Financial Planning for Individual

Requirement Analysis and Financial Planning for Individual

1

ACKNOWLEDGEMENT
The sanitation and euphoric that accompany the successful completion of task, would e incomplete without the mention of the people who made it possi le! After all, a success is a epitome of hard work, severance, undeterred missionary, "eal, steadfast, determination and most of all encouraging guidance! #o, with immense gratitude, I acknowledge all those guidance and encouragement served as a $ eacon light% and crowned my efforts with success! I sincerely thank Mr. Pravin Nagpal, founder of Ifians Financial Services, P ne and my company guide for giving me an opportunity to take this pro&ect! I thank him for eing a constant source of inspiration, mentor and a ove all for his encouragement! 'is e(perience in )arket was itself a great source of knowledge and information for me! *espite his demanding schedule, he estowed every possi le facility to me, so as to carry on the pro&ect work without any encum rance! I would like to e(press my profound sense of gratitude of P!OF.S.P.MA!AT"E of Ins#i# #e $f % siness Manage&en# an' !esearc(, P ne and my faculty guide for guiding me as well as providing me the support to conduct this pro&ect! +ith a deep sense of gratitude and inde tedness, I sincerely and whole,heartedly thank my fellow colleagues and the staff team at IFIA-# Financial #ervices, Pune for giving me value suggestions and advice throughout the e(ecution of the pro&ect! This pro&ect would not have een conduct successfully within time without their support and help! Aruna Am astha ).A /0111,01102
Requirement Analysis and Financial Planning for Individual

0

E)ec #ive S &&ar*
Financial planning is the process of assessing financial goals of individual, taking an inventory of the money and other assets which the person have, determine life goals and then take necessary steps to achieve goals in the stipulated period! It is a method of quantifying a person3s requirement in terms of money! It was a great opportunity to work with IFIANS Financial Services, su , roker of )otilal 4swal #ecurities, India3s leading roking firm! +e will get to know the organisational structure and various usiness models of the company! Financial services refer to services provided y the finance industry! The finance industry encompasses a road range of organi"ations that deal with the management of money! Among these organi"ations are anks, credit card companies, insurance companies, consumer finance companies, stock rokerages, investment funds and some government sponsored enterprises! Financial Planning is one such advisory service, which is yet to get recognition from investors! Although financial planning is not a new concept, it &ust needs to e conducted in organi"ed manner! Today we avail this service from Insurance agent, )utual fund agents, Ta( consultant, 5quity .rokers, 6hartered Accountants, etc! *ifferent agents provide different services and product oriented! Financial Planner on other hand is a service provider which ena les an individual to select proper product mi( for achieving their goals! The ma&or things to e considered in financial planning are time hori"on to achieve life goals, identify risk tolerance of client, their liquidity need, the inflation which would eat up

living and decrease standard of living and the need for growth or income! 7eeping all this in mind financial planning is done with si( step processes!
Requirement Analysis and Financial Planning for Individual

8 Sc$pe $f +$r, T(e sc$pe $f planning +ill incl 'e #(e f$ll$+ing9 Risk )anagement and Insurance Planning 9 Investment Planning 9 Retirement Planning 9 Ta( Planning F$ll$+ings are #(e $./ec#ives $f +$r,9 To identify investment ha it of people! 9 To understand financial planning done in India! 9 To analy"e the characteristics of different asset class! 9 To study changes in financial planning with change in age! 9 To identify various avenues for investment! 9 To e(amine factors influencing the investment decision A good financial plan includes 6ontingency planning, Risk Planning /insurance2, Ta( Planning, Retirement Planning and Investment and saving option! 6ontingency planning is the asic of financial planning and also the most ignored! 6ontingency planning is to e prepared for ma&or unforeseen event if it occurs! These events can e illness, in&ury in family, loss of regular pay due to loss of &o ! #uch events are not certain ut may have financial hardship if they occur! Thus a person should have enough money in liquid form to cover this risk! Risk 6overage is done through insurance! Risk can e classified into life risk, health risk and property risk! Today we have different insurance which covers different risk! 5veryone is e(posed to life risk ut the degree of risk varies! :ife insurance provides an economical support to the family and dependents! Apart from life risk we are also e(posed to health risk! 'ealth insurance covers health risk y funding medical e(penses and hospital charges!
Requirement Analysis and Financial Planning for Individual

; Also we have property insurance to cover risk attached to house property like theft, fire, damage, etc! and various auto insurance! Ta( planning is what every income earner does without fail and this is what financial planning is all to them! A good plan is one which takes the ma(imum advantage of various incentives offered y the income ta( laws of the country! 'owever, do understand that the ta( incentives are &ust that, only incentives! Financial planning o &ective should e getting ma(imum advantage of various avenues! It is to e remem ered that ta( planning is a part and not financial planning itself! There are many investments which do not offer ta( shelter that does not mean they are not good investments! The prudent investment decision made and the returns that accrue will more than offset the ta( outgo! In any case the primary o &ective of a good financial plan is to ma(imi"e the wealth, not to eat the ta(men! 'owever many investment provides great returns which can offset the ta( on it! A detailed study of various investments which provides deduction and e(emption is given in report! Retirement Planning is also an important aspect of financial planning! To a greater e(tend most earning people do retirement planning! There are various schemes in market through which a person can do his retirement planning! To list a few are Annuity Insurance Plan,

PPF and 5PF!
Requirement Analysis and Financial Planning for Individual

<

TA%LE OF CONTAINS
6hapter 1= Introduction to the Topic !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! > 1!1 Introduction to Financial Planning !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! > 1!0 #tudy of various factors !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 11 1!8 +hy I have selected this topic! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 11 1!; #i( step process of Financial Planning !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 11 1!< 6onstitute of Financial Planning !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 18 6hapter 0= Introduction to the 6ompany !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1< 0!1 Profile of IFIA-# !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1< 0!0 #ervices offered y IFIA-# !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1< 6hapter 8= Introduction to Financial Planning Industry !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 00 6hapter ;= #cope of +ork !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0< 6hapter <= 4 &ective of the Pro&ect +ork !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0? 6hapter ?= Research )ethodology !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0@ ?!1 Research *esign !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0@ ?!0 *ata collection techniques and tools !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0@ ?!8 #ample *esign !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0A ?!; :imitations !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0> 6hapter @= Theoretical .ackground !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 81 @!1 6onstitute of Financial Planning !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 81 A good financial plan should include the following things=, !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 81 @!0 :ife Insurance !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 8? @!0!1 :ife #tage in :ife Insurance !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 8A @!0!0 -eed Analysis in life #tages !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 8> @!8 5quities !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;1 @!; )utual Funds !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;1 @!< 6ertificate of *eposits !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;; @!? Pu lic Provident Fund /PPF2 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;; @!@ Real 5state Investment !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;; @!A Bold !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;< @!> Investment in .ank !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;?
Requirement Analysis and Financial Planning for Individual

? @!>!1 Fi(ed *eposit !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;? @!>!0 Recurring *eposit !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;? @!11 #avings .ank Account !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;@ @!11!1 Investment through Post 4ffice !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;@ @!11!0 Post office Recurring *eposit Account /R*A2 !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;@ @!11!8 Time *eposit !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;@ @!11!; -ational #avings 6ertificates !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;A @!11!< Post 4ffice )onthly Income #cheme !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;A 6hapter A= *ata Analysis and Interpretation !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;> A!1 Age distri ution of the respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;> A!0 Income distri ution of respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <1

A!8 Person willingness to take risk according to age !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <1 A!; Investment made y the respondent in various avenues !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <0 A!< #atisfaction of investors on their previous investment !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <8 A!? #ources of informationCreference for investor influencing investment decision! !!!!! <; A!@ Investment 4 &ectives of Individuals !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! << A!A Respondent frequency of investment !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <? A!> Financial :iteracy of respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <@ A!11 *o respondent have enough time to manage their investment affairs !!!!!!!!!!!!!!!!!!!!!! <A A!11 6ase study= Financial planning for single women !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <> A!11!1 )y o servations= !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?1 A!11!0 Assumptions !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?1 A!11!8 #olution !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?1 6hapter >= 4 servation and Findings !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?; 6hapter 11= :imitations !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?< 6hapter11= #uggestions and Recommendations !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?@ 6hapter 10= .i liography !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! @; Anne(ure !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! @< Duestionnaire !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! @<
Requirement Analysis and Financial Planning for Individual

@

In'e) $f Ta.les
Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta Ta A le 1= 7ey players in Financial Planning #ervices !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 08 le 0 Income Ta( sla for individuals !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 81 le 8= Analysis of life stage !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 8> le ;= Investment in Bold !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;< le <= Age distri ution of respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;> le ?= Income distri ution of respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <1 le @= Age distri ution with respect to willingness to take risk !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <1 le A= Investment made y the respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <0 le >= #atisfaction of investors !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <8 le 11= #ources of informationCreference for investor !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <; le 11= Investment 4 &ective of Individuals !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! << le 10= Respondent frequency of investment !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <? le 18= Financial :iteracy of respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <@ le 1;= Time availa le to respondent for investment management !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <A le 1<= 6urrent Portfolio !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <> le 1?= Financial goal and time hori"ons !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?1 le 1@= 5arning and e(penses !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?1 le 1A= #ummary of Financial Plan !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ?8

