your retirement at the age of 60 years. You would like to maintain the same standard of living, which you are living at present.
Retirement Analysis
72,349,647
Term 30 30
? We have allocated your present E.P.F. and P.P.F. to this goal. ? You are advised to start a fresh investment of Rs.9,900 in ratio of 90% in
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Education Planning
You would like to plan for your son's higher education and would like to provide a sum of Rs. 4.50 lakhs in present value for this goal.
Education Planning
2,400,000
650,000
Current Value
Future Value
24,25,000
? Sell your existing equity shares and transfer to Franklin India Blue Chip Fund.
? Sell your
existing equity mutual funds, and shift to DSP BR Top 100 Equity Fund.
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Marriage Planning
You would like to plan for your son's marriage at the age of 26 years and provide a sum of Rs. 7.50 lakhs in present value for this goal
Marriage Planning
5,100,000
750,000
Current Value
Future Value
? Start fresh SIP of Rs.1,800 per month in the ratio of 90:10 in ICICI Pru
Dynamic Fund and SBI Gold Fund respectively. Such allocation of equity and gold is assumed to give return of 14.30% per annum.
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Dream Vacation
You would also like to go for dream vacation with your family in 2019 i.e. after 7 years and would like to spend Rs.2.50 lakhs in present terms. Current Value Inflation Current Age Goal required at age Future Value Investment Rate of Return Monthly Investment Required 2,50,000 10% 30 37 4,87,000 12.90% 3,600
Recommendation
? Start a fresh SIP of Rs. 3,600 per month in HDFC Prudence Fund.
Estate Planning
? We strongly recommend making a Will
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Asset Re-allocation
Investment Assets Cash in Hand Savings Bank Fixed Deposits PPF EPF Insurance - Surrender Value Direct Equity Equity/Balanced Mutual Fund Total Assets Existing Assets 5,000/35,000/1,25,000/2,50,000/1,00,000/75,000/1,00,000/1,50,000/2,50,000/1,00,000/75,000/1,00,000/1,50,000/Retirement Contingency Fund 5,000/35,000/1,25,000/Childrens Education
8,40,000/-
3,50,000/-
2,40,000/-
2,50,000/-
Plan Assumptions
Plan Assumptions Retirement Age Life Expectancy Inflation Rate Portfolio Returns Liquid Funds Portfolio Returns Debt Portfolio Returns Equity Funds Portfolio Returns Balanced Funds Portfolio Returns - Gold & Jewelry All returns are assumed as net of Indian Income tax. None of the returns are guaranteed. Self 60. 80 08.00% 05.00% 08.00% 15.00% 12.90% 08.00% Spouse N.A. 80
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Summary of Recommendations
Contingency Planning
Liquid Fund/ Savings cum FD Rs.2.26 Lakhs Start ASAP
Life Insurance
Buy Aviva I-Life Plan Surrender LIC policies Rs.75 Lakhs ASAP After buying online policy
Health Insurance
Self Self Family Family Buy Bajaj Allianz Critical Illness Buy Apollo Personal Accident Buy Apollo Easy Health Standard Plan - Individual Buy Apollo Optima Plus - Individual Rs. 30 Lakhs Rs. 50 Lakhs Rs. 3 Lakhs Rs. 5 Lakhs
Other Goals
Sr. No. 1. Goals / Plans Retirement Planning Education Planning Target Amt SIP of Rs. 8,900 Rs.1,000/ month 2. Remark / suggestions HDFC Top 200 Fund PPF Sell equity shares and reinvest in Franklin India Blue Chip Sell existing Mutual Fund and reinvest in DSP BR Top 100 Equity Fund 3. 4. Marriage Planning Vacation Planning SIP of Rs.1,800 SIP of Rs.3,600 ICICI Pru Dynamic Plan & SBI Gold Fund in 90:10 ratio. HDFC Prudence Fund Status
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Disclaimer
Any financial plan made by us is based on information detailed by the information provided by the client in the data gathering sheet and the personal discussions with the client. A copy of the data gathering sheet is available on request. The information contained in the financial plan must be read carefully. In case any relevant information is overlooked or misinterpreted, then we request the client to contact us before proceeding with the implementation of the plan. The financial plan is completely based on the information supplied to us by the client, which we assume to be correct. No responsibility can be accepted if the information provided to us is incorrect or inaccurate. This plan is prepared solely for the use of the client to whom it is addressed. This financial plan is a forward-looking document where we have assumed certain return on investments on various investment classes and inflation. These forwardlooking statements involve, and are subject to known and unknown risks, uncertainties and other factors, which could cause actual results, performance or achievements to differ from the future results, performance or achievements expressed or implied by such forward-looking statements. All these forward-looking statements attributable to ApnaPaisa herein are expressly qualified in their entirety by the above-mentioned cautionary statement. ApnaPaisa does not accept any direct or indirect liability for any results, performance or achievements that differ from results, performance or achievements implied by such forward-looking statements. We do not promise that the investments you make based on this plan will be profitable. Investments are always subject to various market, currency, and economic, political and business risks. We will not be liable for any losses that may be caused directly or indirectly by such investment decisions. This financial plan is based on the current situation and goals, which will change with the passage of time. Any material change in the financial situation of the client will necessarily render the contents of the plan out of date. Material changes refer to change in income/salary levels, assets acquired, liabilities incurred, change in number of dependents, health condition, or the passage of time of more than 12 months or the effect of inflation or deflation. We strongly recommend that a) You review this plan periodically to ensure that your plans actual performance is consistent in meeting your goals, and b) You update your plan annually to ensure that your plan is updated for your changing situation and goals.
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Thank you
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