Single Window Services

Chapter 2. ORGANIZATION PROFILE

2.1 History of Organization

(Alparambha: Kshemakara) Its always advisable to make a small and humble
beginning. It ultimately pays off handsomely in the long run. The concept of Single Window Services (SWS) came out of a need to provide a customercentric, hassle-free and highly reliable package in an environment of complete trust and credibility. Promoted by a highly qualified technocrat with a keen eye for financial markets, SWS today is a symbol of quality, reliability and, above all, complete credibility. The products and services offered by SWS encompass a vast array of financial options such as Life & General Insurance, Mediclaim, Deposit schemes from reputed corporate houses, Postal & other Savings Schemes, Automobile, Home & Personal loans, Mutual Funds and, above all, all forms of policy servicing. The SWS was incorporated in 1994, and the certificate of Commencement of Business in 1996. The age-old wisdom, which has percolated over generations, has proved its efficacy time & again in whatever ventures we pursue. This, precisely, is the philosophy that is followed at Single Window Services, a complete solution provider for all your financial needs, future provisions and planning. It has been our constant endeavors, as the name aptly suggests, to provide a complete bouquet of financial services to all our clients; be it life or general insurance, or a multitude of investment options available in todays ever-expanding world; or simply future planning with some specific goal in mind via a single interface. Although most professionals today tend to think that they have adequate life and health insurance cover, the ground realities prove otherwise. In most cases, this realization comes too late. In order to overcome this problem, SWS has adopted a unique methodology of Investment

Single Window Services

& Insurance Audit for all its clients. This helps them realize their actual value and take appropriate corrective steps well in time. In todays ever-changing world, keeping up-to-date is mandatory at all levels of functionality. Training & Orientation Activity, therefore, has become an inseparable part of any enterprise. SWS, apart from offering turn-key, single-stop financial services, has also provided for a comprehensive facility that can be used for conferences, meetings, training & orientation seminars, mini-exhibitions, on-line examinations, etc. With a capacity that can accommodate 30 participants, the centrally air-conditioned Training Hall at SWS provides the best of audio-visual facilities combined with comfortable seating and a soothing ambience to help make any program a grand success. A state-of-the-art public address system, provision for multiple computer terminals, slide & LCD projector, broad-band connectivity, fully-adjustable lighting system and piped music that soothes and enhances participants mood are just a few of the features that go hand in hand with the conference-cumtraining hall at SWS. The Training Division at SWS also offers you a one-stop solution combining catering, stationery and other support services when you organize events at SWS Training Hall. While the facility is conveniently located (just 2 minutes walking distance off College Road), the professional support services play a key role in the success of any event. The Training Division maintains a database of professional trainers / facilitators in various subjects and can also organize training schedules suited to your specific requirements. You can choose from a variety of pre-designed course options or request for a custom-designed training program. A number of options combining subjects such as Communication Skills, Selling Skills, Value Engineering, Personal Total Quality (PTQ), Business Ethics, etc. are currently available with the services of experienced facilitators associated with SWS. We, at SWS, are committed to provide one-stop quality services to all our customers. We sincerely believe that Excellence is the best bargain you can offer!

10

Single Window Services

2.2 Organization Flow Chart

CEO

Chief Financial consultant

Back Office Staff

Chief Tax consultant

Marketing Dept

Account Dept

GIC

LIC

Mutual Fund

11

Single Window Services

2.3 Objective of company

In next three years, the Most Preferred Financial Advisor in Nashik and surrounding districts. Achieve a high level of client satisfaction through value-added services like comprehensive financial planning, support and back-up services and providing fair return on their investments and savings.

2.4 Services Offered by company

LIFE INSURANCE GENERAL INSURANCE MUTUAL FUND STOCK TAX ADVISORY @ FINANCIAL PLANNING CLAIM SETTLEMENT SUCCESSION PLANNING... ALLIED SERVICES IN THE FORM OF NETWORK

12

Single Window Services

Chapter 3 INTRODUCTION TO FINANCIAL PLANNNG

Each one of us needs finance at various stages of our life & to ensure that we have the money available at the right time when needed. We may need money at the time of marriage of a daughter or son & we need money at that time only, and not later! Or at the time of medical emergency and again at the time as later the money helps. Or money will be needed simply at the time of retirement. We need finance at different times for different goals. Buying a home providing for a Childs education or marriage or retirement. Are examples of goals in life that can be measure in monitory terms? Every individual can benefit from objective help to create, grow, other lifestyle objectives systematically without any anxiety. Financial planner can guide individuals to achieve their ultimate aim of spending retire life peacefully without compromising living standards. A Qualified financial planner will provide advice on: Systematic savings Cash flow management Debt management Asset allocation for investment Managing risk through insurance planning Tax strategies to increase inventible surplus Distribute residual wealth through estate planning. The objective of financial planning is to ensure that the right amt of moneys available in the right hands at the right point in the future to archive an individuals financial goals. Successful financial planning makes a considerable contribution to the sum total of human happiness. Financial planning is process that helps a person work out where he or she now, what he or she may need in the future & what he or she must do to reach the defined goals. The process involves gathering relevant financial information., setting life goals , examining the persons current financial status & coming up with a strategy & plan for how the person can meet his or her goals given the persons current situation and future plans.

13

Single Window Services

3.1 DEFINITION & SCOPE, NEEDS Financial planning is a highly personalized service where you need to understand not only the total picture of clients financial position but also his behavior attitude & risk profile.

Definition Financial planning is process of -Identifying persons financial goals -Evaluating existing resources current financial position -Designing the financial strategies that help the person achieve those goals

Financial planning includes investment planning, retirement planning, estate planning, tax planning, risk mgmt. Financial planning is a highly personalized service where you need to understand not only the total picture of clients financial position but also his behavior attitude & risk profile.

AIMS OF FINANCIAL PLANNING The first & basic aim of the financial planning is, To protect the wealth & also create & make a growth in the clients wealth Some other goals of financial planning are education planning, retirement planning, foreign tour planning, wedding planning, tax saving etc.

14

Single Window Services

Fundamentals of Financial Planning

Financial planning is the process of solving financial problems and achieving financial goals by developing and implementing a personalized "game plan." In order to be effective this "plan" must take into consideration an individuals overall picture. It must be:

Coordinated Comprehensive Continuous

Financial planning is like all other phases of life; it involves choices Spend now or save for later? Pay off existing bills or increase retirement savings? Focus savings money on short term or long-term goals? A true financial plan does not focus one aspect or product, but instead seeks to take all areas of planning into consideration when making financial decisions.

What is Included?

Cash Flow Management This aspect of planning deals with the day to day allocation of income; and its effective use in paying for current living expenses and in accumulating assets which will be used in meeting financial goals.

Tax Planning and Management This area focuses on the understanding of and application income tax law, estate and inheritance taxes; and, when possible, minimizing these taxes.

15

Single Window Services

Risk Planning and Management This area of planning deals with the risk of losing life, income, or property. It includes the use of insurance products and strategies.

