Wealth management is an investment advisory discipline that incorporates financial planning,

investment portfolio management and a number of aggregated financial services. High Net
Worth Individuals (HNWIs), small business owners and families who desire the assistance of a
credentialed financial advisory specialist call upon wealth managers to coordinate retail banking,
estate planning, legal resources, tax professionals and investment management. Wealth managers
can be an independent Certified Financial Planner, MBAs, Chartered Strategic Wealth
Professional,[1] CFA Charterholders or any credentialed professional money manager who works
to enhance the income, growth and tax favored treatment of long-term investors. Wealth
management is often referred to as a high-level form of private banking for the especially
affluent. One must already have accumulated a significant amount of wealth for wealth
management strategies to be effective.
What Does Wealth Management Mean?
A professional service which is the combination of financial/investment advice, accounting/tax
services, and legal/estate planning for one fee.

Investopedia explains Wealth Management

In general, wealth management is more than just investment advice, as it can encompass all parts
of a person's financial life.

Wealth Management
Wealth management is a service provided by financial institutions to help high net worth
individuals protect and grow their wealth. This advanced investment advisory discipline involves
providing a diverse range of services, such as financial planning, investment management, tax
planning and cash flow and debt management, based on client requirements.
There are two aspects to the wealth management process; protecting assets from creditors,
market crashes or slowdowns, taxes, lawsuits and other unexpected events, and growing asset
values through methods that actively manage risk and reward profiles to clients needs.
Do You Need Wealth Management?
Wealth management helps people determine their monetary goals and develop actionable
strategies that could help them realize their goals. It also defends their finances against risks.
Wealth management is a service designed specifically forhigh net worth individuals. The
threshold for high net worth varies by country and institution, but the most common definition is
individuals who have more than US$1 million in assets, not including their home. Some high net
worth individuals have done well ingrowing their assets from a low base to their current levels,
and may feel that they can continue to manage their own portfolios. However, as a person’s
wealth grows and/or the markets get more challenging, it becomes increasingly difficult to
realize theexpected returns.
With greater wealth comes greater investment options as well as more complex risks and threats
in terms of legal regulations, taxation issues and opportunities for loss. The level of fear or even
outright panic that can be experienced grows with the sizeof the investment involves. Greater
diversification is needed than in earlier stages of investing. This is where independent financial
advisers or large corporate entities help their clients through professional wealth management.
Wealth Management Services
Wealth management offers the following services:
• Investment planning: assists you in investing your money into various investment
markets, keeping in mind your investment goals.

• Insurance planning: assists you in selecting from various types of insurances, self
insurance options and captive insurance companies.

• Retirement planning: is critical to understand how much funds you require in your old
age.

• Asset protection: begins with your financial advisor trying to understand your preferred
lifestyle and then helping you deal with threats, such as taxes, volatility, inflation,
creditors and lawsuits, to maintaining this lifestyle.

• Tax planning: helps in minimizing tax returns. This might include planning for charity,
supporting your favorite causes while also receiving tax benefits.

• Estate planning: helps in protecting you and your estate from creditors, lawsuits and
taxes. This service is critical for every person whose net worth is high.

• Business planning: This service aims at optimizing the tax free advantages of running
your own business.

• Business succession planning: assists in planning for the inevitable to maximize returns.

• Wealth transfer: helps you pass on your wealth to your dependents.

Benefits of Wealth Management
Wealth management helps in:
• Reducing taxes associated with income, capital gains and estate.

• Protecting assets from misjudgments and creditors.

• Improving yields with more diversification and less risk.

• Managing liabilities such as mortgages and college funding.

Wealth management entails the following steps:

1- Recognize the need for wealth management planning

2- Identify the components of a successful wealth management plan
3- Select your wealth management team and define each member’s role
4- Adhere to well-established , scientific , and appropriate investment principles
5- Establish the legal foundation to execute one’s wishes to provide the maximum possible
benefits to the heirs through the creation and implementation of an estate plan
6- Update your beneficiaries and accurately title your assets
7- Properly manage your liabilities (debt)
8- Learn and adopt good financial management habits
9- Plan your retirement , health , and long term care needs
10- Contribute to the well-being of others by gifting during your lifetime or at death in tax
advantageous manner
11- Minimize and manage your tax liabilities
12- Develop a business succession plan and / or deal with company stock option issues and
highly concentrated investment positions whether in specific stocks or certain sectors of the
market
13- Develop and implement an asset protection strategy
14- Utilize insurance to mitigate against catastrophic losses and to leverage premiums paid for a
host of insurance uses and benefits
15- Select a wealth advisor to oversee your wealth management process and plan
implementation