Requirement Analysis and Financial Planning for Individual

In'e) $f Fig res
Figure 1= *ata 6ollection Techniques !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 0@ Figure 0 = Types of life insurance !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 8@ Figure 8= :ife stage in life insurance !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 8A Figure ;= +orking of mutual funds !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;1 Figure <= Types of mutual funds !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;0

Figure ?= Risks associated with different mutual funds !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;8 Figure @= Age of respondent and percentage chart !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! ;> Figure A= Income of respondent and percentage chart !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <1 Figure >= Age distri ution with respect to willingness to take risk !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <1 Figure 11= Investment made y the respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <0 Figure 11= #atisfaction of investors !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <8 Figure 10= #ources of informationCreference for investor !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <; Figure 18= Investment 4 &ective of Individuals !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <? Figure 1;= Respondent frequency of investment !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <@ Figure 1?= Financial :iteracy of respondent !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <A Figure 1@= Time availa le to respondent for investment management !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! <>
Requirement Analysis and Financial Planning for Individual

>

C(ap#er 0- In#r$' c#i$n #$ #(e T$pic 0.0 In#r$' c#i$n #$ Financial Planning
Financial Planning is the process of meeting life goals through the proper management of finances! Financial planning is a process that a person goes through to find out where they are now /financially2, determine where they want to e in the future, and what they are going to do to get there! Financial Planning provides direction and meaning to persons financial decisions! It allows understanding of how each financial decision a person makes affects other areas of their finances! For e(ample, uying a particular investment product might help to pay off mortgage faster or it might delay the retirement significantly! .y viewing each financial decision as part of the whole, one can consider its short and longterm effects on their life goals! Person can also adapt more easily to life changes and feel more secure that their goals are on track! In simple Financial Planning is what a person does with their money! Individuals have een practicing financial planning for centuries! 5very individual who received money had to make a decision a out the est way to use it! Typically, the decision was either spends it now or save it to spend later! 5veryone have to make the same decision every time they receive money! *oes it need should e spend now or to save it to spend it laterE Today in India, financial planning means only investing money in the ta( saving instruments! Thanks to the plethora of ta( e(emptions and incentives availa le under various sections and su sections of the Income Ta( Act! This has led to a situation where people invest money without really understanding the logic or the rationale ehind the investments made! Further the guiding force in investment seems to e the Fre ate3 they receive from the individual agents and advisors! The more the re ate an agent gives, the smugger person are in the elief that they have made an intelligent decision of choosing the right agent who has offered them more re ate! In the process what is not eing reali"ed is the fact that the financial future is getting compromised!
Requirement Analysis and Financial Planning for Individual

11

0.1 S# '* $f vari$ s fac#$rs
Things to consider while doing financial planning are= i. Ti&e "$ri2$n an' G$als- It is important to understand what individual3s goals are, and over what time period they want to achieve their goals! #ome goals are short term goals those that people want to achieve within the year! For such goals it is important

to e conservative in one3s approach and not take on too much risk! For long term goals, however, one can afford to take on more risk and use time to one3s advantage! ii. !is, T$lerance- 5very individual should know what their capacity to take risk is! #ome investments can e more risky than others! These will not e suita le for someone of a low risk profile, or for goals that require eing conservative! 6rucially, one3s risk profile will change across life3s stages! As a young person with no dependents or financial lia ilities, one might e a le to take on lots of risk! 'owever, if this young person gets married and has a child, person will have dependents and higher fiscal responsi ilities! #o persons approach to risk and finances cannot e the same as it was when they were single! iii. Li3 i'i#* Nee's- +hen does money is needed to meet the goal and how quickly one can access this money! If investment is made in an asset and e(pects to sell the asset to supply funds to meet a goal, then it needs to e understood how easily one can sell the asset! Gsually, money market and stock market related assets are easy to liquidate! 4n the other hand, something like real estate might take a long time to sell! iv. Infla#i$n- Inflation is a fact of the economic life in India! The ottle of cold drink that is rought today is almost dou le the price of what would e paid for ten years ago! At inflation or slightly a ove ;H per annum, a packet of iscuits that costs Rs 01 today will cost Rs! 81 in ten years time! Iust imagine what the cost of uying a car or uying a home might e in ten years timeJ The purchasing power of money is going down every year! Therefore, the cost of achieving goals needs to e seen in what the inflated price will e in the future!
Requirement Analysis and Financial Planning for Individual

11 v. Nee' f$r Gr$+#( $r Inc$&e-As person make investments think a out what is required, whether capital appreciation or income! -ot all investments satisfy oth requirements! )any people are uying apartments, ut are not renting them out even after they take possession! #o, this asset is generating no income for them and they are pro a ly e(pecting only capital appreciation from this! A young person should usually consider investing for capital appreciation to take advantage of their young age! An older person however might e more interested in generating income for themselves!

0.4 W(* I (ave selec#e' #(is #$pic.
Financial Planning is an integral part of any individual life, especially in this modern world where value of everything is e(pressed in terms of money! The active working span of human life is short as compared to the life span! This means people will e spending appro(imately the same num er of years in after retirement what they have spent in their active working life! Thus it ecomes important to save and invest while working so that person will continue to earn a satisfying income and en&oy a comforta le lifestyle! Financial Planning ena les a person to identify their goals, assess the current position and takes necessary steps to achieve the goals! It helps us to understand how financial decisions made effect our life! Financial Planning is not &ust a out investment planning ut it is a out life time planning! Thus through proper financial planning a person can have a easy and secured financial life!

0.5 Si) s#ep pr$cess $f Financial Planning
i. Self assess&en#- 6larify present situation, this is a preliminary step someone has to complete prior to planning their finance! *oing a self,assessment ena le a person to

understand their present wealth status and responsi ilities! #elf,assessment should contain following • Prospective retirement age • )ain source of income • *ependents in family
Requirement Analysis and Financial Planning for Individual

10 • 5(penses and monthly savings • 6urrent investment status 4ne should identify their wealth status prior to move with financial planning! ii. I'en#if* financial, pers$nal g$als an' $./ec#ives- 5ach individual aspires to lead a etter and a happier life! To lead such a life there are some needs and some wishes that need to e fulfilled! )oney is a medium through which such needs and wishes are fulfilled! #ome of the common needs that most individuals would have are= creating enough financial resources to lead a comforta le retired life, providing for a childKs education and marriage, uying a dream home, providing for medical emergencies, etc! 4nce the needsC o &ectives have een identified, they need to e converted into financial goals! Two components go into converting the needs into financial goals! First is to evaluate and find out when it is needed to make withdrawals from investments for each of the needsC o &ectives! Then person should estimate the amount of money needed in current value to meet the o &ectiveC need today! Then y using a suita le inflation factor one can pro&ect what would e the amount of money needed to meet the o &ectiveC need in future! #imilarly one need to estimate the amount of money needed to meet all such o &ectivesC needs! 4nce person have all the values they need to plot it against a timeline! iii. I'en#if* financial pr$.le&s $r $pp$r# ni#ies- 4nce goals and current situation are identified, the short fall to achieve the goal can e assessed! This short fall need to e covered over a period of time to full fill various needs at different life stages! #ince future cannot e predict, all the contingencies should e considered will doing financial planning! A good financial plan should hedge from various risks! A fle(i le approach should e taken to cater to changing needs and should e ready to reorgani"e our financial plan from time to time! iv. De#er&ine rec$&&en'a#i$ns an' al#erna#ive s$l #i$ns- -ow review various investment options such as stocks, mutual funds, de t instruments such as PPF, onds, fi(ed deposits, gilt funds, etc! and identify which instrument/s2 or a
Requirement Analysis and Financial Planning for Individual

18 com ination thereof est suits the need! The time frame for investment must correspond with the time period for goals! v. I&ple&en# #(e appr$pria#e s#ra#egies #$ ac(ieve g$als- Gntil person put things into action everything is waste! -ecessary steps needs to e taken to achieve financial goals this may include gathering necessary documents, open necessary ank, demat, trading account, liaise with rokers and get started! In simple terms, start investing and stick to the plan! vi. !evie+ an' p'a#e plan peri$'icall*- Financial planning is not a one,time activity!

A successful plan needs serious commitment and periodical review /once in si( months, or at a ma&or event such as irth, death, inheritance2! Person should e prepared to make minor or ma&or revisions to their current financial situation, goals and investment time frame ased on a review of the performance of investments!

