Personal

Financial Planning

BY
SQN LDR ANIKATE RASTOGI
Contents
 Introduction
 Planning
 Financial Planning (FinP)
 FinP Pyramid

 FinP Process
 FinP Steps
 FinP Misconceptions
Introduction
Planning
Introduction
Planning

Planning means looking ahead and chalking out

future courses of action to be followed

Examples:
- Preparation for competitive exams
- Planning a vacation
Introduction
Financial Planning (FinP)

Financial Planning is the process of meeting your

life goals through the proper management of your
finances.

Examples of goals:
- Higher Education
- Buying a house
- Accumulating retirement corpus
Introduction
Financial Planning Pyramid

Wealth Distribution
(Transfer what you have)

Wealth Creation
(Accumulate)

Wealth Protection
(Protect what you have) Start
Financial Planning Process

Data Collection Draft Plan

Goal Setting Final Plan
Current Analysis Product Suggestions

Execution
Monitoring Follow ups
Follow ups
Query Solving
Financial Planning Steps
 Review your current situation

 Set short-term & long-term goals

 Create a plan for debts

 Establish Emergency Fund

 Begin invest in your future

 Keep track of your plan

Financial Planning Steps
Review Your Current Situation
 Cash Flow Analysis (Current status)

Sources Uses of
Change
in Cash
of Cash Cash
Balance
Financial Planning Steps
Review Your Current Situation
 Net Worth
Financial Planning Steps
Review Your Current Situation
 Current Asset Allocation

Real
Gold
Estate
Bank
Balanc PF
e
Equitie
s
Financial Planning Steps
Review Your Current Situation
 Risk Profiling

Aggressive
Moderate

Conservative

Risk Averse
Financial Planning Steps
Set Short-term & Long-term Goals
• Purchase a bike after six months
• Higher Education after four years
• Purchase a car after two years
• Book an apartment on next Diwali
Financial Planning Steps
Create a Plan for Debts
• Less reliance on debt
• No Borrowing
• Early repayment of loan
• Utilising Govt. schemes
Financial Planning Steps
Establish Emergency Fund

• Uncertainty

• Back-up plans

• 3-Months salary without any

deductions

• Liquid funds – Cash, Savings A/c,

Sweep-in A/c, short-term FDs
Financial Planning Steps
Begin Invest in Your Future

• How much to invest?

• Where to invest?
Financial Planning Steps
Begin Invest in Your Future
• How much to invest?

• 50-30-20 Rule
• 50% to Needs
• 30% to Wants
• 20% to Savings
Financial Planning Steps
Begin Invest in Your Future
• Where to invest? • Depends on
• Risk Appetite
• Goals
• Duration to achieve
Financial Planning Steps
Begin Invest in Your Future
• Risk/Return relationship
Direct
Equity
MF Balanced Schemes,
Real Estate
MF Debt Schemes,
Company FDs

Bank FDs, Post office Schemes,

Cash
Provident Fund, Gold ETFs
Financial Planning Steps
Begin Invest in Your Future
• Risk/Return relationship
Financial Planning Steps
Begin Invest in Your Future
• Time Value of Money

Highest possible
interest rate
Interest (Best opportunity)

Invest as much as
possible & as Money
often as possible
Invest as long as
Time possible
(Power of
compounding)
Financial Planning Steps
Begin Invest in Your Future

No knowledge about
stock market

STOCKS

No knowledge about
when to invest
Financial Planning Steps
• SIP Returns Insights
• Golden Rule of 15-15-15
Financial Planning Steps
• SIP Returns Insights – Plan 05-10-15 generates ~14 Lacs
Financial Planning Steps
• SIP Returns Insights – Plan 05-15-15 generates ~34 Lacs
Financial Planning Steps
• SIP Returns Insights – Plan 05-20-15 generates ~76 Lacs
Financial Planning Steps
Keep Track of Your Plan
Why they are required?
 Financial goals keep changing
 Changes in your economic profile
 Financial Market Conditions
Financial Planning Steps
Keep Track of Your Plan
• How to track?

• Periodically reviewing the goals

• Rebalancing
• Monitoring cash flows
• Technology (Spend Analyzer, Investment Monitoring
Apps)
Financial Planning Misconceptions
Misconceptions

- Financial Planning is for the Rich

- Insurance Planning is Financial Planning

- Tax Planning is Financial Planning

- I am too young to think about Financial Planning

- Confuse Financial Planning with investing