Financial Planning – An Overview

Presented by
CA Rishabh R. Adukia
B.Com,ACA,ACS,LLB, MBF(ICAI),Certified Financial PlannerCM
Chief Advisor, NINECUBE
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John D Rockefeller, the first billionaire of the world,

when asked once,

“How much money is enough money”

He Replied,
“Just a little bit more”

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The human mind has…

…a great ability to

ADAPT!...

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…. especially in times of difficulty
The 5 emotional stages of lockdown By now, most of us are in Stage 4 or
Stage 5

• Accept that • Ready to face life

changes will stay in new ways
for a longer time • Wanting to be
• Thinking about better prepared
what can be done for the future

Stage 4 – Stage 5 –
Acceptance Optimism

WITH A WELL THOUGHT OUT FINANCIAL PLAN, HALF YOUR WORK IS DONE
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Kaun Banega Crorepati
Who wants to be a millionaire ?

We see people getting rich with lot of efforts over time but do we know 90% of the
people who become crorepati become bankrupt in less than 2 years and not only that
they also come under debt after that
Why?

…………………….
To be
continued

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Agenda
Our today’s agenda would be:

Financial Planning – An Overview

Insurance Planning / Risk Management

Investment Plan

Retirement Plan

Conclusion with Q & A CA Rishabh Adukia 6

What is Financial Planning?
Financial planning is the process of achieving your life goals by using different investment
options with your current resources through proper and disciplined money management. So
Financial Planning is not only about money, but it is all about life, about fulfilling your
wishes, dreams, aspirations and your enjoyment in achieving them.

There are only 3 major components in the Financial Planning process:

1. Current Resources (CR)
2. Investment Options (IO)
3. Financial Goals (FG)

Financial Planning: CR + IO = FG

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Financial Goals

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"Focusing on the things that matter and the things we can control will go a long way to avoiding investor
overconfidence." - Carl Richards CFP® , Founder of BehaviorGap.com
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Controllable Uncontrollable

•How much you spend, save, and • Stock market returns

invest • Inflation
•Career (how much you make) • Real estate prices
• Education • What others say
• Debt • Financial upbringing
•Asset Allocation, Asset Location, • Previous mistakes
and Investment Expenses. • Tax hikes

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6 Basic Financial Planning Tips Every College Student Should Know:

1. Student Loans Come at a High Cost.

2. Beware of Overspending on Your Textbooks.
3. Build an Emergency Fund.
4. Create a Basic Budget.
5. Avoid Impulse Buying.
6. Be Strategic with Credit Cards.

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Insurance Planning
It is our responsibility to help people around, to realise that for a secured future, they have to have
a – STRONG FINANCIAL BASE
Term insurance
(Rs.50/day)

rightly provides the foundation

to the pyramid

OTHER TYPES ?

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Huge scope and big responsibility!

Together we need to reach

out to more people and help

them secure their families

36 crore people insured in

India

Source: IRDA Claim Settlement Ratio 2018-19

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INFLATION FOR LAST 25 YEARS

~7% ~12%

GOVERNMENT
INSTITUTIONAL
RESEARCH

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LETS LOOK AT WHAT REALLY MATTERS
INFLATION: 1990 - NOW

PER ANNUM %

WE ARE NOT EVEN LOOKING AT LIFESTYLE UPGRADES!

ANNUALIZED INFLATION RATE :1990 – 2014

*Adjusted for Import Duties
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FAST FORWARD 25 YEARS…

VALUE OF TODAY’S RS.1 CRORE
17 CRORES

5 CRORES

@ 12 % @7%
WHERE YOU SHOULD BE WHERE RISK-FREE GETS YOU

INVESTING “RISK-FREE” OVER 25 YEARS COULD DESTROY 70% OF YOUR WEALTH!

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Investment Options
Fixed Deposit/PPF Real Estate
• Falling Interest rates • Popular choice
• 7-8% Taxable return • Downward trend post
• PPF invest limit demonetization
• Secured and liquid • Post COVID likely to slide
further
• Not a liquid asset
Gold Equity
• Tied to Global economy • High return but high risk
• Emotional attachment • High tie involvement
• Storage risk • Needs expertise
• Continuous monitoring
Mutual Funds
• Popular choice
• Long term investment
• Wealth creation
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Why Asset allocation is important?

~2%

~5%

~92%

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Kya #Mutual Funds Sahi Hai !!

Top Quartile

Myth – All
Par Kaunsa…….. Personalized MFs deliver
returns

Mutual
Funds
Choosing the Achieve
right MF financial goals

Careful study
of MF

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What is SIP ?

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How does SIP work?

• Every month a specified amount is auto debited from investor’s bank account and invested in
selected mutual fund scheme.

• Units will be allotted every time the amount is invested, based on the NAV of the scheme.