0.6 C$ns#i# #e $f Financial Planning
A g$$' financial plan s($ l' incl 'e #(e f$ll$+ing #(ings-7 i. C$n#ingenc* planning- 6ontingency means any unforeseen event which may or may not occur in future! 6ontingency planning is the asic and the very first step to financial planning! It was found that a large num er of people have invested in financial planning instrument ut have ignored their contingency planning! +hy it is more important to have a contingency planE )ay will have planned for their future that3s a great thing, this would definitely help in long run! .ut there is always a million dollar question to e asked, +hat a out todayL is there a plan in placeE 5veryone would think that they have a secure present with regular salary, ut what if suddenly something happens and it is not possi le to draw that monthly income! There are many possi ilities that due to illness, in&ury or to care of family mem er a huge amount of money is required! ii. !is, C$verage= 5very individual is e(posed to certain type of risk whether it is due to loss or damage of personal property, loss of pay due to illness or disa ilityL or even due to death! #uch risk cannot e determined ut on occurrence there may e a financial loss to
Requirement Analysis and Financial Planning for Individual

1; the individual or their family! Proper personal financial planning should definitely include insurance! 4ne main area of the role of personal financial planning is to make sure that one has the a ility to carry on living in case of some unforeseen and unfortunate event! .asically, insurance provides a safety net to provide the necessary funds when one meets with events like accidents, disa ilities or illnesses! iii. Ta) Planning= A good plan is one which takes the ma(imum advantage of various incentives offered y the income ta( laws of the country! 'owever, do understand that the ta( incentives are &ust that, only incentives! Financial planning o &ective should e getting ma(imum advantage of various avenues! It is to e remem ered that ta( planning is a part and not financial planning itself! There are many investments which do not offer ta( shelter that does not mean they are not good investments! In any case the primary o &ective of a good financial plan is to ma(imi"e the wealth, not to eat the ta(men! 'owever many investment provides great returns which can offset the ta( on it! .ut with the knowledge of the Income Ta( /IT2 Act one can reduce income ta( lia ility! It also helps to decide, where to invest and to claim deductions under various sections!
Requirement Analysis and Financial Planning for Individual

1<

C(ap#er 1- In#r$' c#i$n #$ #(e C$&pan* 1.0 Pr$file $f IFIANS
IFIANS is a team of finance professionals, ased in Pune M India! +e consistently invest our efforts and resources in improving our processes and the involved technology! +ith our superior infrastructure facilities and professional workforce, we are successfully delivering integrated solutions with greater focus and clarity to our clients! +e are a professional firm since 1>>@ offering services like Accounting, Auditing, Ta(ation, #ervice Ta(, 6ompany Formation, Pro&ect Reports N Pro&ect Financing,

Investments, Insurance, Portfolio )anagement, :oan Assistance and 'ousing 6onsulting! 4ur aim is to provide a professional service to our clients at a reasona le cost using state of the art technology!

1.1 Services $ffere' .* IFIANS
They are a professional firm since 1>>@ offering various financial services! Their aim is to provide a professional service to their clients at a reasona le cost using state of the art technology! Few of the ma&or services offered y them are=,

1.1.0 Inc$&e Ta)7
Income earned in a financial year is lia le to ta( as per the rates prescri ed for that year! A financial year runs from 1 April to 81 )arch of the following year! India follows a residence ased ta(ation system! .roadly, ta(payers may e classified as residents or nonresidents! Individual ta(payers may also e classified as Kresidents ut not ordinary residentsK! An Indian company is always an Indian resident! Additionally, any other company whose affairs are wholly controlled and managed from India is also a resident! Any other company would e a non,resident!
Requirement Analysis and Financial Planning for Individual

1? T(e* pr$vi'e f$ll$+ing inc$&e #a) services f$r !esi'en# In'ians• Filling of Income return for Individuals, 'GF, Firms, Trust, 6o,4p! #oc!, Private :imited N :imited 6ompanies /including )-63s2! • Income ta( returns for :andlords, Rental income, Professionals M *octors, Architects! • 5lectrical N5ngg! 6ontractors! • Rectification, Revision or Appeal of Income ta( orders! • To follow up for income ta( refunds! • To get the clearance certificate for going a road! • Payments on which income ta( deduction at source required! • Annual return for T*# in electronic form / eT*# 2! • Registration of trust for charita le purposes!

1.1.1 Service Ta)-7
The service ta( is paya le on all the ta(a le service rendered in India /e(cept Iammu N 7ashmir2, whether to an Indian or foreign client! 'owever services rendered a road shall not attract service ta( levies, as it e(tends only to services provided within India however services have een classified with effect from 1<!8!011< which shall determine their ta(a ility in case the payment is received in converti le foreign e(change! The rate of service ta( for F!O! 011>,11 is 11H ad valorem plus education cess of 8H / 0H towards education cess and 1H towards higher education cess2!P IFIANS pr$vi'es f$ll$+ing service in rela#i$n #$ service #a)• Registration • Record to e maintained and invoice! • Payment of service ta(! • 6lassification of services!

• Ad&ustment of e(cess service ta( paid! • 6redit of service ta( paid! • 6alculation Interest and penalty!
Requirement Analysis and Financial Planning for Individual

1@ • -otice and visit y departmental officer! • Assessment • Revision and appeal • Refund of ta(!

1.1.4 Acc$ n#ing an' Pa*r$ll
Professional Accounting #ervices is the procedure y which financial information a out a usiness is summari"ed, interpreted, noted, classified, and communicated! +e provide finance and accounting outsourcing solutions to organi"ations, who are interested in increasing their operating efficiency and effectiveness! T*pes $f Acc$ n#ing Services pr$vi'e'• Accounting #ystem #etup! • +riting complete ooks of Accounts! • Financial #tatement Preparation! • Payroll Report #ervices! • Accounting Analysis! • Preparation of ta( returns! Pa*r$ll Pr$cessing Services Incl 'esAt Ifians, they provide end to end, client specific, cost effective payroll solution to their clients! The main features of this service are as follows= • 5ntire process of Payroll which includes maintaining of records, master data, )I# etc! • .onus N other statutory enefits! • Full and Final #ettlement! • :oan )anagement! • Provident Fund, BI#, N 4ther statutory requirements! • Preparation and filing of )onthly, Duarterly and Annual returns /T*#CT6# returns2!
Requirement Analysis and Financial Planning for Individual

1A

1.1.5 C$&pan* !egis#ra#i$n
6ompanies are governed in India y 6ompanies Act, 1><?! 5very company is required to register themselves with the Registrar of 6ompanies /R462 and file the necessary documents for various statutory requirements! T*pes $f c$&panies-ormally companies are limited y lia ility and the shareholders are lia le up to the unpaid value of their shares! Priva#e Li&i#e' C$&pan*)a(imum num er of mem ers is <1 and prohi its any invitation to the pu lic to su scri e any shares or de entures, restrict the right to transfer its shares! Pu lic :imited 6ompanyinvites

pu lic to su scri e shares or de entures and any num er of mem ers or other than private limited companies! Pr$vi'es f$ll$+ing services in respec# $f c$&panies• Formation of PrivateCPu lic limited company! • *rafting of memorandum and article of association of companies! • 6onversion of a private company into a pu lic company and pu lic :td! into a private :td! • 6hanging the name of company! • 6hange of registered office! • Alteration of main o &ects of the company! • Inclusion of new usiness in the memorandum of the company! • #tatutory meeting and statutory report! • Appointment of directors and their remuneration! • 'olding and su sidiary company!
Requirement Analysis and Financial Planning for Individual

1>

1.1.6 M # al F n'
IFIANS pr$vi'es #(e .es# ever inves#&en# p$r#f$li$ +i#( vari$ s f n's• 5quity 4riented funds /4pen and 6losed ended funds2 • *e t Funds • F)P /Fi(ed )aturity Plans2 • Ta( #avings Funds Al$ng +i#( #(e & # al f n's #(e* als$ (elp f$r Inves#&en# in P$s# Office sc(e&es/'ow to open a PPF A C 6, 'ow to invest in -#6, 'ow to start a )onthly Income #cheme i!e! )I#2 • Bovernment, R.I and other .onds • 6ompanies Fi(ed *eposits • )utual Funds • Investment in 6apital Bain Account • #pecial Portfolio for #enior 6iti"ens!

1.1.8 Ins rance
#ecurity is the most uncertain thing for every human eing! 5veryone wants to live a healthy life, which is uncertain! +e always plan to provide everything to our family! In such an uncertain world, we help you to fulfill your plans y insuring you in the most suita le manner with= 4ur Insurance advisors have a wide e(perience with oth the a ove 6ompanies, and provided hundreds of policy to our esteemed customers! 4ur e(perts provide you the most suita le policy according your income N requirements for ma(imum enefit!
Requirement Analysis and Financial Planning for Individual

01

Fe+ $f P$licies availa.le are• Term Insurance • +hole :ife Policies • 5ndowment Insurance!