Investment Planning and Management Almost everyone has accumulation goals for which investments must be made and managed. These could include buying a home; planning for college; or providing for retirement.

Retirement Planning and Management By far the most common accumulation goal is the ability to become financially independent. Retirement strategies encompass the understanding of the employersponsored retirement plans; and personal savings accumulation plans.

Estate Planning and Management The final phase of planning is for the transfer of assets to our heirs with minimization of taxes and other costs.

Task of financial planner Task of financial planner is to make a good client planner relationship, assist the client to develop his goals, collect all related financial data, analyses the data, Develop & suggest various alternatives, strategies to archive clients goals, evaluation of various alternatives & selection of appropriate alternative. After selecting appropriate alternative, implementation of the financial plan is take place. After implementing the plan the monitoring & regular preview of the plan is done. The modifications as per the market conditions as & when required are implemented

16

Single Window Services

Planning By Keeping Life Stages In Mind

Single

Family

Retirement

Leaving School

Earner

Marriage

Buying House

Providing For Family

Retirement

Student

1st Job

Marriage

House

Kids Education

Retirement

17

Single Window Services

Process of financial planning Establishing & defining the client planner relationship Gather client data including goals Analyze & evaluate your financial status Develop & present financial planning recommendation Implement the financial planning recommendation Monitor the financial planning recommendations

Benefits of financial planning Security through future planning Analyses every aspect of your financial situation Identified weaknesses & suggest improvements Reduces stress Proper documentation for audit available Prepares everyone to defeat inflation

Financial planning is beneficial for secure the future of the client through planning his future goals, financial status. It analyses your financial status, identify your weaknesses & suggest improvements. Financial planning makes available the proper documentation for audit .all this process reduces stress of the client

18

Single Window Services

Meaning of Portfolio
A Portfolio is a combination of different investment assets mixed and matched for the purpose of achieving investors goal(s). Items that are considered in the portfolio can include any asset, shares, debentures, fixed deposits, mutual fund units to items such as gold, silver and even real estates etc. However, for most investors a portfolio has come to signify an investment in financial instruments like shares, debentures, fixed deposits and mutual fund units. Diversification of Portfolio It is a risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Diversification is possibly the best way to reduce the risk in a portfolio. Advantages of having Diversified Portfolio A good investment portfolio is a mix of a wide range of asset class. Different securities perform differently at any point in time, so with a mix of asset types, your entire portfolio does not suffer the impact of a decline of any one security. When your stocks go down, you may still have the stability of the bonds in your portfolio. There have been all sorts of academic studies and formulas that demonstrate why diversification is important, but its really just the simple practice of NOT PULLING ALL YOUR EGGS IN ONE BASKET. If you spread your investments across various types of assets and markets, you will reduce the risk of your entire portfolio getting affected by the adverse returns of any single asset class.

19

Single Window Services

What is investing?
Investment refers to a commitment of funds to one or more assets that will be held over some future time period. Almost all individuals have wealth of some kind, ranging from the value of their services in the workplace to tangible assets to monetary assets. Anything not consumed today and saved for future use can be considered an investment. For our purposes, investment will mean a measurable asset retained in order to increase ones personal wealth.

Why invest?
We invest to improve our future welfare. Funds to be invested come from assets already owned, borrowed money, and savings or foregone consumption. By foregoing consumption today and investing the savings, we expect to enhance our future consumption possibilities. Anticipated future consumption may be by other family members, such as education funds for children or by ourselves, possibly in retirement when we are less able to work and produce for our daily needs. Regardless of why we invest we should all seek to manage our wealth effectively, obtaining the most from it. This includes protecting our assets from inflation, taxes and other factors.

What Process Do We Use to Invest?

The financial planning process consists of six steps that help you take a "big picture" look at where you are financially. Using these six steps, you can work out where you are now, what you may need in the future and what you must do to reach your goals. These six steps are:

20

Single Window Services

1. Establishing and defining the client-planner relationship. The financial planner should clearly explain or document the services to be provided to you and define both his and your responsibilities. The planner should explain fully how he will be paid and by whom. You and the planner should agree on how long the professional relationship should last and on how decisions will be made. 2. Gathering client data, including goals. The financial planner should ask for information about your financial situation. You and the planner should mutually define your personal and financial goals, understand your time frame for results and discuss, if relevant, how you feel about risk. The financial planner should gather all the necessary documents before giving you the advice you need. 3. Analyzing and evaluating your financial status. The financial planner should analyze your information to assess your current situation and determine what you must do to meet your goals. Depending on what services you have asked for, this could include analyzing your assets, liabilities and cash flow, current insurance coverage, investments or tax strategies. 4. Developing and presenting financial planning recommendations and/or alternatives. The financial planner should offer financial planning recommendations that address your goals, based on the information you provide. The planner should go over the recommendations with you to help you understand them so that you can make informed decisions. The planner should also listen to your concerns and revise the recommendations as appropriate.

21

Single Window Services

5. Implementing the financial planning recommendations. You and the planner should agree on how the recommendations will be carried out. The planner may carry out the recommendations or serve as your "coach," coordinating the whole process with you and other professionals such as attorneys or stockbrokers. 6. Monitoring the financial planning recommendations. You and the planner should agree on who will monitor your progress towards your goals. If the planner is in charge of the process, she should report to you periodically to review your situation and adjust the recommendations, if needed, as your life changes.

Common Mistakes.
It may be helpful to be aware of some common mistakes people make when approaching financial planning: 1. Don't set measurable financial goals. 2. Confuse financial planning with investing. 3. Neglect to re-evaluate their financial plan periodically. 4. Think that financial planning is only for the wealthy. 5. Think that financial planning is for when they get older. 6. Think that financial planning is the same as retirement planning. 7. Wait until a money crisis to begin financial planning. 8. Expect unrealistic returns on investments. 9. Think that using a financial planner means losing control. 10. Believe that financial planning is primarily taxed planning.

22

Single Window Services

INVESTMENT OPPORTUNITIES IN INDIA From the Investment point of view following are the main opportunities available for Investment in India, each of these schemes fulfills the objectives of investors and these schemes having its own advantages and disadvantages but by combining all these major investment schemes we can make the best portfolio for investor which fulfills the expectation and financial goals of the investor. These Investment opportunities include

I. Stock Market. II. Mutual Fund. III. Insurance. IV. Postal Schemes for Investment. V. Debt market. VI. Real Estate.

23

Single Window Services

I. Stock Market
Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes place is determined by the market forces (i.e. demand and supply for a particular stock). Example for a better understanding of how market forces determine stock prices. ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an upward movement in its stock price. More and more people would want to buy this stock (i.e. high demand) and very few people will want to sell this stock at current market price (i.e. less supply). Therefore, buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of ABC Co. Ltd. On the contrary, if there are more sellers than buyers (i.e. high supply and low demand) for the stock of ABC Co. Ltd. in the market, its price will fall down. Advantages of investing in Stock/Share market by Long Term Investment companies. Investor can receive the benefits of dividend or bonus shares. Today the INFLATION rate is around 12%, in this scenario investment in the stock In the capital market there is no capital gain tax on the profit made by selling of shares One can expect assured returns of 25-30% p.a. if invested for long term in the growing

market is able to give you the handsome returns compared to other investments. after one year by the investor. Disadvantages of investing in Stock/Share market suffering Share market is very sensitive and highly volatile so there is high risk involved. If the investment is made without having proper knowledge, the chances of losses become very high. As discussed earlier that the stock market is very sensitive and volatile so any political,

commercial or global news can affect the market.