Filed Under: Alternative Investments, Banking, Budgeting, Careers, Hedge Funds, Insurance
Family offices are private wealth management advisory firms that serve ultra-high-net-worth
clients. According to the Family Office Exchange, there are more than 3,500 family offices
based in the United States. By offering a complete outsourced solution to managing finances and
investments, including budgeting, insurance, charitable giving, family-owned business, and
wealth transfer and tax services, these offices set themselves apart from traditional wealth
management firms. Although they vary in their level of service, most typically invest heavily in
consultants, databases and analytical tools that help them conduct due diligence on money
managers or optimize a portfolio of investments for tax purposes.
In this article, we'll review the top three trends affecting family offices, including the rapid
growth of the family office industry, the types of family office services provided, and the
increasingly sophisticated use of hedge funds and alternative investments by both single and
multifamily offices.

Family Office Facts

There are two types of family offices: single-family offices (SFOs) and multifamily offices
(MFOs). Single family offices serve one wealthy family, while multifamily offices operate more
like traditional private wealth management practices with multiple clients. Multifamily offices
are much more common because they can spread heavy investments in technology and
consultants among several high-net-worth clients instead of a single individual or
family. According to the Greycourt White Paper "Establishing A Family Office: A Few Basics",
the minimum size for a family office can vary, because "If the goal is simply to provide family-
wide accounting and bookkeeping, a family with as little as $50 million will find it economical
to establish an office. On the other hand, a fully integrated family office is probably accessible
only to very large families, typically those with more than $1 billion." (Want to attract this type
of clientèle? Read Targeting Ideal Customers.)

These high net worth clients can run into a gamut of issues that you need to be prepared to deal
with. There are three trends in particular that may change the way you do business with these
individuals.

Tackling the Trends

Prominent trends fueling the growth of family offices include:

1. There is a growing number of high-net-worth and ultra-high-net-worth classes around

the world.
In most developed nations, the wealthy are accumulating assets more rapidly than the middle
class. At the same time, many emerging economies are thriving, with annual growth rates of 4-
8%. Many experts have noted that by 2015-2020, China's upper class will be larger than
America's middle class. Growth in countries such as China, Brazil, India and Russia will ensure
that the family office format of wealth management services continues to grow in popularity over
the next five to seven years. (To learn more about emerging economies, see What Is An
Emerging Market Economy? and Demographic Trends And The Implications For Investment.)

2. Profitability is a growing challenge for family offices.

As populations amass greater wealth, large wealth management firms are competing on a cost
basis and moving a larger portion of their core services online. While the average person might
appreciate saving hundreds or even thousands of dollars in fees each year, many affluent
individuals would much rather spend $20,000 to $100,000 a year to ensure that experienced
professionals are managing their investments and taxes to fit their specific financial goals and
risk tolerances. (Keep reading about risk tolerance in Risk Tolerance Only Tells Half The Story.)

Many of these individuals run businesses or have complex wealth management or tax-related
needs, and they require a team of experts to help manage their finances. Family offices are
becoming the common answer to that demand, remaining highly profitable while also serving the
unique needs of the ultra-affluent.

3. Ultra-affluent clients are demanding highly professional financial services.

While there are no set rules on what services a family office can or cannot offer, there are
common investment and finance-related services that most of them provide for their clients.
Many of these advanced services are not available within a private banking or traditional wealth
management setting, simply because they are affordable only for the most affluent clientèle.

Some of these typical services include:

• Investment portfolio management
• Tax management and advisory
• Cash flow management and budgeting
• Multigenerational wealth transfers
• Family business and financial advisory
• Donations to nonprofits and major gift plans
• Political donations
Family offices also offer superior expertise on constructing or selecting alternative investment
portfolios and products. Many have invested heavily in systems, reporting and institutional
consultants to help select the most appropriate alternative investment managers and products for
their high-net-worth clients.

Conclusion
A complete, well-developed alternative investment platform at a family office is a competitive
advantage, and as competition increases among multifamily offices these platforms will be more
global, transparent and diverse in their offerings. Knowing these trends and changing your
offices to accommodate them can set your firm on solid ground with these often demanding and
rewarding families.

Financial planning is a critical exercise in ensuring long-term financial security.