• )oney .ack Policies • Retirement Policies • 6hild .enefit Plans /Regular N G:IP2 • G:IP /Gnit :inked Insurance Plans2 And most importantly , 'ealth Insurance! • Beneral Insurance 1.1.9 "$&es an' L$ans Ifians helps to get a property on lease /Rent2 with lowest ever charges! They have a good network of property owners who wish to give property on Rent in and around Pune! 1.1.9.0 Pr$per#* Manage&en# an' Leasing :f$r O+ners;:easing C Rental= Ifians, a team with the data ase of more than <111 clients! They get regular enquiries from those, who need properties on Rent! For the est deal of your property, contact us! 'owever, no charges are eing taken from owners for renting any property! Ifians will take care a out= • :easing C Renting of property to good tenants! • To check if your property is managed properly from time to time! • To check if the tenant is paying electricity ill etc and he is paying on time! • To take care a out the society charges, corporation and other compulsory ta(es! • To repair the property as required!
Requirement Analysis and Financial Planning for Individual

01 • +e will forward the snaps /photograph2 of property to you from time to time y email! • To take care of the assets /furniture2 etc as provided! 1.1.9.1 Sale < P rc(ase $f Pr$per#*If you are the one intend to sell your property, we are the one to help you! If you are the one intend to purchase a property, we are the one to help you! At Ifians, we have a team of :awyers, to take care of all the registration, verification and other procedure, so leave everything on us! L$ans- 4ur e(perts will guide you a out the loans, the terms etc! It will e our &o to help you get the est deal! Also, in association with '*F6 'ome :oans, we provide home loans at most attractive rates and such terms suita le to our customers! And of course, transfer of loans are also een taken care! #oon we will e starting four wheeler, two wheeler and Personal loans through various institutions!
Requirement Analysis and Financial Planning for Individual

00

C(ap#er 4- In#r$' c#i$n #$ Financial Planning In' s#r*
Financial services refer to services provided y the finance industry! The finance industry encompasses a road range of organi"ations that deal with the management of money! Among these organi"ations are anks, credit card companies, insurance companies, consumer finance companies, stock rokerages, investment funds and some government

sponsored enterprises! The Indian financial services industry has undergone significant changes over the years, particularly in the last decade, and continues to evolve today! Financial Planning , a distinct element within the spectrum of financial services industry , is still relatively a young discipline! .ut personal finance products N services are increasingly ecoming an important part of this industry as the Indian consumers seek to ma(imi"e and optimi"e the potential earnings and fruits of their hard,earned money! 6urrently, there are distinct divisions within the financial services industry! A person goes to a ank to save his money or to get a loan! 'e uys stocks and onds from a roker! 'e purchases insurance from an insurance agent and mutual funds from a mutual fund distri utor! The regulation of the industry reflects the division of these transaction, ased services! Ca#eg$r* • Products for sales and advice • Insurance agent • Insurance Policies • )utual Fund distri utor • )utual Funds • 5quity share rokerCsu , roker • #hare trading, IP4s • Income ta( consultant • Ta( Planning, 5mployee .enefits • *istri utorCAdvisor of multiple financial products Nservices • )Fs, Insurance, Post 4ffice schemes, share trading, ta( etc
Requirement Analysis and Financial Planning for Individual

08 Ta.le 0- Ke* pla*ers in Financial Planning Services C$&pan* Service $fferings IndiaInfoline Investment #ervices :td 4nline trading, equities, derivatives, commodity trading, IP4, )F distri ution, personal finance, market and sector research, investment anking, wealth management )otilal4swal Financial #ervices 5quity, derivatives, portfolio management, online trading, insurance, commodity trading, mutual funds, margin funding I6I6Idirect!com 4nline trading, market and research, personalfinance and corporate services, equity, FN4, IP4, overseas trading, retirement solutions, life insurance '*F6 #ecurities 4nline trading, call and trade, IP4, equity, derivatives Religare 5nterprises :td 5quities, commodity trading, personal finance, wealth management, asset management, portfolio management services, insurance solutions #harekhan!com 5quities, commodity trading, portfolio

management, )F distri ution, research 5mkayBlo al Finance :td +ealth management, e, roking, research, commodity trading, equities, derivatives India ulls #ecurities #ervices :td 5quities, research, commodities, )F distri ution, derivatives 5delweiss 6apital :td 5quities, FN4, research,asset management services, investment anking Beo&it.-P Pari as Financial #ervices :td 4nlinetrading, )F distri ution, insurance services, P)#, IP4, property services Indians have een making investment through such agents which was restricted to a particular product! Apart from the a ove agent friends and professionals like 6hartered
Requirement Analysis and Financial Planning for Individual

0; Accountant played an important role in investment decisions! This is how for few decades investors have een doing their Financial Planning! 'owever, financial services, especially on the retail side, have undergone a ma&or transformation and financial consumers are demanding a holistic N comprehensive approach to their personal finance! Qarious factors have cataly"ed this change like privati"ation of insurance and mutual fund sectors has increased product options for the investor! #econd, fluctuating interest rates and the end of Fguaranteed return3 products have prompted investors to look for alternative modes of investment! And also with a num er of miss,selling instances taking place in the financial markets, investors3 confidence in Fadvisors3 has een shaken and the investors are asking for a Ftrusted financial advisor3!
Requirement Analysis and Financial Planning for Individual

0<

C(ap#er 5- Sc$pe $f W$r,
The scope of study is getting familiar with various investment avenues availa le in market! To study the life stages of an individual and to identify their risk tolerance, income flow, life goals and current investment! #tudy should cover all areas of the individuals financial needs and should result in the achievement of each of the individuals goals! The scope of planning will include the following= • Risk )anagement and Insurance Planning • Investment Planning • Retirement Planning • Ta( Planning
Requirement Analysis and Financial Planning for Individual

0?

C(ap#er 6- O./ec#ive $f #(e Pr$/ec# W$r,
Followings are the o &ectives of work= • To identify investment ha it of people! • To understand financial planning done in India! • To analy"e the characteristics of different asset class! • To study changes in financial planning with change in age! • To identify various avenues for investment!

• To e(amine factors influencing the investment decision
Requirement Analysis and Financial Planning for Individual

0@

C(ap#er 8- !esearc( Me#($'$l$g* 8.0 !esearc( Design
The study is a out to find various avenues availa le for an individual to invest and ways to achieve long term and short term financial goals through financial planning! It intends to study the pattern in which individual allocates his savings in various asset class! It descri es the awareness of investor a out various alternatives availa le to them! It also aims at creating awareness of financial planning! The data required for the study would e acquired through personal interview and questioner and it was collected y means of cold calling /6old calling is the process of approaching prospective customers or clients, who were not e(pecting such an interaction2,and the research period was spread out in twenty days! For this purpose researcher choose Tech )ahindra :td 6ampus /'in&ewadi2, where researcher could find enough educated office going people, which will help us getting etter understanding of how financial planning is done!

8.1 Da#a c$llec#i$n #ec(ni3 es an' #$$ls
For the purpose of data collection researcher took help of oth primary data and secondary data collection method! Fig re 0- Da#a C$llec#i$n Tec(ni3 es Primary data are those, which are collected afresh and for the first time, and thus happen to e original in character! This method was used y means of Personal Interview, wherein researcher had face,to,face contact with the persons! The reason ehind choosing this Da#a C$lle#c#i$n Tec(ni3 es Pri&ar* Da#a Sec$n'ar* Da#a
Requirement Analysis and Financial Planning for Individual

0A method was to have detailed information on the su &ect! It also provided opportunity for selecting the sample for interview! The interview conducted were a mi(ture of structured and unstructured interviews! #cope was kept open for detailed discussion at the discretion of the interviewee! +here there was a time crunch a structured procedure was followed wherein predetermined questions were put forward! The other method was adopted in primary data collection was Duestionnaires! This was used to assist a more structured form of information! The information thus o tained was standard and in a more un iased form! It assisted to collect data from a large sample si"e! The pattern adopted was a general form of questionnaire! Duestions are in dichotomous /yes or no answers2, multiple choice and open ended question! 4pen ended questions are restricted due to the difficulty faced in analy"ing! The questioner was kept short and to the point! #econdary data means data that are already availa le i!e!, the data which is already collected and analy"ed y other! To get a etter understanding and to have a larger e(posure on the su &ect this method was used! )ethods use was data availa le on worldwide we , articles in newspapers, financial industry reports, Financial Planning oard of India reports and article, reports pu lished y Bovernment of India, etc! #upport was also provided y the pro&ect guide y giving inputs from his years of e(perience

8.4 Sa&ple Design

#ample design was ased on principles of sample survey! #ample was decided on socio demographic factors such as income and age group! The num er of respondent were restricted to 111,011 due to lack of time! #ampling unit was geographical unit where the research was carried in Tech )ahindra :td, 'in&ewadi, Pune! #ource list for respondents was not predetermined it was on random asis! The various parameters on which the research was to e conducted are= • Awareness of financial Planning • Alignment of life goals and financial goals • Investment distri ution in various asset classes • *ecision influencing investment
Requirement Analysis and Financial Planning for Individual

0>

8.5 Li&i#a#i$ns
Lac, $f resp$nse fr$& sa&ple= It is also said as access to resource of information! As the method adopted was cold calling the respondent were not easily availa le for discussion! =n+illing #$ reveal financial p$si#i$n- In technical term it can e said as access to information! )any of are not comforta le to disclose our financial affairs openly! In such a situation researcher had to convince the respondent a lot more times! Ti&e- *ue to lack of time availa ility of respondent and the period which can e used to collect data was short the research could not e conducted on a large sample si"e! =sing $rgani2a#i$n :c$&pan*; na&e- )any a time to get access to respondent researcher had to revel the organi"ation identity! People thought that it was for the purpose of sales of promotional activity, which lead to negative response from many people! Lac, $f e)per#ise- 4n the side of the researcher there was lack of in,depth information on the topic!
Requirement Analysis and Financial Planning for Individual

