What is Financial Planning?
Financial planning
is the process of establishing personal and financial goals and creating a way to
reach them by beating Inflation (Purchasing power eater). The financial goals
can include buying a house, saving for your child’s education / marriage or
planning for your retirement or simply creating a wealth in future.
Benefits
of Financial Planning
- Knowing & understanding your financial
needs / goals
2 Achieving your goals
with optimum use of resources
3 Understanding impact of
investment choices
4 Adapting to changes in
personal & financial situations
5 Peace of mind – ensuring that your goals are
not compromised
Effect of inflation (Prices of commodities)
Items
|
1957
|
1982
|
Present
|
2025
|
|
A Kg of Rice
|
0.30 paisa
|
Rs 4
|
Rs 30
|
Average 7% to 8% Inflation
|
82
|
A Kg of Tur Dal
|
0.50 paisa
|
Rs 8
|
Rs 70
|
190
|
|
A liter of Milk
|
0.50 paisa
|
Rs 2
|
Rs 30
|
82
|
|
A Liter of Petrol
|
0.25 paisa
|
Rs 3
|
Rs 75
|
204
|
|
A Kg of Sugar
|
0.15 paisa
|
Rs 3
|
Rs 35
|
95
|
What are available investment option
Opportunities
|
Indicative Returns
|
Indicative Risk
|
Indicative holding period
|
Fixed
income
Bank FD / RD,
|
8% to9% ( Pre tax)
|
No
|
Ad per Desired holding period
( 1to 3 years)
|
Equity ( Stocks /MF/ PE )
|
12% to 20%
|
High
|
Easy liquidity ( 5+ years)
|
Metals (
|
10% to 15 %
|
Moderate
|
Easy liquidity ( 3 to 5 years)
|
Real
Estate
|
15% to 18%
|
Moderate
|
Not liquid (5 + years )
|
Performance of various Assets since 2000 to 2010 If Rs 100000
invested in Jan 2000
Assets
|
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
Average
|
Maturity value
|
Equity
|
-20.60
|
-17.87
|
3.52
|
72.89
|
13.08
|
42.33
|
46.70
|
47.15
|
-52.45
|
75.5
|
16.7
|
20.63%
|
Rs
787061
|
Gold
|
0.10
|
0.33
|
14.00
|
4.50
|
14.00
|
2.60
|
3.30
|
15.5
|
20.00
|
23.00
|
23.80
|
13.71%
|
Rs
410946
|
Debt
|
10.8
|
22.46
|
15.68
|
9.95
|
-3.15
|
3.47
|
0.76
|
5.29
|
20.78
|
-5.5
|
8.4
|
8.09%
|
Rs
235310
|
Equity is more
volatile than others & also gives more returns than other assets over
longer period investment.
So considering INFLATION,
Fixed income option – This can only preserves the investment value.
Equity (MF) & Gold can create wealth.
Goals
|
Investment period
|
Suggested Asset class
|
Rate of returns
|
Emergency Funds
|
No lock in OR
Up to 1 year
|
Bank SB a/c
MF Liquid schemes
|
4%
7 to 9%
|
Child Education OR
Child Marriage
|
1 TO 3 Years
3 to 5 years
5 years & above
|
Bank FD / MF Debt schemes
MF Hybrid / Gold schemes
MF Equity / Gold schemes
|
7 to 9 % / 7 to 12%
9 to 15%
12 to 18%
|
Retirement
|
5 years & above
|
MF Equity / Gold schemes
|
12 to 18%
|
We have use these assets based on our goals and investment
period
Others
goals ( Dream House, Four Wheeler, Foreign tour etc) can be set as per available investment
period.
15 YEAR SIP RETURNS FOR SIP OF Rs 10000 PER MONTH
115
DIVERSIFIED EQUITY SCHEME CONSIDARED
YEAR STARTED
|
2009
|
2007
|
2005
|
2002
|
2000
|
1997
|
Invested
Amount
|
360000
|
600000
|
840000
|
1200000
|
1440000
|
1800000
|
YEARS
|
3
|
5
|
7
|
10
|
12
|
15
|
|
15.76
|
18.21
|
15.41
|
24.01
|
27.28
|
26.79
|
|
454746
|
944927
|
1454739
|
4276954
|
8580924
|
17450539
|
Average
Returns %
|
1.73
|
7.73
|
8.64
|
17.84
|
19.94
|
20.29
|
Average
Returns Rs
|
369687
|
729187
|
1142390
|
3064256
|
5228736
|
9802547
|