24

Single Window Services

II. Mutual Fund Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invests the money thus collected into asset classes that match the stated investment objectives of the scheme. Since the stated investment objectives of a mutual fund scheme generally form the basis for an investor's decision to contribute money to the pool, a mutual fund cannot deviate from its stated objectives at any point of time. Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own. When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors. For example If the market value of the assets of a fund is Rs.100, 000 The total number of units issued to the investors is equal to 10,000 Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00 Now if an investor 'X' owns 5 units of this scheme Then his total contribution to the fund is Rs.50 (i.e. Number of units held multiplied by the NAV of the scheme)

25

Single Window Services

Advantages of Mutual Fund for an Investor Portfolio Diversification Professional Management Less Risk Low Transaction Costs Liquidity Choice of Schemes Transparency Flexibility Safety

Disadvantages of Mutual Fund for Investor Costs Control Not in the Hands of an Investor No Customized Portfolios Difficulty in Selecting a Suitable Fund Scheme

26

Single Window Services

III. Insurance
Insurance is a basic form of risk management, which provides protection against possible loss to life or physical assets. A person who seeks protection against such loss is termed as insured, and the company that promises to honor the claim, in case such loss is actually incurred by the insured, is termed as Insurer. In order to get the insurance, the insured is required to pay to the insurance company (i.e. the insurer) a certain amount, termed as premium, on a periodical basis (say monthly, quarterly, annually, or even onetime). Concept of Insurance / How Insurance Works The concept behind insurance is that a group of people exposed to similar risk come together and make contributions towards formation of a pool of funds. In case a person actually suffers a loss on account of such risk, he is compensated out of the same pool of funds. Contribution to the pool is made by a group of people sharing common risks and collected by the insurance companies in the form of premiums.

INSURANCE COVERS
Depending on the circumstances, you may need insurance in the following areas: Life Health Home Motor Personal Liability Professional Liability Business Disability

27

Single Window Services

LIFE INSURANCE:
Life insurance is a risk sharing mechanism whereby a policy owner (the insured) agrees to invest some money with an insurance company that obligates itself to pay money to a beneficiary on the insureds death. It is a legal contract between an insurance company and policy owner. Life insurance needs analysis: The first in determining what type of insurance to buy is a needs analyses. You need to assess the financial impact on your family if the breadwinner should die. You can assess the in different ways. 1. The Multiple Earning Method: The amount of life cover you should buy should be 3 to 10 times of your gross annual earnings. It completely ignores your financial resources and needs. 2. The Human Life Value Method: This method values human life at the present value of all future earnings potential. The steps for calculating the amount of cover under this method are as below: Deduct your personal expenses from your total income. This is the surplus that you leave for your family and for your investments. Calculate the number of years left in your earning life (Retirement age-Current age) Project family expenses up to retirement, allowing for increases due to inflation and other factors. Subtract any pension benefits that they might get at your death. Add non-recurring expenses like childrens marriage. Calculate the shortfall in the total expenses and income. Calculate the present value of the shortfall. 28

Single Window Services

3. The Needs Method: This method tries to calculate the amount required by your family to maintain their existing lifestyle and their financial goals. The amount of the life cover under this Method is calculated by subtracting the total of your current financial resources from the present value of your familys projected expenses.

FORMS OF LIFE COVER:

Life insurance covers are availably three forms. Each form exists for a different objective. These are: 1. Term Plan

2. Pensions Plan 3. Investment-cum-insurance products Endowment plans Money-back plans Whole life plans Unit linked insurance plans

1. TERM PLANS: In the event of death in the policy period, your nominees receive the amount of your cover i.e. the sum assured. You get nothing if you survive beyond the policy period. 2. PENSION PLANS: Pension plans are actually pure investment products. They provide with an alternate income stream after your retirement.

29

Single Window Services

3. ENDOWMENT PLAN: They also offer some returns on the premiums paid by you. So if you die during the policy Term, your nominees get the sum assured plus some returns. Even if you survive the term, you still get back the sum assures and the returns. However, the premium charged for endowment plans is 5-6 times higher than the premium for term plan.

4. MONEY-BACK PLANS: Money-back plans are a variant of endowment plans. In case of the endowment plans, the survival benefits are disbursed at the end of the policy term, while in money-back plans the payback is staggered through the policy period. Money back policy is a policy opted by people who want periodical payments. A money back policy is generally issued for a particular period, and the sum assured is paid through periodical payments to the insured, spread over this time period. In case of death of the insured within the term of the policy, full sum assured along with bonus accruing on it is payable by the insurance company to the nominee of the deceased.

4. WHOLE-LIFE PLANS: The term plan, endowment plans and money back plan provide cover only till a specified age. Whole life plan provides cover till end of life. The insured has to pay premium till a specified age. On reaching that age, the insured has the option to encash the maturity benefits pr continue the cover for his entire lifetime. 5. UNIT LINK INSURANCE PLANS: It can be considered as a combination of mutual funds and term plans. Part of the premium paid is linked to the policy period and the sum assured and the rest is invested. 30

Single Window Services

NON-LIFE INSURANCE

TYPES OF NON LIFE INSURANCE: 1. PersonalMedical Disability 2. PropertyDamage to property Loss of income Indirect losses 3. LiabilityUnder statute Under common law Under contract

31

Single Window Services

IV. DEBT
Debt is that parts of the total investment that will yield steady returns and provide an element of stability to the whole portfolio of the individual. This is an important asset class as it is not just returns but the nature of the portfolio that has to be taken into Consideration for different individuals.

Features of debt
The returns here are in the form of interest Coupon rate determines the interest received for investors The yield is another important factor to look at Yield measure the return of an instrument that is held till its maturity Yield changes at different points of time depending upon market conditions Yield is relevant for traded debt instruments This will give the total return for debt Investors can put their money into debt directly or through mutual fund They are quite steady in returns There are various debt instruments like bonds, debentures, and deposits.

Use of debt
Used to bring in an element of stability in the picture Makes the investment a bit less risky than equity There is no cause for daily monitoring unless there is an intention to trade the instruments There is an element of surety about the returns when held till maturity and there is not credit default

32

Single Window Services

Bonds
A bond is a debt instrument issued for a period of one year or more. This is a more conservative investment. Bonds raise capital for the issuer by borrowing money from investors. With a bond note, the issuer is basically promising to repay the principal along with interest on a specified date, also known as the maturity date. The government, states, cities, corporations and many other types of institutions sell bonds.