81

C(ap#er 9- T(e$re#ical %ac,gr$ n' 9.0 C$ns#i# #e $f Financial Planning
A g$$' financial plan s($ l' incl 'e #(e f$ll$+ing #(ings-7 i. C$n#ingenc* planning- 6ontingency means any unforeseen event which may or may not occur in future! 6ontingency planning is the asic and the very first step to financial planning! It was found that a large num er of people have invested in financial planning instrument ut have ignored their contingency planning! 5veryone would think that they have a secure present with regular salary, ut what if suddenly something happens and it is not possi le to draw that monthly income! There are many possi ilities that due to illness, in&ury or to care of family mem er a huge amount of money is required! ii. !is, C$verage- 5very individual is e(posed to certain type of risk whether it is due to loss or damage of personal property, loss of pay due to illness or disa ilityL or even due to death! #uch risk cannot e determined ut on occurrence there may e a financial loss to the individual or their family! Proper personal financial planning should definitely include insurance! 4ne main area of the role of personal financial planning is to make sure that one has the a ility to carry on living in case of some unforeseen and unfortunate event! a. Life !is,- 5very individual is prone to risk of losing life it3s a naked truth ut what is not certain is the time of death! In terms of financial planning, covering life risk means insuring the life of the person through proper life insurance plan! :ife insurance, simply

put, is the cover for the risks that person run during their lives! Insurance ena les us to live our lives to the fullest, without worrying a out the financial impact of events that could hamper it! .. "eal#( !is,- :ifespan of Indian is known to have increased nowadays, and senior citi"ens strive to stay healthy and active as they age! 'owever, the older person gets the more e(tensive health care is needed! 'ealth insurance is an insurance Policy that insures against any medical e(penses! Insured medical e(penses will e taken care of y the insurance company provided person pays their premium regularly! c. Pr$per#* C$verage- Property 6overage insures personal property from damage, destroy or stolen! *welling coverage also known as 'omeowners Insurance offers protection against direct physical damage caused to the dwelling, including rooms, fireplaces, carpeting, tile floors and elements of decor! iii. Ta) Planning- A good plan is one which takes the ma(imum advantage of various incentives offered y the income ta( laws of the country! Financial planning o &ective should e getting ma(imum advantage of various avenues! It is to e remem ered that ta(
Requirement Analysis and Financial Planning for Individual

81 planning is a part and not financial planning itself! There are many investments which do not offer ta( shelter that does not mean they are not good investments! 'owever many investment provides great returns which can offset the ta( on it! .ut with the knowledge of the Income Ta( /IT2 Act one can reduce income ta( lia ility! The rate of income ta( is different for different income levels, and thus, the income ta( paya le depends on the total earnings in a given year! Ta.le 1 Inc$&e Ta) sla. f$r in'ivi' als A; F$ll$+ing are vali' f$r Men Inc$&e !ange Ta) Percen#age Gp to 1,?1,111 -o ta( C e(empt 1,?1,111 to <,11,111 11H <,11,111 to A,11,111 01H A ove A,11,111 81H %; F$ll$+ing are vali' f$r W$&en Gp to 1,>1,111 -o ta( C e(empt 1,>1,111 to <,11,111 11H <,11,111 to A,11,111 01H A ove A,11,111 81H C; F$ll$+ing are vali' f$r Seni$r Ci#i2en Gp to 0,;1,111 -o ta( C e(empt 0,;1,111 to <,11,111 11H <,11,111 to A,11,111 01H A ove A,11,111 81H a.Sec#i$n >?C- The government encourages certain types of savings M mostly, long term savings for retirement M and therefore, offers ta( reaks on such savings! #ec A16 of the Income Ta( Act is the section that deals with these ta( reaks! It states that qualifying investments, up to a ma(imum of Rs! 1 :akh, are deducti le from income! This means that income gets reduced y this investment amount /up to Rs! 1 :akh2! @ alifie' inves#&en# n'er Sec#i$n >?C arePr$vi'en# F n' :PF;- The payment that is made to PF is counted towards #ec A16

investments
Requirement Analysis and Financial Planning for Individual

80 A$l n#ar* Pr$vi'en# F n' :APF;- If person increase PF contri ution overland a ove the statutory limit /as deducted compulsorily y employer2, even this amount qualifies for deduction under section A16! P .lic Pr$vi'en# F n' :PPF;- If person have a PPF account, and invest in it, that amount can e included in #ec A16 deduction! Life Ins rance Pre&i &s- Any amount that person pay towards life insurance premium for self, spouse or children can also e included in #ection A16 deduction! E3 i#* Lin,e' Savings Sc(e&e :ELSS;- The investments that are made in 5:## are eligi le for deduction under #ec A16! "$&e L$an Principal !epa*&en#- The 5quated )onthly Instalment /5)I2 that is paid every month to repay home loan consists of two components M Principal and Interest! The principal component of the 5)I qualifies for deduction under #ec A16 S#a&p D #* an' !egis#ra#i$n C(arges f$r a ($&e- The amount paid as stamp duty while uying a house and the amount paid for the registration of the documents of the house can e claimed as deduction under section A16 in the year of purchase of the house! Na#i$nal Savings Cer#ifica#e :NSC;- The amount that is invested in -ational #avings 6ertificate /-#62 can e included in #ec A16 deductions! Infras#r c# re %$n's- These are also popularly called Infra .onds! These are issued y infrastructure companies, and not the government! The amount invested in these onds can also e included in #ec A166F deductions! Pensi$n F n's B #ection A1666= #ection A1666= This section M #ec A1666 M stipulates that an investment in pension funds is eligi le for deduction from income! #ection A1666 investment limit is clu ed with the limit of #ection A16 , it means that the total deduction availa le for A1666 and A16 is Rs! 1 :akh! %an, Fi)e' Dep$si#s- This is a newly introduced investment class under #ection A16!.ank fi(ed deposits /also called term deposits2 having a maturity of < years or more can e included in #ec A16 investment!
Requirement Analysis and Financial Planning for Individual

88 O#(ers- Apart from the ma&or avenues listed a ove, there are some other things, like children3s education e(pense /for which receipts are need2, that can e claimed as deductions under #ec A16! Ta) planning +i#( sec#i$n >?C 7 An age +ise s#ra#eg*Typically, most people invest a large part of the money in Pu lic Provident Fund /PPF2 and the rest is taken care of y life insurance premiums and so on! 'owever, investing this amount lindly is not the est way to go a out it! 'ere3s some help on how to go a out allocating this A16 limit depending upon age! Age 1074?- In the initial phase of si(,seven years of this age racket, most people are single and little or no dependents! If there are no dependents, it3s not necessary to have a large life insurance! Instead focus on returns! 6onsidering the state of the equity markets today, a su stantial portion M around @1 per cent to A1 per cent of the A16 contri ution can e made in 5:##, which invests primarily in stocks! This will ensure that the process of investing for the long term has een started! Also, since there is a lock,in of three years for these schemes, it will lead to a forced savings!

Age 40756- .y this time, person is e(pected to e married with small children! Also, there could e additional lia ilities like uying a house or car! The first step that must e taken is to get adequate life insurance, for dependents and lia ilities! )ake sure to cover all the lia ilities so that dependents are not under any financial pressure, in case of an unfortunate mishap! Gse a term plan to get the highest possi le cover at a low cost! 6hildren college fees can e included as a part of the A16 enefits! The home loan principal payout can form the second leg of the contri ution for this age group! #o, esides 5PF contri ution, life Insurance premiums and home loan principal should e sufficient to take care of the entire Rs 1 lakh requirement! If there is still any shortfall, look at 5:## investments and Provident Fund! Age 5878?- Person is pro a ly at the peak of the career or moving towards it! This is most likely the final phase of earning a regular income! There is a good chance that loans have een paid,off y now and children are in the stage of ecoming independent! The last few years of this phase is when a lot of families plan and should retire their loans! It is also an age where life insurance is of e(treme importance! Re,evaluate need for life cover at this
Requirement Analysis and Financial Planning for Individual

8; point of time! If life cover is needed more, increase it su stantially! 'ealth insurance need to e included due to various diseases and illness taking toll with growing age! 'ence, risk management is of e(treme importance here! Seni$r ci#i2ens- In this age group, capital protection and need for regular income are two most important needs! 4ne must first opt for a #enior 6iti"ens3 #avings #cheme that will give ta( enefit! #ince #6## is generally parked in a lump sum, look at fi(ed deposits only if they are giving high interest rates! If interest rates are low, then person should opt for PPF, if person is in the highest ta( racket as liquidity is still the est /account should have completed 1< years a long time ago2 and can withdraw ta(,free amounts comforta ly! ..Me'iclai& :Sec >?D;- Individual and 'indu Gnified Families /'GF2 are eligi le for deduction under #ection A1* for mediclaim premium paid! *eduction can e claimed on premium paid for assessee, spouse, dependent children and dependent parents! The criteria of dependency isn3t applica le in case of a spouse /i!e! sheChe may even e independent, ut the assesse can still pay the premium on hisCher life to get ta( enefits for the same2! De' c#i$n F$r n$n7seni$r ci#i2ens- The amount of mediclaim insurance premium paid or Rs! 1<111, whichever is less F$r seni$r ci#i2ens- The amount of mediclaim insurance premium paid or Rs! 01111, whichever is less! c. In#eres# an' Divi'en' !eceive' :sec >?L;- *eduction up to a ma(imum of Rs! 1<,111 /out of which Rs! 8,111 is especially dedicated to government securities2 is allowed from the ta(a le income in respect of aggregate earnings from some specified sources! The schemes are= *eposits with .anking 6ompany, 6o,operative .anks N 6o,operative #ocieties! • 'ousing .oards • #mall #avings #chemes • -ational #avings 6ertificates • Post 4ffice Time and Recurring *eposits • -ational #avings #cheme, 1>>0

