Assignment

of
Personal Financial Planning

Topic: To make a Personal Financial Plan

Submitted by:
Gourav Anand
Roll no.:- R1813A13
BBA (6TH SEM.)

SUBMITTED TO:
Vikas Anand

LOVELY SCHOOL OF BUSINESS

 What is Personal Financial Planning?
Personal financial planning is the process of managing your money to achieve
personal economic satisfaction. This planning allows you to control your financial
situation. Every person, family has a unique financial position and any financial
activity must also be carefully planned to meet specific needs and goals. The
financial planning process involves the following steps:

1. Determine your current financial situation.

2. Develop your financial goals.

3. Identify alternative courses of actions.

4. Evaluate your alternatives.

5. Implement your financial plan

6. Review and revise your plan.

Personal and Financial Information of Myself

and My Family Members.
 My father is a business man and he manufacturing cycle parts. He is also the
president of united cycle & parts manufacture association. The yearly
income of my father is Rs. 95,00,000 (in 2009-2010) and the yearly income
from association is Rs. 10,00,000. So

Total yearly income of my family = 9,500,000+1,000,000= Rs.10,500,000

Total monthly income=Rs. 10,500,000/12=Rs. 875,000

 My father also saves for the future contingencies. He has a savings account
in Punjab & Sind Bank. This savings account has Rs. 2,800,000 currently
which yields 3.9% interest p.a.

 He has taken fixed deposit of Rs. 700,000 @8.5% p.a.

  Our living (home) expenses :-

 Rs. 80,000 per month is spent for the grocery.

 The school & tuition fee of my sisters which is Rs. 60,000 half yearly.
i.e. Rs. 10000 per month.

 My course fee as I am doing my graduation at LPU. This amounts to

RS. 100,000 Yearly i.e. Rs. 8,333 approx. per month.

 He pays car insurance premium of Rs. 26800 per year i.e. Rs. 2233
per month.

 Medical expenses of my family amounts to Rs. 6800 per month.

 Telephone + internet + electricity bill amounts to Rs. 13100 approx

per month.

 Misc. expenses like money given on marriages, holiday trips etc.

amounts to RS. 8500 per month.

 Our factory expenses (as monthly):-

 Electricity bill= 10,600

 Wages= 50,000

 Consumable stores= 1500

 Oil & lubricants= 15,000

 Bank charges= 400

 Machinery repair & tools= 4500

 Legal expenses= 1000

 Cartage outward= 2240

 Audit fees= 400

Total factory expenses= 85,640

Total expenses= 85,640 + 128,966 = 214,606

Total Monthly Income = Rs. 875,000

Total Monthly Expenses = Rs. 214,606 approx

Savings Per Month = Rs. 660,394(monthly income less

monthly expenses)

Yearly Savings = Rs. 660,394*12= Rs.7,924,728 approx

Financial Service Organizations Used by My Family.

 My father uses banks as he has savings account and fixed deposits account
with Punjab & Sind Bank.

 We also invest money in Mutual Fund (Rs. 150,000) and Share Market
(Rs.680,000)

 He has taken LIC’s Growth Fund for Rs. 600,000.

 He has taken a comprehensive car insurance policy from ICICI Lombard

Insurance Company.

 We visit mall and wholesale stores like West End Mall, and Best Price every
month. The payment is made in cash and debit card mode.

 We also take the services of hospitals like Apolo Hospital Ludhiana and
DMC.
Financial Goals Related to Various Current
and Future Needs
CURRENT GOALS – within 1 FUTURE GOALS- more than 1
year year
1. To buy a Honda CR-V car 1. After 1 year we need Rs.
within 3-4 months. 500,000 per year for my
younger sisters Graduation.
2. To purchase a plot in focal
point Ludhiana. 2. I am going abroad for my
further studies i.e. Post
3. To pay tuition fee of my sister
Graduation from CANADA
of Rs. 60,000 within 6
after 1 year. I will need Rs.
months.
2500,000 per year.
4. To do shopping for the whole
3. I am getting married after 3 or 4
family as my elder sister
years. So we need funds for the
marriage is in October this
marriage too.
year. It will cost us Rs.
1500,000. 4. After 2 years my brother wants
to start his own business.
5. To save Rs. 45000 per month
for the living expenses. This 5. After 1 year we buy a big home
would be deposited in savings in 32 sector.
account every month and will
be withdrawn whenever
needed.
Analysis of Various Investment Options
INVESTMENT RETURN ON REMARKS
OPTIONS INVESTMENT