A financial plan is a road map to help you achieve your life’s financial goals.
In general usage, a financial plan can be a budget, a plan for spending and saving future
income. This plan allocates future income to various types of expenses, such as rent or utilities,
and also reserves some income for short-term and long-term savings. A financial plan can also be
an investment plan, which allocates savings to various assets or projects expected to produce
future income, such as a new business or product line, shares in an existing business, or real
estate.
In business, a financial plan can refer to the three primary financial statements (balance sheet,
income statement, and cash flow statement) created within a business plan. Financial forecast or
financial plan can also refer to an annual projection of income and expenses for a company,
division or department.[1] A financial plan can also be an estimation of cash needs and a decision
on how to raise the cash, such as through borrowing or issuing additional shares in a company.[2]
While a financial plan refers to estimating future income, expenses and assets, a financing plan
or finance plan usually refers to the means by which cash will be acquired to cover future
expenses, for instance through earning, borrowing or using saved cash.
A financial planner or personal financial planner is a practicing professional who helps
people deal with various personal financial issues through proper planning, which includes but is
not limited to these major areas: cash flow management, education planning, retirement
planning, investment planning, risk management and insurance planning, tax planning, estate
planning and business succession planning (for business owners).
The work engaged in by this professional is commonly known as personal financial planning. In
carrying out the planning function, he is guided by the financial planning process to create a
financial plan; a detailed strategy tailored to a client's specific situation, for meeting a client's
specific goals. The key defining aspect of what the financial planner does is that he considers all
questions, information and advice as it impacts and is impacted by the entire financial and life
situation of the client.

Contents
[hide]
• 1 Objectives
• 2 Considerations
• 3 Scope
• 4 The process
• 5 What is a financial planner's job function?
• 6 Licensing, regulations and self-regulation
○ 6.1 Australia
○ 6.2 Malaysia
○ 6.3 Other countries
• 7 History of certifications in financial planning across the globe
• 8 Accredited business school, training centers and other providers
• 9 See also
• 10 References
 • 11 External links

[edit] Objectives
People enlist the help of a financial planner because of the complexity of performing the
following:
• Finding direction and meaning in one's financial decisions;
• Understanding how each financial decision affects other areas of finance; and
• Adapting to life changes in order to feel more financially secure.
The best results of working with a comprehensive financial planner, from an individual client or
family's perspective are:
• To create the greatest probability that all financial goals (anything requiring both money
and planning to achieve) are accomplished by the target date, and
• To have a frequently-updated sensible plan that is proactive enough to accommodate any
major unexpected financial event which could negatively affect the plan, and
• To make intelligent financial choices along the way (whether to "buy or lease" whether to
"refinance or pay-off" etc.).
Before working with a comprehensive financial planner, a client should establish that the planner
is competent and worthy of trust, and will act in the client's interests rather than being primarily
interested in selling the client financial products for his own benefit. As the relationship unfolds,
an individual financial planning client's objective in working with a comprehensive financial
planner is to clearly understand what needs to be done to implement the financial plan created for
them. So, in many ways, a financial planner's step-by-step written implementation plan of action
items, created after the plan is completed, has more value to many clients than the plan itself.
The comprehensive written lifetime financial plan is a technical document utilized by the
financial planner, the written implementation plan of action is just a few pages of action items
required to implement the plan; a much more "usable" document to the client.
[edit] Considerations
Personal financial planning is broadly defined as "a process of determining an individual's
financial goals, purposes in life and life's priorities, and after considering his resources, risk
profile and current lifestyle, to detail a balanced and realistic plan to meet those goals." The
individual's goals are used as guideposts to map a course of action on 'what needs to be done' to
reach those goals.
Alongside the data gathering exercise, the purpose of each goal is determined to ensure that the
goal is meaningful in the context of the individual's situation. Through a process of careful
analysis, these goals are subjected to a reality check by considering the individual's current and
future resources available to achieve them. In the process, the constraints and obstacles to these
goals are noted. The information will be used later to determine if there are sufficient resources
available to get to these goals, and what other things need to be considered in the process. If the
resources are insufficient or absent to meet any of the goals, the particular goal will be adjusted
to a more realistic level or will be replaced with a new goal.
Planning often requires consideration of self-constraints in postponing some enjoyment today for
the sake of the future. To be effective, the plan should consider the individual's current lifestyle
so that the 'pain' in postponing current pleasures is bearable over the term of the plan. In times
where current sacrifices are involved, the plan should help ensure that the pursuit of the goal will
continue. A plan should consider the importance of each goal and should prioritize each goal.
Many financial plans fail because these practical points were not sufficiently considered.
[edit] Scope

Finance

Financial markets[show]
Bond market
Stock market (equity market)
Foreign exchange market
Derivatives market
Commodity market
Money market
Spot market (cash market)
Over the counter
Real estate
Private equity
Financial market participants:
Investor and speculator
Institutional and retail

Financial instruments[show]
Cash:
Deposit
Option (call or put) Loans
Security
Derivative
Stock
Time deposit or certificate of deposit
Futures contract
Exotic option

Corporate finance[show]
Structured finance
Capital budgeting
Financial risk management
Mergers and acquisitions
Accountancy
Financial statement
Audit
Credit rating agency
Leveraged buyout
Venture capital
Personal finance[show]
Credit and debt
Student financial aid
Employment contract
Retirement
Financial planning