Requirement Analysis and Financial Planning for Individual

8< • Post 4ffice )onthly Income #cheme • -otified de entures of co,operative societies or institutions or pu lic sector companies • Bovernment #ecurities iv. !e#ire&en# Planning- A retirement plan is an assurance that person will continue to earn a satisfying income and en&oy a comforta le lifestyle, even when they are no longer working! *ue to the improved living conditions and access to etter medical facilities, the life e(pectancy of people is increasing! This has led to a situation where people will e spending appro(imately the same num er of years in retirement what they have spent in their active working life! Thus it has ecome imperative to ensure that the golden years of the life are not spent worrying a out financial hardships! Planning for retirement and choosing a pension strategy to safeguard financial security can e a minefield! In the last few years, there have een many changesL the volatility of the stock market, reduction of final,salary pension schemes, the rise of uy,to,let property portfolios and changes in ta(ation and pension legislation! !eas$ns f$r '$ing !e#ire&en# planning can .e n'ers#$$' +i#( #(e f$ll$+ingLife e)pec#anc* +ith advancement in technology life e(pectancy is likely to increase! +hich means a person would e spending a large amount of time in his post retirement period! Thus one needs to have a regular income to sustain living which is only possi le if prepared for it when earning! Me'ical e&ergencies +ith age come health pro lems! +ith health pro lems, come medical e(penditure which may make a huge dent in post,retirement income! Failure here could lead to liquidate /sell2 assets in order to meet such e(penses! Remem er mediclaims do not always suffice! N clear fa&ilies Independence is the new way of life, gone are the days when people use to have an entire cricket team making a family! TodayKs youth prefer not more than two children! +ith
Requirement Analysis and Financial Planning for Individual

8? westerni"ation coming in, the culture of &oint family is changing! )ost prefer independence and stay away from their family! N$ g$vern&en# sp$ns$re' pensi$n plan Gnlike the G# and G7 where they have IRA and state pension respectively as social security enefit during retirement, the government of India does not provide such enefits! #o, persons are responsi le for themselves now! C$. ($pping +ith youngsters hopping &o s regularly they do not get enefit of plans like super annuity and gratuity! .oth these require certain num er of working years spent in the service of a particular employer! Infla#i$n 4ne needs to take into account inflation while calculating retirement corpus as well as returns! +ith the rising inflation it would only the raise the cost of living and it would also eat the return on the investment! The 6ABR /compounded annual growth rate2 of inflation over the past 11 years is <!< per cent! Assuming an individual at the age of 81, requires Rs

0<,111 a month to lead a comforta le life, for the same standard of living after 81 years, he may require Rs 1!0< lakh a month, given the inflation factor! In India persons employed in the organised sector have some form of social security such as 5mployees Provident Fund /5PF2, 5mployees Pension #cheme /5P#2 and gratuity! Those who are employed in government and its related arms also en&oy the enefit of pension along with BPF and gratuity! .ut these two sections account for only seven per cent of the working population! The remaining >8 per cent of the people have no form of mechanism to take care of their retirement! 4ver A1 per cent of Indian employees have done no retirement planning independent of any mandatory government plans!

9.1 Life Ins rance
:ife Insurance is a policy provided y an insurance company, according to which in e(change for premium payments, the insurer is o liged to pay a certain sum /a lump sum or portions of smaller sums2 to the eneficiary in the event of insured death! :ife Insurance
Requirement Analysis and Financial Planning for Individual

8@ is literally a matter of life and death, since purchasing :ife Insurance is asically planning for after the death! +hen healthy and well, people from all walks of life prefer not to think that one day they would pass away! Fac#$r #$ .e c$nsi'ere' .ef$re . *ing an Life Ins rance P$lic* .efore uying a :ife Insurance Policy it is always important to find out why do I want to uy Insurance and for what purpose! 'ow much :ife Insurance 6over do I need, comes second! Few factors which need to e considered are= • Age and num er of dependents! • Annual Income and Annual 5(penses! • 4utstanding :ia ilities like 'ome :oan, 6ar :oan etc! Investments and #avings! • :ife #tyle 5(penses! )oney require in Future T*pes $f Life Ins rance Fig re 1 - T*pes $f life ins rance Life Ins rance Ter& Ins rance En'$+&en# Ins rance W($le Life Ins rance M$ne*7%ac, Plan =LIP
Requirement Analysis and Financial Planning for Individual

8A 9.1.0 Life S#age in Life Ins rance Fig re 4- Life s#age in life ins rance
Requirement Analysis and Financial Planning for Individual

8> 9.1.1 Nee' Anal*sis in life S#ages Ta.le 4- Anal*sis $f life s#age Nee' < P rp$se !ec$&&en'e'

Ins rance Plan %es# S i#e' F$r • #avings Ncapitalappreciatio n • Protection /Risk cover G:IP • )oderate to high income • 'ave dependents • #ecurity to dependents • Risk cover Term policy • Ooung individuals • :ow income • 'ave dependents • 6hildKs future studies • 6hildKs marriage 6hildren plans • 6ouples having small kids • Retirement .enefits • Risk cover Pension plans • Persons aged a ove ;1 • Persons not having pension provision from their employer • Risk cover • Periodic payments )oney ack policy • Persons having recurring financial requirements • :ow to moderate income • Risk cover • #avings 5ndowment Plans • Requirement of fi(ed sum after lapse of certain period
Requirement Analysis and Financial Planning for Individual

;1

9.4 E3 i#ies
5quities are a type of security that represents the ownership in a company! 5quities are traded / ought and sold2 in stock markets! Alternatively, they can e purchased via the Initial Pu lic 4ffering /IP42 route, i!e! directly from the company! Investing in equities is a good long,term investment option as the returns on equities over a long time hori"on are generally higher than most other investment avenues! 'owever, along with the possi ility of greater returns comes greater risk! S(are Price De#er&ina#i$n

At any given moment, equity3s price is strictly a result of supply and demand! The supply is the num er of shares offered for sale at any one moment! The demand is the num er of shares investors wish to uy at e(actly that same time! The price of the stock moves in order to achieve and maintain equili rium! Another theory of share price determination comes from the field of .ehavioral Finance! According to .ehavioral Finance, humans often make irrational decisionsR particularly, related to the uying and selling of securitiesR ased upon fears and misperceptions of outcomes! The irrational trading of securities can often create securities prices which vary from rational, fundamental price valuations! #tock market investmentsS 5conomics T )athematicsC#tatistics T Psychology 5conomics *eals with fundamentals of company! #tatistics deals with study of companies3 financial statement and it past performance in stock market! Psychology deals with market sentiments /'erd mentality2 which are most crucial as it can lead in wrong direction!

9.5 M # al F n's
A )utual Fund allows a group of people to pool their money together and have it professionally managed, in keeping with a predetermined investment o &ective! This investment avenue is popular ecause of its cost,efficiency, risk,diversification, professional management and sound regulation! Person can invest as little as Rs! 1,111 per month in a )utual Fund! There are various general and thematic )utual Funds to choose from and the risk and return possi ilities vary accordingly! A )utual Fund is a trust that pools the savings of a num er of investors who share a common financial goal!
Requirement Analysis and Financial Planning for Individual

;1 T(e fl$+ c(ar# .el$+ 'escri.es .r$a'l* #(e +$r,ing $f a & # al f n'Fig re 5- W$r,ing $f & # al f n's T*pes $f M # al F n's Sc(e&e in In'ia +ide variety of )utual Fund #chemes e(ists to cater to the needs such as financial position, risk tolerance and return e(pectations etc! The ta le elow gives an overview into the e(isting types of schemes in the Industry • .y #tructure o 4pen , 5nded #chemes o 6lose , 5nded #chemes • .y Investment 4 &ective o Browth #chemes o Income #chemes o .alanced #chemes o )oney )arket #chemes • 4ther #chemes o Ta( #aving #chemes o #pecial #chemes o Inde( #chemes o #ector #pecific #chemes o #tructural *escription of )utual Fund o #tudy of Individual Financial Planning

)ost mutual funds are $pen7en'! The reason why these funds are called Uopen,endU is ecause there is no limit to the num er of new shares that they can issue! -ew and )ost mutual funds are open,end! The reason why these funds are called Uopen,endU is ecause
Requirement Analysis and Financial Planning for Individual

;0 there is no limit to the num er of new shares that they can issue! -ew and e(isting shareholders may add as much money to the fund as they want and the fund will simply issue new shares to them! 4pen,end funds also redeem, or uy ack, shares from shareholders! In order to determine the value of a share in an open,end fund at any time, a num er called the -et Asset Qalue is used Cl$se'7en' funds ehave more like stock than open,end fundsL that is to say, closed,end funds issue a fi(ed num er of shares to the pu lic in an initial pu lic offering, after which time shares in the fund are ought and sold on a stock e(change! Gnlike open,end funds, closed,end funds are not o ligated to issue new shares or redeem outstanding shares! The price of a share in a closed,end fund is determined entirely y market demand, so shares can either trade elow their net asset value /Uat a discountU2 or a ove it /Uat a premiumU2! #ince one must take into consideration not only the fundKs net asset value ut also the discount or premium at which the fund is trading, %r$a' & # al f n' #*pes Fig re 6- T*pes $f & # al f n's
Requirement Analysis and Financial Planning for Individual

;8 !is, "ierarc(* $f Differen# M # al F n's *ifferent mutual fund schemes are e(posed to different levels of risk and investors should know the level of risks associated with these schemes efore investing! The graphical representation hereunder provides a clearer picture of the relationship etween mutual funds and levels of risk associated with these funds= Fig re 8- !is,s ass$cia#e' +i#( 'ifferen# & # al f n's
Requirement Analysis and Financial Planning for Individual

;;

9.6 Cer#ifica#e $f Dep$si#s
6ertificate of deposit was introduced in India in 1>>1! It is a scheme of raising funds y commercial anks, e(cept rural anks and is a negotia le receipt of funds! *ue to their negotia le nature, they are also called -egotia le 6ertificate of *eposit /-6*2! Though interest on certificate of deposits is ta(ed, it is still a popular form of shortterm investments for companies due to following reasons= • These certificates are fairly liquid! • They are generally risk free! • They offer a higher yield as compared to conventional deposits!