The various types of Bonds are as follows: Zero Coupon Bond: Bond issued at a discount and repaid at a face value. No periodic interest is paid. The difference between the issue price and redemption price represents the return to the holder. The buyer of these bonds receives only one payment, at the maturity of the bond. Convertible Bond: A bond giving the investor the option to convert the bond into equity at a fixed conversion price.

Treasury Bills: Short-term (up to one year) bearer discount security issued by government as a means of financing their cash requirements.

33

Single Window Services

V.

Postal Schemes for Investment

Following chart will explain some of the popular schemes of Postal Department for Investment
Minimum Interest Scheme (%) (Rs.) National Savings Certificate Public Provident Fund 8.00a 100 (Rs) No limit 6-year tenure Section 80C benefit Section 80C benefit Investment Investment Features Tax Breaks Maximum

8.00b

500

70,000

15-year term; tax-free returns

Kisan Vikas Patra 8.41b

100

No limit Single A/c: 4.5

Money doubles in 8 years, 7 months No tax benefit No tax benefit 6-year tenure; monthly returns

Monthly Income Scheme

8.00

1,500

lakhs Joint A/c: 9 lakhs

Time Deposits Recurring Deposits Senior Citizens Saving Scheme

6.25-7.50 200 7.50c 10

No limit No limit

Available for 1, 2, 3, 5 years 5-year tenure 5 year tenure; minimum age 55; also available with public sector banks

No tax benefit No tax benefit

9.00d

1,000

15 lakhs Single A/c: 1

No tax benefit

Savings Bank Account

3.5

lakh Joint A/c: 2 lakhs

Any individual can open an account; Cheque facility available.

No tax benefit

Sec 80C benefit: Investments up to Rs 1 lakh in specified securities (maximum of Rs. 70,000 in PPF) qualify for deduction
A

Compounded half-yearly

Compounded yearly

Compounded quarterly

Payable quarterly

34

Single Window Services

VI. Real Estate Investment
India Real Estate Investment is a significant feature of the Indian realty market under the initiation of the investors and developers, leading to future real estate development in India. The development of private ownership of property real estate in India has become a major area of business with India Real Estate Investment playing the vital role. India Real Estate Investment involves minimum risk for getting maximum return. India Real Estate Investment has rising demand in every sector like commercial, residential, retail, industrial and hospitality. But maximum demand is observed in the booming IT sector. The India Real Estate Investment is facilitated by the liberal economic policies of the government. Factors Favoring Indias Real Estate Investment Increasing growth in residential properties due to lower interest rates, easy availability of housing finance, rising income, better job prospects and increase of nuclear families. Growth of retail market in India due to increasing demand from retailers, higher disposable incomes. Burgeoning IT and ITES industry Growing commercial property market Emerging hospitality or hotel industry due to the exceptional boom in inbound tourism and the IT sector. Development of the special economic zones (SEZ).

35

Single Window Services

3.2 Presentation of the information either in Tabular form and / Graphical

What are Risk Analysis and Portfolio Planning? Risk Analysis Risk analysis is very important tool for portfolio planning, because each persons risk appetite is different due to reasons like income level, age, mentality, financial goals and objectives. So Portfolio planner must have to find out the risk appetite of the client with the help of RISK ANALYSIS tool. By analyzing the risk of client the portfolio planner came to know whether the client is AGGRESSIVE, MODERATE, and CONSERVATIVE.

Basic Types of Portfolios

In general, aggressive investment strategies - those that shoot for the highest possible return - are most appropriate for investors who, for the sake of this potential high return, have a high-risk tolerance (can stomach wide fluctuations in value) and a longer time horizon. Aggressive portfolios generally have a higher investment in equities. The conservative investment strategies, which put safety at a high priority, are most appropriate for investors who are risk averse and have a shorter time horizon. Conservative portfolios will generally consist mainly of cash and cash equivalents, or high quality fixed income instruments. To demonstrate the types of allocations that are suitable for these strategies, we'll look at samples of both a conservative and a moderately aggressive portfolio. Note that the terms cash and the money market refer to any short-term, fixed-income investment. Money in a savings account and a certificate of deposit (CD), which pays a bit higher interest, are examples. (You can read more about the money market in the.)

36

Single Window Services

1. Conservative portfolio: Conservative model portfolios generally allocate a large percent of the total portfolio to lower-risk securities such as fixed-income and money market securities.

Your main goal with a conservative portfolio is to protect the principal value of your portfolio. As such, these models are often referred to as "capital preservation portfolios". Even if you are very conservative and prefer to avoid the stock market entirely, some exposure can help offset inflation. You could invest the equity portion in highquality blue chip companies, or an index fund, since the goal is not to beat the market.

37

Single Window Services

2. Moderately Conservative Portfolio: A moderately conservative portfolio is ideal for those who wish to preserve a large portion of the portfolios total value, but is willing to take on a higher amount of risk to get some inflation protection.

A common strategy within this risk level is called "current income". With this strategy, you chose securities that pay a high level of dividends or coupon payments.

38

Single Window Services

3. Moderately Aggressive Portfolio: Moderately aggressive model portfolios are often referred to as "balanced portfolios" since the asset composition is divided almost equally between fixed-income securities and equities in order to provide a balance of growth and income.

Since these moderately aggressive portfolios have a higher level of risk than those conservative portfolios mentioned above, select this strategy only if you have a longer time horizon (generally more than five years), and have a medium level of risk tolerance.

39

Single Window Services

4. Aggressive Portfolio: Aggressive portfolios mainly consist of equities, so these portfolios' value tends to fluctuate widely. If you have an aggressive portfolio, your main goal is to obtain longterm growth of capital. As such the strategy of an aggressive portfolio is often called a "capital growth" strategy.

To provide some diversification, investors which aggressive portfolios usually add some fixed income securities.

40

Single Window Services

5. Very Aggressive Portfolio: -

Very aggressive portfolios consist almost entirely of equities. As such, with a very aggressive portfolio, your main goal is aggressive capital growth over a long time horizon.

Since these portfolios carry a considerable amount of risk, the value of the portfolio will vary widely in the short term.

41

Single Window Services

Portfolio Planning

After analyzing clients risk appetite portfolio planner starts his actual work of Portfolio Planning. Firstly portfolio planner finds out the goals and objectives of his clients for investing in the right direction. Then he designs the investment of his client in stock market, mutual fund, insurance, FDs, realty investment and bonds etc. for making diversified portfolio. After designing the clients portfolio, portfolio planner discussed his proposed investment pattern with his client and after getting approval from him he actually invest his money.

After making investment, Portfolio Planner has the duty to keep regular watch on clients portfolio.

42

Single Window Services

3.2Data Interpretation and Analysis

Sample Portfolio of different backgrounds, financial conditions, objectives and financial goals To study the risk analysis, portfolio analysis and planning we need to study live cases to understand how it works and beneficial in practical life. For this I decided to take live examples of different persons with different objectives, financial conditions, objectives and goals. Procedure for making Portfolio of the client Fill up the Risk analysis and portfolio analysis of the client to know his/her personal and financial details. Then analyze the Risk Appetite of the client. Then understand his/her financial goals. Then study the cash inflow and outflow pattern of the client. After this study the existing Investments of the client. Then prepare the Model investment Portfolio for client. After clients free consent for the proposed plan, invest his/her money according to that. After this keep regular watch on clients Portfolio and make necessary changes wherever required.