Public finance[show]
Government spending:
Transfer payment
(Redistribution)
Government operations
Government final consumption
expenditure
Government revenue:
Taxation
Non-tax revenue
Government budget
Government debt
Surplus and deficit
deficit spending
Warrant (of payment)

Banks and banking[show]

Fractional-reserve banking
Central Bank
List of banks
Deposits
Loan
Money supply

Financial regulation[show]
Finance designations
Accounting scandals

Standards[show]
ISO 31000
International Financial Reporting

Economic history[show]
Stock market bubble
Recession
 Stock market crash
History of private equity

v·d·e

Financial planning should cover all areas of the client’s financial needs and should result in the
achievement of each of the client's goals. The scope of planning would usually include the
following:
Risk Management and Insurance Planning
Managing cash flow risks through sound risk management and insurance techniques
Investment and Planning Issues
Planning, creating and managing capital accumulation to generate future capital and cash flows
for reinvestment and spending
Retirement Planning
Planning to ensure financial independence at retirement including 401Ks, IRAs etc.
Tax Planning
Planning for the reduction of tax liabilities and the freeing-up of cash flows for other purposes
Estate Planning
Planning for the creation, accumulation, conservation and distribution of assets
Cash Flow and Liability Management
Maintaining and enhancing personal cash flows through debt and lifestyle management
Relationship Management
Moving beyond pure product selling to understand and service the core needs of the client
Education Planning for kids and the family members
[edit] The process
The personal financial planning process is according to ISO 22222:2005 a six-step process as
follows:
Step 1: Setting goals with the client This step (that is usually performed in conjunction with
Step 2) is meant to identify where the client wants to go in terms of his finances and life.
Step 2: Gathering relevant information on the client This would include the qualitative and
quantitative aspects of the client's financial and relevant non-financial situation.
Step 3: Analyzing the information The information gathered is analysed so that the client's
situation is properly understood. This includes determining whether there are sufficient resources
to reach the client's goals and what those resources are.
Step 4: Constructing a financial plan Based on the understanding of what the client wants in
the future and his current financial status, a roadmap to the client goals is drawn to facilitate the
achievements of those goals.
Step 5: Implementing the strategies in the plan Guided by the financial plan, the strategies
outlined in the plan are implemented using the resources allocated for the purpose.
Step 6: Monitoring implementation and reviewing the plan The implementation process is
closely monitored to ensure it stays in alignment to the client's goals. Periodic reviews are
undertaken to check for misalignment and changes in the client's situation. If there is any
significant change to the client's situation, the strategies and goals in the financial plan are
revised accordingly.
[edit] What is a financial planner's job function?
A financial planner specializes in the planning aspects of finance, in particular personal finance,
as contrasted with a stock broker who is generally concerned with the investments, or with a life
insurance intermediary who advises on risk products.
Financial planning is usually a multi-step process, and involves considering the client's situation
from all relevant angles to produce integrated solutions. The six-step financial planning process
has been adopted by the International Organization for Standardization (ISO).[1] Financial
planners are also known by the title financial adviser in some countries, although these two terms
are technically not synonymous, and their roles have some functional differences.
Although there are many types of 'financial planners,' the term is used largely to describe those
who consider the entire financial picture of a client and then provide a comprehensive solution.
To differentiate from the other types of financial planners, some planners may be called
'comprehensive' or 'holistic' financial planners.
Other financial planners may specialize in one or more areas, such as insurance planning (risk
management) or retirement planning.
Financial planning is a growing industry with projected faster than average job growth through
2014.[2]
[edit] Licensing, regulations and self-regulation
The title of 'financial planner' is largely an unregulated term in many countries. Lack of
regulation has allowed financial services personnel in these countries to use the title
indiscriminately. Often, financial products intermediaries, such as life insurance and unit trusts
agents, use the title to project a professional image to clients even when they are not trained in
the professional aspects of financial planning. This has sometimes led to abuse. Clients may be
deceived to receive financial planning services that are unprofessional, from unethical providers.
To protect the industry, financial planning professionals and practitioners from across the globe
(starting from the United States) have begun to form trade organisations to provide self-
regulations and to maintain some orderliness in the industry. Some, such as the FPA, have begun
to organize high-level training programmes and certify members who successfully completed
these programmes.
The title of 'financial planner' continues, however, to be used by individuals in the financial
industry in most countries, as there are little or no legal barriers to prevent the use of the title.
The governments in many countries where the financial planning profession is taking roots are
beginning to play an increasingly active role in tasking themselves to ensure the market is
orderly. More stringent laws and guidelines are being progressively introduced to keep the
profession in check. Additional qualifications have also recently emerged that have extended on
the financial planner series of designations, to include specialist skill sets like those in wealth
management or private banking.
 PERSONAL FINANCIAL PLANNING