9.8 P .lic Pr$vi'en# F n' :PPF;
PPF is considered safe investment avenue! The current interest rate on PPF is AH per annum! Again like 5PF the rate of interest is not fi(ed The est part of PPF is that the interest thereon is e(empt from ta( under section 11/112 of the Income Ta( Act! Ta( deduction can e claimed on contri ution made y an individual into his own PPF account or into the PPF account of his spouse or children! PPF account can e opened in a nationali"ed ank or a post office! It is a 1<,year account!

The entire amount including accumulated interest can e withdrawn after 1< years!

9.9 !eal Es#a#e Inves#&en#
Real 5state Investment is now treated as a ma&or case of capital udgeting y using stateof, the,art investment analysis which incorporates the future stream of income it may generate and the associated risk ad&ustments! It has een the highlight of the investment literature since the 1>@13s when investment theorists e(tended techniques such as pro a ility, time value of money and utility into its analysis! Real estate is asically defined as immova le property such as land and everything permanently attached to it like uildings! Real property as opposed to personal or mova le property is characteri"ed y the right to transfer the title to the land whereas title to personal property can e retained!
Requirement Analysis and Financial Planning for Individual

;<

9.> G$l'
The love for gold in India is legendary! There has always een a good demand for gold in India making it the largest consumer of gold in the world! The consumption of gold is mostly in form of &ewellery! .ut as investment an investors generally uy gold as a hedge or safe haven against any economic, political, social or currency, ased crises! These crises include investment market declines, inflation, war and social unrest! Bold can e ought in various forms, one can either uy it in the form of physical gold ,, ars, iscuits and or coins or even in a demateriali"ed form! Bold &ewellery is not a good investment as it is not as liquid as ars or gold fund! G$l' E)c(ange7Traded Fund or Bold 5TF is the new investment option of recent origin! This open,ended mutual fund collects money from the investors to invest in standard gold ullion! Instead of physical holding the gold, the investors will e assigned units of the gold 5TF! Bold 5TF are listed in the stock e(changes of their respective countries! Bold5TFs give the same advantages of holding gold in the physical form without the hassles associated with keeping gold in physical form! Ta.le 5- Inves#&en# in G$l'
Requirement Analysis and Financial Planning for Individual

;?

9.D Inves#&en# in %an,
.ank investment can e said as the most common or primary investment avenues! -ot many people recogni"e this sector as an investment avenue! .anks are the most common and many a times people first investment e(perience! Fe+ inves#&en#s in .an, can .e in f$ll$+ing f$r&-

9.D.0 Fi)e' Dep$si#
A fi(ed deposit is meant for those investors who want to deposit a lump sum of money for a fi(ed periodL say for a minimum period of 1< days to five years and a ove, there y earning a higher rate of interest in return! Investor gets a lump sum /principal T interest2 at the maturity of the deposit! The minimum deposit amount varies with each ank! It can range from as low as Rs! 111to an unlimited amount with some anks! *eposits can e made in multiples of Rs! 111C,! +ith effect from A!O! 1>>A,>>, investment on ank deposits, along with other specified incomes, is e(empt from income ta( up to a limit of Rs!10, 111C, under #ection A1:! Also, from A!O! 1>>8,>;, ank deposits are totally e(empt from wealth ta(! The 1>>< Finance

.ill Proposals introduced ta( deduction at source /T*#2 on fi(ed deposits on interest incomes of Rs!<111C, and a ove per annum!

9.D.1 !ec rring Dep$si#
The Recurring deposit in .ank is meant for someone who wants to invest a specific sum of money on a monthly asis for a fi(ed rate of return! At the end, person will get the principal sum as well as the interest earned during that period! The minimum investment of Recurring *eposit varies from ank to ank ut usually it egins from Rs 111C,! There is no upper limit in investing! The rate of interest varies etween @ and 11 percent depending on the maturity period and amount invested! The interest is calculated quarterly or as specified y the ank! The period of maturity ranging from ? months to 11 years!
Requirement Analysis and Financial Planning for Individual

;@

9.0? Savings %an, Acc$ n#
A #aving .ank account /#. account2 is meant to promote the ha it of saving among the people! It also facilitates safekeeping of money! In this scheme fund is allowed to e withdrawn whenever required, without any condition! 'ence a savings account is a safe, convenient and afforda le way to save money! .ank deposits are fairly safe ecause anks are su &ect to control of the Reserve .ank of India with regard to several policy and operational parameters! .ank also pays a minimal interest for keeping money with them! The interest rate of savings ank account in India varies etween 0!<H and ;H! In #avings .ank account, ank follows the simple interest method! The rate of interest may change from time to time according to the rules of Reserve .ank of India!

9.0?.0 Inves#&en# #(r$ g( P$s# Office
#hare of Post office investment has also a ma&or part in Indian 'ousehold investment, which is mostly due to its all India presence of service network! Qarious avenues for post office investment are as follows= ;!>!1! Post office Recurring *eposit Account /R*A2

9.0?.1 P$s# $ffice !ec rring Dep$si# Acc$ n# :!DA;
A Post,4ffice Recurring *eposit Account /R*A2 is a anking service offered y *epartment of post, Bovernment of India at all post office counters in the country! The scheme is meant for investors who want to deposit a fi(ed amount every month, in order to get a lump sum after five years! The minimum investment in a post,office R*A is Rs 11 and then in multiples of Rs! <C, for a period of < years! There is no prescri ed upper limit on investment! The post,office recurring deposit offers a fi(ed rate of interest, currently at @!< per cent per annum compounded quarterly! As the post office is a department of the government of India, it is a safe investment! Interest earned on this account is e(empted from ta( as per #ection A1: of Income Ta( Act!

9.0?.4 Ti&e Dep$si#
The scheme is meant for those investors who want to deposit a lump sum of money for a fi(ed periodL say for a minimum period of one year to two years, three years and a
Requirement Analysis and Financial Planning for Individual

;A ma(imum period of five years! Investor gets a lump sum /principal T interest2 at the maturity of the deposit! Time *eposits scheme return a lower, ut safer, growth in investment!

The rate of interest is relatively high compared to the ;!<H annual interest rates provided y anks! Although the amount invested in this scheme is not e(empted as per section AA of Income Ta(, the amount of interest earned is ta( free under #ection A1,: of Income Ta( Act!

9.0?.5 Na#i$nal Savings Cer#ifica#es
-ational #avings 6ertificates /-#62 are certificates issued y *epartment of post, Bovernment of India and are availa le at all post office counters in the country! The scheme com ines growth in money with reductions in ta( lia ility as per the provisions of the Income Ta( Act, 1>?1! The duration of a -#6 scheme is ? years! It is having a high interest rate at AH compounded half yearly! Ta( enefits are availa le on amounts invested in -#6 under section AA, and e(emption can e claimed under section A1: for interest accrued on the -#6! Interest accrued for any year can e treated as fresh investment in -#6 for that year and ta( enefits can e claimed under section AA!

9.0?.6 P$s# Office M$n#(l* Inc$&e Sc(e&e
The post,office monthly income scheme /)I#2 provides for monthly payment of interest income to investors! It is meant for investors who want to invest a sum amount initially and earn interest on a monthly asis for their livelihood! *eposit in )onthly Income #cheme and invest interest in Recurring *eposit to get 11!<H /appro(2 interest! The interest income accruing from a post,office )I# is e(empt from ta( under #ection A1: of the Income Ta( Act, 1>?1! )oreover, no T*# is deducti le on the interest income! The alance is e(empt from +ealth Ta(!
Requirement Analysis and Financial Planning for Individual

;>

C(ap#er >- Da#a Anal*sis an' In#erpre#a#i$n >.0 Age 'is#ri. #i$n $f #(e resp$n'en#
Ta.le 6- Age 'is#ri. #i$n $f resp$n'en# Age gr$ p $f resp$n'en# N$. $f !esp$n'en# Percen#age 01,81 ?< 8@H 81,;< ?1 8;H ;<,?1 8< 01H A ove ?1 1< >H T$#al 096 0??E Fig re 9- Age $f resp$n'en# an' percen#age c(ar# Almost @1H of respondent was from age group 01yrs to ;<yrs this is considered to e most active age group! *uring this age, life of an individual changes very drastically! The career is in growing stage in starting few years and there are hardly any responsi ilities, at this time there is a lot of funds availa le for disposal! It is this age where ma(imum risk can e taken and a greater period can e given to grow the amount invested! As a person enter into their 813s they have increased family responsi ility and gradually the risk taking a ility reduces with the age!
0 10 20 30 40 50 60