43

Single Window Services

Case.

________________________________
Personal Financial Plan For Mr. Satish Deshpande & Family

________________________________

44

Single Window Services

Introduction Goals and Objectives Current Financial Situation Assumptions Cash-Flow Management Risk management / Insurance planning Education Planning Retirement Planning Investment Planning Estate Planning Tax Planning Implementation / Action Plan Appendix 1: Personal Data Appendix 2: Personal Financial Fact-Finder

45

Single Window Services

Introduction Satish, you are 42 years old, married to Pushpa age 39 recently. You are currently earning Rs. 1352000/- p.a. and main support for the family. Pushpas income in mainly for her own savings and personal use. Within next 2-3 yrs she will stop her consultancy and focus on your childrens education and home. You are very keen on insurance part. And paying almost 200000/- premium p.a. Total 14 policies with sum assured Rs. 3815000. Majority of the policies are Endowment and few Term Insurances. Your Net worth analysis shows a net worth of Rs. 4590000/- Total Assets now in July 2008 are Rs. 8182000/- and liabilities of Rs. 3592000/-

46

Single Window Services

Your Objectives & Concerns 1. Cash Flow & Net worth Management To have a significant cash flow surplus annually of around 15-18% of household gross income in order to provide a funding source for all future wealth accumulation targets. Any cash flow review should not significantly change your lifestyle. 2. Risk planning & Management You want to have a complete familys personal insurance program. This includes covering all debts and having lump sums for generating income for the surviving family members. 3. Education of both the children. You have 2 sons. Your goal is to give them the Best quality of Education in best colleges in India. By, retirement, you expect both of them to be independent and do not need financial support. 4. Retirement Planning You have some personal savings. Your goal is to retire at age 60. At that time you want maintain the standard of living same as before retirement for yourself and spouse. Lowering the standard is unacceptable. You are however not aware whether the current recourses are adequate to provide retirement needs.

5. Investment Planning Asset portfolio should grow at a rate, which supports the realization of the wealth accumulation goals for financial freedom (retirement) and education for children.

47

Single Window Services

6. Estate Planning To have wills written for both husband and wife and to have a trust set up for the child. 7. Tax Planning To optimize tax savings under the Indian tax system. You are keen on using up all personal tax relieves and rebates and to have good income reallocation planning.

Sub-Objectives 1. Good long term capital appreciation 2. Returns from investment should be tax free or with minimum tax

48

Single Window Services

Current Financial Situation Cash Flow Analysis In-Flow Satish Income (after tax) Pushpa's Income (after tax) LIC Maturity Dividend Received Bank Interest Rs
1,352,040 165,000 134,000 20,000 2,100

Out-Flow Tax Payment Satish Tax Pushpa's Tax Subtotal Standard of Living Car loan installments (Honda City) Car loan installments (Wagon R) House loan installments Personal Loan Car maintenance House maintenance Credit Card payments Eating out Groceries Travel Utilities Miscellaneous Subtotal Insurance Premium Satish life insurance Pushpa's life insurance Vehicle Insurance Other Insurance Subtotal Total Difference

Rs.
225,000 0 225,000 212,400 79,764 225,144 235,392 19,000 12,000 6,122 48,000 12,000 50,000 60,000 69,500 1,029,322 108,264 57,901 12,686 21,000 199,851 1,454,173 218,967

Total

1,673,140

49

Single Window Services

Cash out Flow is

1% 1% 4% 7% 5% 4% 3% 1% 3% 0% 1% 1% 16% 15% 15% 15%

5%

Satish's Tax Car loan installments (Honda City) Car loan installments (Wagon R) House loan instalments Personal Loan Car maintenance House maintenance Credit Card payments Eating out Grocerie s Travel Utilitie s Miscellaneo us Satishs life insurance Pushpas life insurance Vehicle Insurance Other Insurance

50

Single Window Services

Net worth Statement Current

Assets Liquid assets: Cash in hand Saving account Fixed Deposits Mutual Funds Sub Total Non-liquid assets: Properties Equities PPF Cars Life insurance cash value Other Assets Sub Total TOTAL

Rs. 20000 116950 0 776000 912950 3500000 200000 1005789 800000 764053 1000000 7269842 8182792

Liabilities Home Loan Car loans Personal Loan

Rs. 1780000 456000 1356000

TOTAL NETWORTH

3592000 4590792

51

Single Window Services

Net worth Statement Current

Assets
0% 1% 12% 9% Saving account Mutual Funds 9% Properties Equities 10% PPF 44% 13% 2% Life insurance cash value Other Assets Cars Cash in hand

52

Single Window Services

Risk Management/Insurance Planning The current personal insurance summary is as follows: Person Mr. Satish Mrs. Pushpa Master Umesh Master Amey Plan type Endowment + Term Insurance Endowment Unit Linked Unit Linked Premium p.a. 92533/56550/6395/6351/Insurance Cover 3815001/1142653/75000/100000/-

The current property insurance summary is as follows: Property Current House Cars Other Household Assets Sum Assured Not Insured Adequately Covered Not Insured

53

Single Window Services

Investment Planning The following table lists out the portfolio of investment-grade assets currently owned and the portfolio return rate: Asset Saving Account Equities Life insurance Value Mutual funds PPF Rs 116,95 0 200,00 0 764,05 3 776,00 0 1,005,78 9 2,862,79 Total: 2 Portfolio Return: 9.48% 8.00% 2.81% 15.00% 4.07% 4.50% 1.20% 18.00% 1.26% 3.50% 0.14% Return Rate Weighted Return Rate

Investments

4%

7%

35% 27%

Saving Account Equities Life insurance Mutual funds PPF

27%

54

Single Window Services

Retirement Planning There is currently no clear plan on retirement. You have not really focused on this aspect. It seems that your major focus is on your current profession and you have not given a thought on Retirement Planning.

Education Planning It seems that you have not specifically allocated funds for education funding of your two sons.

Estate Planning There is no arrangement of any nature including will and trust done, other than the nominations done for Mutual funds and Insurance policies.

The other facts and data are collected in the Personal Financial Fact-Finder form as attached in the Appendices.