• Even though one of the most significant factors in our life is the state of our personal finances,
we rarely spend time on managing them since unlike businesses, we are not accountable to
any one for our personal financial goals and results.
• We can make a much larger contribution in every area of our life when our personal finances,
investments and taxation are properly planned.
THE FUNDAMENTAL CORNER STONES OF SUCCESSFUL INVESTING
ARE :
• SAVE REGULARLY, INVEST REGULARLY
• START EARLY
• USE TAX SHELTERS
• INVESTMENT RETURNS SHOULD EXCEED THE INFLATION.
PYRAMID OF INVESTMENT AVENUES :

Begin your wealth-building exercise by investing in low risk investments. Increase your risk
exposure by investing in higher return investments once your foundation is strong and you
become more familiar with investments.
 The Magic of Compounding
Did you know that higher the frequency of interest payment, higher is the actual interest paid to
you?

Amount of interest received if you invest Rs. 1,000,000 @ 12% p.a. for 10 years at various interest
payment intervals.
"You can create your financial future through Simple, Systematic,
saving and Investment Plan of PPF.

If you invest Rs 2,000 a month for 30 years in Public

Provident Fund, which gives you a 11 percent
annual return, Rs 720,000 balloons into Rs.
4,777,000.

The magic of compounding makes Rs 5,000 a month

grow 6.6 times.

Maturity value of your PPF savings (in Rs.)

(total amount invested is shown in brackets)
Saving Rs 2000 Rs 5000
horizon a month a month
149,000 374,000
5 years
(120,000) (300,000)
401,000 1,003,000
10 years
(240,000) (600,000)
15 years 8,26,000 2,064,000
 (360,000) (900.000)
1,541,000 3,852,000
20 years
(480,000) (1,200,000)
2,746,000 6,865,000
25 years
(600,000) (1,500,000)
4,777,000 11,941,000
30 years
(720,000) (1,800,000)

..:: YOUR NET-WORTH

The first step in planning your finances is to know where you financially stand today i.e. ascertaining
your net-worth. Your net-worth is the difference between what you own and what you owe i.e. YOUR
ASSETS - YOUR LIABILITIES. Calculate your net-worth periodically, say quarterly and keep track of
changes. An increasing net-worth means you are doing well financially.
To calculate your current net worth, enter the information in the table below. Keep in mind the following
points while filling the table.
1. Use current market value.
2. Estimate if you can’t be accurate.
3. Be conservative.
4. Avoid insignificant detail.
5. Be honest. Nobody else needs to see these figures.

Portfolio management is a technique of matching the components of one’s

investment mix with predetermined financial goals. This includes selecting the most
suitable investment options after assessing their performance in the past and
estimating their growth in future. A portfolio is held as part of an individual’s
investment strategy of diversification, whereby varied assets are owned, so as to
reduce investment risk.

The process of portfolio management involves conducting a SWOT analysis to

decide:

• which assets to buy

• the quantity of each asset to be purchased

• the timing of their purchase

• which assets to divest

Types of Portfolio Management

Portfolio management can be broadly divided into:

Active portfolio management: Portfolio managers (either independent advisors or

managers tied to financial management firms) are constantly involved in the active
management of portfolios. They aim at earning more than the average market
return on the chosen investments. Market research is undertaken to formulate
investment strategies. Active portfolio management strategy involves purchasing
undervalued securities or selling securities that are overvalued. The success of an
investment portfolio depends on the skills of a portfolio manager and the accuracy
of market research.

Passive portfolio management: This process is limited to selecting securities that

track a particular index. It includes formulating an investment plan as part of
portfolio building. Decisions regarding asset classes and the proportional allocation
of funds to them need to be finalized. This is followed by keeping records and
rebalancing the portfolio when needed.

Portfolio Management: Factors Influencing the Process

Portfolio management should begin with the setting of investing objectives. While
one investor may aim for rapid growth, another may be seeking safe investments.
Accordingly, one can choose between debt instruments (such as bonds) and
equities (stocks). In addition, derivatives (such as options and futures contracts) are
can also help diversify the portfolio.

Other factors that affect the process of portfolio management are:

 • circumstances of the portfolio owner

• performance measurement (including expected return and risk associated

with it)

• changing economic conditions

• preference of the area of investment (domestic or international)

Financial institutions conduct their own investment analysis. Individual investors

may hire their services to achieve financial goals.

Portfolio Analysis

In financial terms, ‘portfolio analysis’ is a study of the performance of specific

portfolios under different circumstances. It includes the efforts made to achieve the best
trade-off between risk tolerance and returns. The analysis of portfolio can be conducted
either by a professional or an investor who may utilize specialized software to do so.