• Investor can redeem or switch out units partially or fully, anytime he/she wishes to do so.

• Each SIP installment is considered as a new investment; hence exit load will be applicable if
you redeem your investment within the predefined time.

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Why Initial Years are Critical?

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Key Rules of Investing

Discipline

Early Start

Patience

Key Mantra: Compounding

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Effect of Compounding Over Time

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Have you understood Compounding?

Option A : Re 1 invested at one place where you get Re 1

crore in 30 days

OR

Option B : Double your Re 1 every day for 30 days

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Have you understood Compounding?...

Day Amount
1 1
2 2
3 4
4 8
5 16
6 32
7 64
8 128
9 256
10 512
11 1,024
12 2,048
13 4,096
14 8,192
15 16,384
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Have you understood Compounding?...

Day Amount Day Amount

1 1 16 32,768
17 65,536
2 2
18 1,31,072
3 4 19 2,62,144
4 8 20 5,24,288
5 16
6 32
7 64
8 128
9 256
10 512
11 1,024
12 2,048
13 4,096
14 8,192
15 16,384
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Have you understood Compounding?...

Day Amount Day Amount

1 1 16 32,768
2 2 17 65,536
3 4 18 1,31,072
4 8 19 2,62,144
5 16 20 5,24,288
6 32 21 10,48,576
7 64 22 20,97,152
8 128 23 41,94,304
9 256 24 83,88,608
10 512 25 1,67,77,216
11 1,024 26 3,35,54,432
12 2,048 27 6,71,08,864
13 4,096 28 13,42,17,728
14 8,192 29 26,84,35,456
15 16,384 30 53,68,70,912
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PICKING THE RIGHT MARKET IN 1990

RS.1 CRORE INVESTED THEN WOULD BE

**Return includes Sensex returns from January 1990 and actual fund returns thereafter, till August 2015
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EXPERIENCE THE POWER OF

COMPOUNDING
IN A WAY YOU HAVEN’T PROBABLY DONE
BEFORE

8x

2x
2x

**Return includes Sensex returns from January 1990 and actual fund returns thereafter, till August 2015
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Volatility reduces with time

1 out of 4 times investors lost money

One has to go
through this
Returns became steadier entire journey of
1 out of 9 times investors lost money
volatility

Never a loss!
~97% of the times investors made atleast 15%returns

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It’s Never too Late to Build a Fortune
• Compounding started to work for
him at the age of 65 years

• 90% of his wealth which he has

today actually started building for
him after the age of 65 years

• He started at the age of 11 and still

felt it was too late for him to start

• Today he is at 90 years of age and

yet active living a simple life

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Retirement Planning

• New Age of Retirement ?

• Creation of a retirement corpus for next 30 years

while beating inflation

• Expenses –
• Life style expenses
• Family vacations,
• Medical Emergencies,
• Lifestyle upgrades
• Uncertainties

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Planning your Estate
Believe it or not! each one of us has
an estate.
Whether it’s your vehicle or your
home; the cash lying in your saving and
current account, every asset constitutes
an estate.
It’s your responsibility to decide what
happens to these after you leave this
world.
You need to ensure that the right
asset is assigned to the appropriate
individual in the right manner.
Ultimately, you need to think about your assets
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Recent Events…..
Market behaviour pre & post corrections

3 year return
Year Event before the Fall % fall from 3 year return
started peak after the Fall
1986-88 Global Recession 203.7% -41.3% 199.5%
1990-91 Gulf War/Indian Fiscal Crisis 238.8% -38.7% 304.3%
1992-93 Harshad Mehta Scam 481.0% -54.4% 88.4%
1994-96 Stock Market Stumble 148.7% -40.7% 71.7%
2000-01 Dot Com Bubble 69.4% -56.2% 115.6%
2008 Subprime Crisis 225.1% -60.9% 110.1%
2020 Covid – 19 54.0% -38.1% ?
AVERAGE 227.8% -48.7% 148.3%

Sharp falls have invariably been followed by even sharper gains

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Thumb Rules – Finance Student

To calculate the number of years in which your investment will double -- it

is known as the rule of 72 -- simply divide 72 by the rate of return that you
can generate.
So at 12 % return, you can double your money in six years. No. of years =
72/12 = 6.
To know the time required to triple the principal amount, the rule of 114 is
used.
The amount of time needed to triple your money would be = 114/12 = 9.5
years.

Rule of 72: Number of years to double = 72/expected return

Rule of 114: Number of years to triple = 114/expected return
Rule of 144: Number of years to quadruple = 144/expected return

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CONCLUSION

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For any kind of personal

guidance or queries, you may
contact me on:

adukia.rishabh@gmail.com
+91-9819861049

Blog :
ninecube.wordpress.com

CA Rishabh Adukia