55

Single Window Services

Assumptions

Following are the assumptions based on the facts and discussions with you. Your income will increase at the rate of 10 % per annum until age 60. Spouses income will stop within next 3 years. Rate of inflation at 7 % per annum based on government official rate on Consumer Price Index. Equities investment rate of return at 18% p.a. on long-term basis. Property investment rate of return at 10 % p.a. covering capital gain. Investment-linked equities funds at rate of return of 15% p.a. Investment-linked bond funds at rate of return of 7.5 % p.a. Pre-retirement investment portfolio rate of return should be 12% Post-retirement investment portfolio rate of return = 10%

56

Single Window Services

Recommendations
Cash Flow Management The current cash flow surplus is very low at around 2 Lacs per annum. Based on no change or very minimal change in lifestyle, we have studied and done an analysis. In recommending changes, we have kept in mind some basic principles: Your lifestyle needs to be maintained as original as possible. Any reshuffling of assets including paying off debts or loans must leave behind enough liquid assets that cater to the 3-6 months of emergency buffer fund. Our analysis and recommendations: As you are living with your parents the household expenses are very much in control. We should really appreciate that you dont have any balance on credit card. In your routine outflow the major contribution is of EMI of different loans. We will see any alternative available to reduce the EMI contribution. Car Loan (Honda City): - In this case the loan was taken in 2003. As it is higher end car the loan rate is vary low. It comes out to be 6.7% only. So its better we should keep it as it is. The loan will end in Aug 08 Car Loan (Wagon R): - This loan is also at lower side. Interest rate comes out to be 8%. Better to continue this loan without any change. House Loan: - In this case the interest rate is almost same with other banks so there is hardly any scope for debt arbitrage. Personal Loan: - This is taken from 3 banks at different time and at different rate. The average interest rate of all 3 loans comes out to be 16%, which is slightly on higher side. This is the area where we can think of repaying it earlier. Total outstanding amount is Rs. 1356000/-

57

Single Window Services

We have various options available to repay this loan. Your Insurance portfolio shows that majority of the policies are of Endowment type and few are Term insurances. We have taken out the Loan quotation for all those endowment policies. Total Loan available is around Rs. 587000/-. Loan interest rate is 9% Current value of your investment in Mutual Fund & Shares is Rs. 976000/- we have a product called Loan against Securities. (LAS) current interest rate for that is 13%. We can pledge all the investment in those against which 50% loan will be available. i.e. Rs. 488000/- will be available at 13% we will utilize Rs. 450000/- from that. Surplus of Rs. 38000/- will be available which we will not utilize as LAS is fluctuating on market, so it will act as buffer to adjust the market condition. Currently PPF has much more amount getting 8%. We will withdraw Rs. 319000. Adding above 3 (587000+450000+319000) we will get Rs 1356000/We can close the personal loan from above amount. Another important point is in LIC loan interest payment is mandatory (4.5 % of loan amount half yearly) LAS is CC loan. Hence we can adjust the principle repayment in both the loans as per our wish. Considering that we will repay the principle also then equivalent EMI will be 11338/-

58

Single Window Services

If the above reductions are implemented, the new cash flow statement will look like the followings: Cash Flow Statement - Revised In-Flow Satishs Income (after tax) Pushpa's Income (after tax) LIC Maturity Dividend Received Bank Interest Rs. 1,352,04 0 165,000 134,000 20,000 2,100 Out-Flow Tax Payment Satish Tax Pushpa's Tax Others Subtotal Standard of Living Car loan installments (Honda City) Car loan installments (Wagon R) House loan installments LIC Policy Loan Loan Against Securities Car maintenance House maintenance Credit Card payments Eating out Groceries Travel Utilities Miscellaneous Subtotal Insurance Premium Satishs life insurance Pushpa's life insurance Vehicle Insurance Other Insurance Subtotal Rs.

225,000 0 225,000 212,400 79,764 225,144 69,192 66,864 19,000 12,000 6,122 48,000 12,000 50,000 60,000 69,500 929,986 108,264 57,901 12,686 21,000 199,851

Total

1,673,14 0

Total Difference

1,354,837 318,303

59

Single Window Services

Revised Cash Out Flow

Satishs Tax

2% 1% 4% 8% 5% 4% 4% 1% 4% 0% 1% 1% 5% 5% 17% 6% 16% 17%

Car loan installments (Honda City) Car loan installments (Wagon R) House loan installments LIC Policy Loan Loan Against Securities Car maintenance House maintenance Credit Card payments Eating out Groceries Travel Utilities M iscellaneous Satishs life insurance Pushpas life insurance Vehicle Insurance Other Insurance

60

Single Window Services

The new net worth statement after debt arbitrage will be as follows: Net worth Statement Revised Assets Liquid assets : Cash in hand Saving account Fixed Deposits Mutual Funds Sub Total Non-liquid assets : Properties Equities PPF Cars Life insurance cash value Other Assets Sub Total TOTAL Rs. 20000 116950 0 776000 912950 3500000 200000 686789 800000 764053 1000000 6950842 7863792 Liabilities Home Loan Car loans LIC Policy Loan Loan Against Securities Rs. 1,780,000 456,000 587,000 450,000

TOTAL NETWORTH

3,273,000 4,590,792

Here, we can see a dramatic change in the cash flow surplus. From Rs. 2.18 Lacs surplus, we now have a surplus of Rs. 3.18 Lacs, which can be used to fund your goals and objectives in life. This surplus is necessary to do the funding, as current assets may not be sufficient to do the task.

61

Single Window Services

Revised Asset 0% 1% 13 % 10 % 10 % 9% 3% 44 % 10 % Cash in hand Saving account Mutual Funds Properties Equities PPF Cars Life insurance Value cash Other Assets

62

Single Window Services

Risk Management/Insurance
Personal Insurance You are keen to upgrade your familys insurance program so as to meet the goal and objectives. Calculations for Sanjays sum assured : Death & Total and Permanent Disability As you are the breadwinner of the Family, there are certain responsibilities that you have to complete, There are 2 types of liabilities, which we should consider while deciding the Sum Assured. 1. 2. 1. Legal Liability Moral Liability Legal Liability Amount 1780000 456000 1356000 3592000

Head House Loan Car Loan Other Loans Total

63

Single Window Services

2. a. Moral Liability Maintaining same life style of the family Based on principal liquidated basis: Family should get at least Rs. 20000/- Monthly, which will cover the pension of spouse also. Rate of Return: 8% (Risk Free) Inflation: 5% Inflation Adjusted Rate of Return: 2.86% Principle amount req. today = Rs. 6644000/b. Education of your children

Present value of Future requirement of Education of both the children is calculated which comes out to be: Rs. 854200

Mr. Sanjay Legal Liability Moral Liability Less: Current insurance Less: Net worth of family on investment assets only i.e. S/A, Equities, Mutual Funds, PPF, Cash Value of Insurance Additional insurance required

Rs. 3592000 7498200 3815001 2543792

4731407

64

Single Window Services

For wife, the need of wife will be arbitrary as if something were to happen to her, husband will continue working and supporting the remaining family. Therefore, sum assured of half of husbands amount (Moral Liability) i.e. Rs. 3700000 should suffice.