What is Portfolio Analysis?

Portfolio analysis involves quantifying the operational and financial impact of the
portfolio. It is vital to evaluate the functioning of investments and timing the returns
effectively.

The analysis of a portfolio extends to all classes of investments such as bonds, equities,
indexes, commodities, funds, options and securities. Portfolio analysis gains importance
because each asset class has peculiar risk factors and returns associated with it.
Hence, the composition of a portfolio impacts the rate of return on the overall
investment.

What is involved in Portfolio Analysis?

 Portfolio analysis is broadly carried out for each asset at two levels:

• Risk aversion: This method analyzes the portfolio composition while considering the risk
appetite of an investor. Some of the investors may prefer to play safe and accept low profits
rather than invest in risky assets generating high returns.

• Analyzing returns: While performing portfolio analysis, prospective returns are calculated
through the average and compound return methods. An average return is simply the
arithmetic average of returns from individual assets. However, compound return is the
arithmetic mean that considers the cumulative effect on overall returns.

The next step in portfolio analysis involves determining dispersion of returns. It is the
measure of volatility or standard deviation of returns for a particular asset. Simply put,
dispersion refers is the difference between the real interest rate and the calculated
average return. Measuring the recovery period after a negative market cycle is equally

Portfolio Analysis Tools

Several specialized portfolio analysis softwares are available in the market to ease the
task for an investor. These application tools can analyze and predict future trends for
almost every investment asset. They provide essential data for decision making on the
allocation of assets, calculation of risks and attainment of investment objectives.

It is still advisable to hire professional experts for highly sophisticated portfolio

compositions as they can offer direct assistance to help their clients earn good returns.

portfolio analysis

Definition
Analyzing elements of a firm's product mix to determine the optimum allocation of its
resources. Two most common measures used in a portfolio analysis are market growth
rate and relative market share.

Modern portfolio theory (MPT) is a theory of investment which attempts to maximize

portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a
given level of expected return, by carefully choosing the proportions of various assets. Although
MPT is widely used in practice in the financial industry and several of its creators won a Nobel
memorial prize[1] for the theory, in recent years the basic assumptions of MPT have been widely
challenged by fields such as behavioral economics.
MPT is a mathematical formulation of the concept of diversification in investing, with the aim of
selecting a collection of investment assets that has collectively lower risk than any individual
asset. That this is possible can be seen intuitively because different types of assets often change
in value in opposite ways. For example, as prices in the stock market tend to move independently
from prices in the bond market, a collection of both types of assets can therefore have lower
overall risk than either individually. But diversification lowers risk even if assets' returns are not
negatively correlated—indeed, even if they are positively correlated.
More technically, MPT models an asset's return as a normally distributed function (or more
generally as an elliptically distributed random variable), defines risk as the standard deviation of
return, and models a portfolio as a weighted combination of assets so that the return of a
portfolio is the weighted combination of the assets' returns. By combining different assets whose
returns are not perfectly positively correlated, MPT seeks to reduce the total variance of the
portfolio return. MPT also assumes that investors are rational and markets are efficient.

The fundamental concept behind MPT is that the assets in an investment portfolio should not be
selected individually, each on their own merits. Rather, it is important to consider how each asset
changes in price relative to how every other asset in the portfolio changes in price.
Investing is a tradeoff between risk and expected return. In general, assets with higher expected
returns are riskier. For a given amount of risk, MPT describes how to select a portfolio with the
highest possible expected return. Or, for a given expected return, MPT explains how to select a
portfolio with the lowest possible risk (the targeted expected return cannot be more than the
highest-returning available security, of course, unless negative holdings of assets are possible.)[4]
MPT is therefore a form of diversification. Under certain assumptions and for specific
quantitative definitions of risk and return, MPT explains how to find the best possible
diversification strategy.

Insurance – India
(A) LIFE INSURANCE :
• Term Life Insurance
• Permanent Life Insurance
(B) GENERAL INSURANCE
• Fire Insurance
• Marine Insurance
• Accident Insurance

(A)Life Insurance
Life Insurance is a contract providing for payment of a sum of money to the person assured or,
following him to the person entitled to receive the same, on the happening of a certain event. It
is a good method to protect your family financially, in case of death, by providing funds for the
loss of income.