BANKING SECTOR – FDS 8-10% OVERDRAFT/LOAN

COMPOUNDING FACILITY
AGAINST FDs

POST OFF - PPFS, POMIS,  8-10% LOAN FACILITY

KVPS COMPOUNDING AFTER 5 YRS

AVERAGE ON
OTHER
INSTRUMENTS

GOVT / INFRASTRUCTURE 6-8% BONDS ARE

BONDS COMPOUNDING TRADABLE/LOAN
BY PSU BANKS

MUTUAL FUNDS / SHARES AVERAGE OF 15- TAX- SAVING

18% OVER A 8-10 YR BONDS WITH 3 YE
PLATFORM LOCK- IN
AVAILABLE&
SECTOR SPECIFIC
INVESTMENTS

EQUITY LINKED SAVINGS  AVERAGE OF 15- TAX- SAVING

SCHEMES OFFERED BY 18% OVER A 8-10 YR BONDS WITH 3 YE
BANKS. PLATFORM LOCK- IN
AVAILABLE&
SECTOR SPECIFIC
INVESTMENTS

REAL ESTATE - FLATS /  AVERAGE OF 25-

BUILDINGS 40% OVER A 8-10 YR
 PLATFORM

REAL ESTATE – PLOTS AVERAGE OF 25-

40% OVER A 8-10 YR
PLATFORM

GOLD / PRECIOUS STONES AVERAGE OF 20- SALE THREAT

30% OVER A 8-10 YR
PLATFORM

LIFE INSURANCE 15-18% LIFE COVERS FOR

PRODUCTS COMPOUNDING THE INVESTOR.
OVER A 10-20 YR LOAN FACILITY
AFTER 5 YEARS

UNIT LINKED INSURANCE  15-18% LIVES COVER FOR

PRODUCTS COMPOUNDING THE INVESTOR.
OVER A 10-20 YR LOAN FACILITY
AFTER 5 YEARS

MONITORING CURRENT ECONOMIC

CONDITIONS
 The current growth rate of Indian economy is 8.90%.

 The current inflation rate of India is 8.34%.

 The current repo rate is 6.25%

 The current bank rate is 6%

TAKING VARIOUS ACTIONS TO ACHIEVE THE
CURRENT AND FUTURE GOALS.
 Risk Perception: - My Father has Rs. 7,924,728 yearly as savings. He can
tolerate risk of Rs. 100,000 only out of the total savings.

 We have Rs. 600,000 as FD and Rs. 900,000 in Savings Account

MY FAMILY’s NEW PORTFOLIO

Equity Linked Saving Schemes- HDFC Rs. 600,000
TaxSaver

Indus Ind Bank –FD , interest rate 8% p.a Rs.900,000

for 1 year

Savings Account at Punjab & Sind Bank Rs. 200,000

interest rate 3.8%

Real Estate Plot Rs. 40,00,000

Gold Rs. 1,000,000

Systematic investment Plans(SIP) of Rs. 8000*12 = Rs. 120,000

HSBC Mutual Fund

IDFC Bond – Series 1(lock-in-period -5 Rs. 60,000

yrs)

National Savings Certificate- for 6 Rs. 650,000

yrs@8.16% compounded semi- annually.

SBI’s ULIP Scheme Rs.400,000

Conclusion
From above study we can conclude that personal financial planning
really plays an imperative role in today’s world. After having done a
proper assessment of the financial situation, an individual can set up
long term as well as short term goals. Once the goals are set, appropriate
strategies can be formulated in order to fulfill the goals. This could be
achieved by curtailing unnecessary expenditure or by expanding the
income level by investing in stocks, real estate or other interest earning
assets. So by practically applying theory, I am able to make a portfolio
for my family.

References
 Jack R Kapoor, Les R Dlabay, Robert J Hughes, Personal Finance, McGraw-
Hill, 8th Edition 2005

 http://www.economywatch.com/finance/personal-finance/personal-
financial-planning.html

 http://www.rbi.org

 www.hsbcprulife.com/

 www.onemint.com/2009/07/03/bank-interest-rates-india/

 www.myfamilyinvestment.com/

 www.moneycontrol.com/planning_desk/fininvoption.php

 www.tradingeconomics.com