Wife Total basic sum assured needed Less: Current insurance Additional insurance required

Rs. 3700000 1100000 2600000

For the children, death cover will not be an important need as the financial loss to the parents will be minimal. However, disability cover is needed and it is recommended that disability income of Rs. 4000/- per month per child be given. To generate this income perpetually with 8% (risk free rate), a basic sum assured of = Rs. 600000/- is recommended for both the children

Education Planning
Table of cost for the degree program for Children. 65

Single Window Services

Cost required for tuition fees and living expenses for degree course todays is Rs.100000/- per year & for Post Graduation is Rs. 200000/Considering 7% inflation in education amount required will be
Sr.no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 HE 80000 85600 91592 98003.44 104863.7 112204.1 120058.4 128462.5 137454.9 147076.7 157372.1 168388.2 180175.3 192787.6 GR 100000 107000 114490 122504.3 131079.6 140255.2 150073 160578.1 171818.6 183845.9 196715.1 210485.2 225219.2 240984.5 PG 200000 214000 228980 245008.6 262159.2 280510.3 300146.1 321156.3 343637.2 367691.8 393430.3 420970.4 450438.3 481969 98003.44 104863.7 140255.2 150073 160578.1 171818.6 367691.8 393430.3 120058.4 128462.5 171818.6 183845.9 196715.1 210485.2 450438.3 481969 98003.44 104863.7 140255.2 270131.5 289040.7 343637.2 551537.8 590145.4 210485.2 450438.3 481969 Umesh Amey Net req

For Umesh For Amey EMI for Umesh EMI for Amey

HE 202866 248520 4855 2533

GR

PG

Total of EMI

622724 355663 8041 2433

761121 932307 4372 3372

17,269/-

8399/25608/-

Retirement Planning
Financial Independence by age 60 Retirement income projection by Expense Method:

66

Single Window Services

From fact-finding discussion held with James, we list out all the expenses that they projected they will incur when they retire. The amount of each expense is benchmarked at todays price. The future pricing is found by taking inflation into consideration at 7 % per annum. All the figures are tabulated in the following table: Retirement Income - Projection by Expense Method Items needed when retired Food Clothing Cars maintenance Personal maintenance Medical Groceries Travel Utilities Life insurance Entertainment Medical Insurance
House maintenance

Total

Today's annual cost 48000 20000 19000 24000 10000 12000 50000 60000 200000 30000 20000 12000 505000

Inflation rate 6% 7% 6% 7% 9% 7% 6% 5% 0% 7% 6% 5%

Cost at age 60 137008 67598 54232 81118 47171 40559 142716 144397 200000 101397 57086 28879 2902161

The Expense Method is the more accurate method but relies quite heavily on the rate of inflation.

67

100000

150000

200000

250000

50000 Retirement

Retirement

68

Fo C od ar C Pe s m lo rs on ain thin al te g n m ai anc nt en e an M ce ed G ic a ro ce l r ie s Tr av U el Li f e til i i n t ie En sur s an t M ed erta ce H ica inm ou l se Ins ent m ura ai nt nce en an ce

Single Window Services

Single Window Services

Finding the lump sum for retirement: To find the lump sum to generate this projected retirement income is sufficient, we first select the annual retirement income calculated from the Expense Method at Rs 2902161/Then we work into two scenarios on the length of time this income is needed. Scenario 1: The principal intact scheme. The Rs. 2902161/- annual retirement income is to be needed perpetually i.e. indefinitely. Here, based on the inflation-adjusted discount rate I, we calculate the lump sum needed for such inflation-adjusted income generation.

You need Rs 29021610/- to have this retirement income perpetually without liquidating any of the principal amounts. The amount looks very high. In layman terms, this is the deluxe scheme. The second scenario will be the economy scheme.

69

Single Window Services

Scenario 2: Principal liquidation scheme. The annual retirement income is to be needed for a certain number of years only normally to the end of the life span projected. Taking a life span of up to 80 years old + a safety margin of 10 years until age 90, we are taking a period of 30 years in which the lump sum accumulated at retirement will be used up together with the interest income generated to provide the per annum amount. Again here, based on the inflation adjusted rate of return i, we calculate the lump sum needed for such inflation-adjusted income generation. Assumptions: Rate of inflation, I = 7 % Post-retirement rate of return in fixed income instruments, r = 10 % We calculate the inflation-adjusted discount rate i = r I / 1 + I = 0.10 0.07 / 1 + 0.07 = 2.8037 % Using financial calculator or table of values, where n = 30 i = 2.8037 % PMT = 2902161 FV = 0 Mode = BGN (as retirement income is needed at the beginning of each year) PV = 59990371/Lump sum needed is about Rs. 59990371/-

70

Single Window Services

Funding the entire lump sum We now see if you can fund this amount within 18 years from now. Funding the amount can come from 2 sources Current net assets Future cash flow surpluses All the sources fund the accumulation phase as tabulated below: Source Method Value 18 years From now, at 11 % growth rate

NOW Current net assets

From revised net worth statement Amount is Rs. 2543792 16645437/(See Note 1 below) Using calculator, N = 18 I = 11 % PV = Find FV

FUTURE

a) Cash flow statement revised with annual surplus of Rs. 275000/- (After New Insurance Coverage) Using calculator, N = 18 I = 11 % PMT = 275000/Mode = End Find FV TOTAL: (M + N) 13858882/-

N 30504319/-

Note: (1) The net value of cars is not taken into this figure, as cars are not investment grade asset unless they are liquidated.

71

Single Window Services

Our findings:
Satish will have 16645437 + 13858882 = Rs. 30504319/- by the time he retire. Satish requires Rs. 66553950/- to fund by the economy scheme method based on current situation. Actual amount is short to meet the requirement, so the options are: A higher post-retirement rate of return of higher than 10%. During retirement years, assets should be invested in very low risk or zero-risk assets. So, this is not recommended. Delay the retirement age from 60 to probably 63. However, this does not meet Satish original objective and will be pursued only as a last resort. Reducing the retirement income will meet the lower retirement lump sum. Based on the risk profile questionnaire, Satish has that much risk appetite hence we recommend the option (d) to adapt.

72

Single Window Services

Investment Planning To meet the desired retirement lump sum at age 60, the portfolio investment rate of return used above is 12% for pre-retirement. However, based on the current portfolio, the portfolio return rate is only 9.48%. The portfolio needs to be restructured to the followings: Asset Saving Account Equities Life insurance Mutual funds PPF Total: The recommendations are: Based on the age and risk profile questionnaire, Satish has a moderate risk appetite. Hence the Asset Allocation kept is: Asset Class Debt Equity Amount 1,197,792/1,346,000/% 47% 53% Rs 116,950.0 1,346,000.0 764,053.0 316,789.0 2,543,792 Return Rate 3.50% 18.00% 4.50% 15.00% 8.00% Portfolio return: Weighted Return Rate 0.16% 9.52% 1.35% 0.00% 1.00% 12.03%

As Equity portion has higher risk we suggest you to go for PMS activity, in which you will have direct participation in equity market with professional advice. As you have completed almost first 15 yrs in PPF and extended that account for next 5 yrs. You will be able to withdraw Rs. 500000/-, which will invest in equity. We will reallocate the mutual Fund amount to Direct Equity

73

Single Window Services

The recommendations for Future Investment Every year the surplus investment of Rs. 275000/- will be as below. Asset Saving Account Time Deposits Equities Mutual funds Debt Funds PPF Total: Rs. 20,000.0 73,000.0 72,000.0 90,000.0 20,000.0 275,000 Return Rate 3.50% 9.00% 18.00% 15.00% 7.50% 8.00% Portfolio return: Weighted Return Rate 0.25% 0.00% 4.78% 3.93% 2.45% 0.58% 12.00%

This will keep the asset allocation same as required We have added Debt Funds in your portfolio. They are almost liquid as saving account. But the yield is almost double than the saving.