A1. TERM LIFE INSURANCE : Under a Term Life contract, the insurance company pays a
specific lump sum to the designated beneficiary in case of the death of the insured. These
policies are usually for 5, 10, 15, 20 or 30 years.
Term life insurance are the most popular in advance countries but were not so popular in India.
However, after the entry of the private operators and aggressive marketing by few players this
kind of policies are becoming popular. The premium on such type of policies is comparatively
quite low when compared with other types of life insurance policies, mainly due to the fact that
these policies do not carry cash value.
PLUS OF TERM LIFE INSURANCE MINUSES OF TERM LIFE INSURANCE
- If one survives the period of the policy, he /
she does not get any money at the end of the
- The premium payable on these policies is low
policy.
as they do not carry any cash value.
The premium on such policies keeps on
- One can afford for quite high value insurance
increasing with age mainly because the risk of
policies
death of older people is more. Over the page of
60, these policies become difficult to afford.

A2. PERMANENT LIFE INSURANCE :

In a Permanent Life contract, a portion of the money paid as premiums is invested in a fund
that earns interest on a tax-deferred basis. Thus, over a period of time, this policy will
accumulate certain "cash value" which you will be able to get back either during the period of
the policy or at the end of the policy.
Your need for life insurance can change over a lifetime. At any age, you should consider your
individual circumstances and the standard of living you wish to maintain for your dependents. In
most cases, you need life insurance only if someone depends on you for support. Your life
insurance premium is based on the type of insurance you buy, the amount you buy and your
chance of death while the policy is in effect. This type of policy not only provides protection for
your dependents by paying a death benefit to your designated beneficiary upon your death, but it
also allows you to use some part of the money while you are alive or at the end of the policy.
Some examples of such policies are :- Whole Life, Universal Life and Variable-Universal Life.
ENDOWMENT POLICIES
These policies provide for period payment of premiums and a lump sum amount either in the
event of death of the insured or on the date of expiry of the policy, whichever occurs earlier.
MONEY BACK POLICIES
These policies provide for periodic payments of partial survival benefits during the term of the
policy itself. A unique feature associated with this type of policies is that in the event of death
of the insured during the policy term, the designated beneficiary will get the full sum assured
without deducting any of the survival benefit amounts, which have already been paid as money-
back components. Moreover, the bonus on such policies is also calculated on the full sum
assured.
ANNUITY / PENSION POLICIES / FUNDS
This policies / funds require the insured to pay the premium as a single lump sum or through
installments paid over a certain number of years. The insured in return will receive back a
specific sum periodically from a specified date onwards (the returns can can be monthly, half
yearly or annually), either for life or for a fixed number of years. In case of the death of the
insured, or after the fixed annuity period expires for annuity payments, the invested annuity fund
is refunded, usually with some additional amounts as per the terms of the policy.
Annuities / Pension funds are different from from all other forms of life insurance as an annuity
policy / fund does not provide any life insurance cover but merely offers a guaranteed income
either for life or a certain period. Therefore, this type of insurance is taken so as to get income
after the retirement.

Types of Insurance in India

Rita Bhattacharjee
Rita Bhattacharjee is a writing/editing professional with experience in copywriting,
website content development, SEO-optimized articles and editing. Born and raised in
Kolkata, India, Bhattacharjee pursued a master's degree in English literature from
Jadavpur University. She stays in St. Augustine, Fla., with her husband and son.

By Rita Bhattacharjee, eHow Contributor

 updated: April 30, 2010

1.
○ Insurance in India can be broadly categorized into two types: life and general. Life insurance
can be further classified into term life insurance, whole life insurance, money back plan,
endowment policy and pension plan. Health, home, accident, motor and travel insurances
fall under the general insurance category. State-owned companies like Life Insurance
Corporation of India, as well as private insurance providers, like ICICI Prudential and Bajaj
Allianz, provide life and general insurances in India.

Term Life Insurance Policy

○ As its name implies, term life insurance policy is for a specified period. It lets you select the
length of time for which you want coverage, up to a period of 35 years. It has one of the
lowest premiums among insurance plans and also carries an added advantage of fixed
payments that do not increase during your term. In case of the policy holder's untimely
demise, the benefit amount specified in the insurance agreement goes to the nominees.

Whole Life Insurance Policy

○ Whole life insurance policies do not have any fixed term or end date and is only payable to
the designated beneficiary after the death of the policy holder. The policy owner does not get
any monetary benefits out of this policy. Because this type of insurance involves fixed known
annual premiums, it's a good option if you want to ensure guaranteed financial benefits for
surviving family members.

Money Back Plan

○ With a money back plan, you receive periodic payments, which are a percentage of the
entire amount insured, during the lifetime of your policy. It's a plan that offers insurance
coverage along with savings. A unique feature of the money back plan is that in the event of
the policy holder's death during the policy term, the beneficiary will get the full sum assured
without having any of the survival benefit amounts, which have already been paid, deducted.

Pension Plan
○ Pension plans are different from other types of life insurance because they do not provide
any life insurance cover, but ensure a guaranteed income, either for life or for a certain
period. You make the investment for a pension plan either with a single lump sum payment
or through installments paid over a certain number of years. In return, you get a specific sum
every year, every half-year or every month, either for life or for a fixed number of years.