This restructured portfolio will give 12 % return in order to meet your accumulation goals. However, such restructuring must meet the risk profile of you in which we have matched. If it does not, the financial planner will need to discuss again with you again if they can arrive to some acceptable conclusions which include but not limited to, making some changes to your goals and objectives.

74

Single Window Services

Restructured Existing Investment Portfolio
12% 0% Saving Account Equities 30% 53% Life insurance Mutual funds PPF 5%

Future Investment Portfolio

7% 7% Saving Account 27% 33% Equities Mutual funds Debt Funds PPF 26%

Asset Allocation

Debt
47% 53%

Equity

75

Single Window Services

Estate Planning

The need for estate planning centers more on will writing, trust creation and estate distribution. A will is recommended to be written to instruct the trustees to distribute all wealth to the beneficiaries as per the wishes of you should he be demised. To ensure assets go to the right person(s), it is recommended that all nominations must be properly done for all insurance policies and mutual funds.

76

Single Window Services

Tax Planning
Tax relief & rebates You are keen to maximize whatever relief and rebates you can get so that he can pay minimum taxes. You already have a taken a good care of Taxes You have full advantage of Home loan interest repayment. Life Insurance policies itself takes care of tax rebate u/s 80 C As we have increased the Health Insurance premium you will be able to get full benefit u/s 80 D Frequent Churning of shares used to generate Short Term Capital Tax. Now as per new recommendation your equity portfolio will be handled by professionals, they will take good stocks and hold them for at least more than a year. Hence Short Term Capital Tax will be minimized.

77

Single Window Services

Implementation/ Action Plan What Apply for loan from LIC Withdraw amount from PPF Withdraw the amount from Mutual Funds Invest the amount in Equity Apply for Loan against Securities Complete the LAS Repay the Personal Loan To prepare and complete a comprehensive insurance program for the entire family To review retirement planning goals and objectives To restructure the current asset portfolio from 9.48% to 12.0% To get a will written and nominations for others. Review the portfolio Who to do it Client Client Client Financial Planner Financial Planner Financial Planner Client Financial Planner Financial Planner + Client Financial Planner Financial Planner Financial Planner + Client Deadline 1 July 08 1 July 08 1 July 08 15 July 08 1 July 08 15 Sep 08 20 July 08 1 July 08 10 July 08 15 July 08 10 July 08 15 Dec 08

78

Single Window Services

Appendix 1 Personal Data Area Birth date Sex Marital status Address Occupation Employer Income from employment Consultant Self Employed Rs. 1352000/- per annum Satish 1 Sep 1965 Male Married Pushpa 27 Mar 1967 Female Married Same Consultant Self Employed Rs. 165000/- per annum Umesh 19 Jan 1995 Male Single Same Nil Nil NA Amey 15 May 1998 Male Single Same Nil Nil NA

79

Single Window Services

Chapter 4. Conclusion of the study

Most of people unaware about Financial Planning. Mainly businessman & salaried person are more interested to do Financial Planning. Mutual fund advertisement not succeeds in creating awareness in the people. Most of investor does not know that how Portfolio Generate profit. People are more interested in investing in traditional Investment options like insurance, FD, post.

80

Single Window Services

Chapter- 5 Recommendations and suggestions

Co. should have to increase awareness in the customers. Create a new tools and techniques which will easy to understand for clients. Co. has to use effective Medias that can appeal to the masses. Make those ads, which can educate customers about financial planning.

81

Single Window Services

QUESTIONNAIRE

PERSONAL FACT FINDER Date: 28-june-08 Name: Address Satish Deshpande

Phone No. Date of Birth Relation Spouse Child 1 Child 2 Education Background Occupation Employer Q. Q Q Q Q Q Q 1-Sep-65 Name Pushpa Umesh Amey B.E. MBA HusbandWifeSelf Employed Age 39 12 9

Fax No. Marital Status Occupation Self Employed Education Education

Marrie d

Consultant Consultant

Brief summary of your working experience? Working as a Consultant from last 12 Yrs. Personal legal Advisor Personal Accountant Personal Tax Advisor Insurance Agent Current Annual Income Mrs. Godha Mr. Sandip Deshmukh Mr. Sandip Deshmukh Mr. Deepak Kulkarni 1352000/-

Last 3 Years Annual Income Year 2007-2008 1352000/Year 2006-2007 1217000/Year 2005-2006 1095000/What is the average annual increment rate? 10% Average annual taxes paid in the last 3 years? 180000/Are income tax withheld appropriately from your employment income? 82

Q Q Q

Single Window Services

N/A Q Q Q Q Q Q Q Are your income tax returns prepared by you or a professional accountant? Professional Accountant Do you file income tax jointly or separately with your spouse? Separately DO you have a personal retirement plan? No At what age do you want to retire? 60 What concerns you most about retirement? Monthly Income What does retirement mean to you? Involving in Social Work, Traveling, Develop my personal hobbies Do you expect to maintain, upgrade or reduce your pre-retirement standard of living during retirement? Maintain pre-retirement standard after retirement Do you think your current retirement program provide adequately for your Retirement income needs? Dont know Are you willing to lower your standard of living during retirement? No Do you have dependants you need to care for during retirement? No How much do you need now to maintain your current standard of living? Minimum Rs 350000/- without considering loan repayment What assets do you currently owned? Two Cars House Are any property individually owned by you or your spouse? Yes What other investments have you invest in? PPF, Shares, Mutual Funds What is your opinion on the following investment? 83

Q Q Q Q

Q Q Q

Single Window Services

Stocks Properties Mutual Funds Fixed Income Others Q Q Q Q Q Q Q I like to take risk and the trading activity One is sufficient which I am not going to sell ant time They are good as an investment option Not really interested/Dont want taxable income PPF is good Government scheme

Company What existing benefits does your company provide as retirement benefits? N/A How do you foresee your future with this company? N/A Does the company have any retirement gratuity or death gratuity for employees? N/A Do you own any shares in the company? N/A What will happen to the shareholding upon death, disability or retirement? N/A What is your plan 5 years from now? My wife will stop working within next 3 yrs. Planning to expand the consultancy What percentage of retirement fund contributions is your company contributing? N/A What is your current retirement fund balance? N/A Have you made any withdrawals from retirement fund? No Do you plan to make any withdrawals in the future? No

Q Q Q Q

84

Single Window Services

BIBLIOGRAPHY

CFP Books (Certified Financial Planning) www.singlewindowservices.com www.mutualfund.com AMFI Course Book

85