Endowment Policy
○ An endowment policy can be taken out for a specified period. At the end of the stipulated
period, the assured amount is paid back to the policy holder, along with the bonus
accumulated during the term of the policy. Designed primarily to provide a living benefit,
along with life insurance protection, the endowment policy makes a good investment if you
want coverage, as well as some extra money.

Health Insurance
○ Under the general insurance category, health insurance is one of the most popular choices.
In India, Mediclaim covers hospitalization, expenses incurred during medical tests and for
 medicines. You can also get coverage for medical expenses by opting for the 'Critical Illness
(CI)' rider available with life insurance policies. This means that in case of a 'critical illness'
as defined by the insurance company during the policy tenure, you will be paid the amount
as proposed in the policy.

Read more: Types of Insurance in India | eHow.com http://www.ehow.com/list_6402528_types-

insurance-india.html#ixzz1IkxmMbBH

SANTANDER
Which Investment?

A quick guide to your investment options

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Low/ medium/ high risk investments

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Please remember the value of investments and any income from them can go down as well as up.
 Limited Offer: Fixed Term Investments

Invest with confidence

Our range of Fixed Term Investments is provided by Santander ISA Managers Limited and guarantees to

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• Why choose a Fixed Term Investment?

• Your Options

• What will I get back?

• Things you need to know before investing

• Apply now

Why choose a Fixed Term Investment?

• Peace of mind – you are guaranteed to get back your original investment plus at least a minimum return at

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Your Options

The following plans are available on a limited offer basis up until 11 April 2011 and could be withdrawn

earlier without prior notice if sold out. All product options require a minimum investment of £1,500. For

further information or for details on any latest offers please contact your local branch:

Santander

Growth Plan

(Issue 42)

Fixed Term (years) 3¾ 5½

Capital guaranteed Yes Yes

Guaranteed minimum return* 4% 12%

Maximum return* 50% of the 50% of the

growth in the growth in the

FTSE 100 Index1 FTSE 100 Index1

Available as a Stocks and Shares No Yes

ISA

Available outside of an ISA (as a Yes Yes

Direct Share Investment)

 Use your Capital Gains Tax Yes Yes

allowance to offset any gains where

you can (Direct Share Investment)

*If held for the full term.

1
Subject to daily averaging over the last six months of investment term.

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What will I get back?

• Santander Growth Plan (Issue 42) – 3¾ year term

• Santander Growth Plan (Issue 42) – 5½ year term

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Things you need to know before investing

These products are considered as being very low risk investments but like most investment products they are

not completely risk-free. Here is some additional information you need to know before making a decision.

• Your money will be used to buy shares in a protected cell of the Investment Company. The value of these

shares can go up and down during the term of the Plan.

• Your original capital and the minimum return are guaranteed only at maturity. Any return above this is not

guaranteed. If you close your Plan early you may get back less than you paid in.

• The guarantee that you will receive the money you invested and the minimum return at maturity is provided

by Santander Guarantee Company, a wholly owned direct subsidiary of Santander UK plc. Investors in the
 plan are exposed to Santander Guarantee Company’s ability to pay which is dependent on Santander UK plc

and its subsidiaries continuing to be able to meet their financial obligations.

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which are designed to generate the returns under the Plan. These financial transactions will not be secured.

• In relation to the two points listed immediately above, in the unlikely event that Santander UK plc was to

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• The tax treatment and any tax benefits associated with your investment may change in the future, which

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inflation. Therefore, the real value of your money could reduce during the term of the investment.

Premium Investments

• Join our highly personalised investment service

• Why choose Santander's Premium Investments?

• How much does Premium Investments cost?

• How to Apply

• Other Information

Join our highly personalised investment service

Premium Investments is a specialist service for high value investors. Provided by Santander Portfolio

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Why choose Santander's Premium Investments?

• Partnership – you’ll be given a dedicated personal advisor, to make sure you get exactly what you want

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We charge a 1% pa fund management fee, a portfolio management fee of £100 + VAT and 0.5% to 1% pa of

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How to Apply

To discuss your investment plans or arrange an appointment with your personal adviser:
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You can print off a full colour brochure

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You can see rates for our Premium Investments Deposit Accounts

Premium Investment Portfolios are stockmarket-linked investments. Their value, and any income from them,

can go down as well as up, and is not guaranteed at any time.

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Risk factors

• Premium Investment Portfolios are stockmarket-linked investments. Their value, and any income from them,

can go down as well as up, and is not guaranteed at any time. You may not get back the full amount

invested.

• The tax benefits may change in the future, which could affect how much you get back