70 21-30 30-45 45-60 Above 60 No. of Respondent Percentage
Requirement Analysis and Financial Planning for Individual

<1

>.1 Inc$&e 'is#ri. #i$n $f resp$n'en#
Ta.le 8- Inc$&e 'is#ri. #i$n $f resp$n'en# Inc$&e !esp$n'en# Percen#age Gpto 0,11,111 59 8;H 0,11,111,8,11,111 48 0@H 8,11,111,;,11,111 29 1@H ;,11,111,<,11,111 22 18H A ove <,11,111 17 >H T$#al 096 0??E Fig re >- Inc$&e $f resp$n'en# an' percen#age c(ar# Financial planning is a out assessing our present cash flowsL estimating the required cash flow after a certain period of time and to determine the steps required to achieve this over a period! The amount of disposa le income at hand determines various investment decisions! It also helps in making ta( plans so that ma(im enefit can e gained through various ta( e(emptions! #o it is necessary to know the income inflow of an individual! The a ove graph shows that a ma&or portion of respondent are in income sla of upto Rs!0,11,111 p!a!L this indicates that the persons may e in the eginning stage of career! +ith increasing income sla the no of respondent are reduced!
0 10 20 30 40 50 60 70 Respondent Percentage
Requirement Analysis and Financial Planning for Individual

<1

>.4 Pers$n +illingness #$ #a,e ris, acc$r'ing #$ age
Table 7: Age distribution with respect to willingness to take risk

Age Gr$ p Willingness #$ #a,e ris, T$#al "ig( M$'era#e L$+ 01,81 0> 0< > ?8 81,;< 1; 1> @ ;1 ;<,?1 11 18 81 <8 A ove ?1 > @ 8 1> T$#al 096 Fig re D- Age 'is#ri. #i$n +i#( respec# #$ +illingness #$ #a,e ris, The investment decisions are more ased on the willingness to take the risk rather than the a ility to take risk! The a ove graph descri es the willingness to take risk at various life stages! At the younger age people are more willing to take risk which reduces over the

years as responsi ility increase! Although different individual may have different preferences which could contradict their age, many a time investment is a function of willingness rather than a ility which is clearly descri ed y a ove graph!
0 5 10 15 20 25 30 35 !g" #oderate $o% 21-30 31-45 45-60 Above 60
Requirement Analysis and Financial Planning for Individual

<0

>.5 Inves#&en# &a'e .* #(e resp$n'en# in vari$ s aven es
Table 8: Investment made by the respondent

Aven e !esp$n'en# Percen#age :ife Insurance ;< 111 Fi(ed *eposit 0A ?0 )utual Fund 0< <A 5quity )arket 18 0A Bold < 10 PPF 8A A0 Post 4ffice *eposit 01 ;A T$#al 096 Fig re 0?- Inves#&en# &a'e .* #(e resp$n'en# A fair idea of asset allocation of individuals in various asset classes can e o served through this! It was o served that the all respondent had a life cover policy! This shows that the asics of financial planning were achieved! The ne(t ma&or portion was provided Fund due to it eing more secure investment and also ta( e(emption offered! )a&or investments were also made in .ank Fi(ed *eposits and Post 4ffice *eposits! 5quity was not a preferred investment among many due to its volatile nature ut many used it as a long
0 20 40 60 80 100 120 $!fe &ns'rance (!)ed *epos!t #'t'a+ ('nd ,-'!t. #ar/et

0o+d PP( Post 1ff!ce *epos!t Respondent Percentage
Requirement Analysis and Financial Planning for Individual

term investment y investing in large companies! Investment in gold was more in form of &ewellery which is not a good option as investment! Qery few invested in g and Bold 5TFs!

>.6 Sa#isfac#i$n $f inves#$rs $n #(eir previ$ s inves#&en#
Ta.le D- Sa#isfac#i$n $f inves#$rs Sa#isfac#i$n !esp$n'en#s Oes <? -o @> -eutral ;1 T$#al 096 Fig re 00- Sa#isfac#i$n $f inves#$rs A ma&or portion of respondent was unsatisfied with the returns they got on their investment! This reflects that investment decision was not taken properly! Few common reasons cited were= 9 Inadequate knowledge a out the instrument in which investment was made 9 )isguided y the agent of financial company

Respondents Satisfaction on Investment
<8 - Percen#age 80 ;< 08 0?? - nowledge 2es
323 No 453 Ne'tra+ 233 03

Returns
gold coinsC ars
Requirement Analysis and Financial Planning for Individual

<; 9 6harges applica le were not disclosed initially 9 Gnplanned investment Also a ma&or portion of investment was in assets which has a low risk M low returns category! This also was a ma&or reason of respondent unsatisfied with current returns!

>.8 S$ rces $f inf$r&a#i$n<reference f$r inves#$r infl encing inves#&en# 'ecisi$n.
Ta.le 0?- S$ rces $f inf$r&a#i$n<reference f$r inves#$r

S$ rce $f inf$r&a#i$n !esp$n'en# -ews paper, Pu lications N )edia <1 Professionals 0> Agents C .roker @0 Friends, Peer group etc 08 T$#al 096 Fig re 01- S$ rces $f inf$r&a#i$n<reference f$r inves#$r
51 29 72 23 Ne%s paper4 P'b+!cat!ons 5 #ed!a Profess!ona+s Agents 6 7ro/er (r!ends4 Peer gro'p etc

Respondent
Requirement Analysis and Financial Planning for Individual

<< There are sources of information which are vital in making investment decision! The graph shows the source of information which is plotted according to its authentication! 4n the V a(is the e(treme right indicates highest authentication and it get reduce as we move to right! +e find that ma&or respondent have taken investment decision on the ases of information provided y Agents N .roker of different financial company! The ne(t ma&or information source is -ewspapers, pu lication and media which are considered to e highly authenticated data! 'elp of professionals in investment decision is taken not y many, due the fees charged y various professional for their service! There is less num er of respondents taking their investment decision on information provided y friends! )ostly the information provide y such people is ased on their e(perience which may not e true for others!

>.9 Inves#&en# O./ec#ives $f In'ivi' als
Ta.le 00- Inves#&en# O./ec#ive $f In'ivi' als Inves#&en# O./ec#ive !esp$n'en# Percen#age Principle #afety 8@ 01H )aintain #tandard of :iving <> 8;H )eet future e(penses ;1 08H #afeguard against contingencies 8A 00H T$#al 096 0??E
Requirement Analysis and Financial Planning for Individual

Fig re 04- Inves#&en# O./ec#ive $f In'ivi' als Investment o &ective to a greater e(tend determine the investment tenure and the avenue! *ifferent investment o &ectives have different investment avenues to meet them! .y determining the o &ective we can easily determine the investment vehicle for indivi

The persons looking for principal safety can investment in Post office schemes, government securities, anks and PPF! Investment in 5quity and )utual funds can give greater returns which can eat high inflation rate! Term deposits are useful when mo needed after a fi(ed period of time!

>.> !esp$n'en# fre3 enc* $f inves#&en#
Ta.le 01- !esp$n'en# fre3 enc* $f inves#&en# Preferre' Fre3 enc* $f inves#&en# )onthly Duarterly 'alf Oearly Annually #ingle C4ne Time T$#al
293 173

<? - - !esp$n'en# Percen#age ?0 8<H 0< 1;H 01 10H ;0 0;H 0< 1<H 096 0??E
203 343

Investment

b!ective

Pr!nc!p+e 8afet. #a!nta!n 8tandard of $!v!ng #eet f't're e)penses 8afeg'ard aga!nst cont!ngenc!es

individuals! money is
Requirement Analysis and Financial Planning for Individual

<@ Fig re 05- !esp$n'en# fre3 enc* $f inves#&en# A good num er of investors prefer to invest regularly on monthly asis, thanks to #ystematic Investment Plan! )onthly investment helps to invest in small denominations with enefits of Rupee cost averaging! )onthly investment was largely found in )utual Funds! To a surprise many prefer to invest in single or one time installment without knowing the risk attached to it! 4ne time investment is a good option only for physical assets life real estate and gold!

>.D Financial Li#erac* $f resp$n'en#
Ta.le 04- Financial Li#erac* $f resp$n'en# Financial Li#erac* !esp$n'en# Qery Bood ?> Bood <1 Average 8A

Poor 1@ T$#al 096
0 10 20 30 40 50 60 70 #ont"+. 9'arter+. a+f 2ear+. Ann'a++. 8!ng+e 61ne :!;e Respondent Percentage
Requirement Analysis and Financial Planning for Individual

<A Fig re 06- Financial Li#erac* $f resp$n'en# The purpose ehind knowing the financial literacy is to get to know how etter the respondent can take investment decision individually! A large portion of respondent stated they have a good knowledge of investment avenues ut their investment portfolio contradicted! Thus it states that many are not ready to acknowledge that they do not possess the required knowledge! This keeps them into darkness and may lead to wrong investment decisions, which are hard to correct!

>.0? D$ resp$n'en# (ave en$ g( #i&e #$ &anage #(eir inves#&en# affairs
Ta.le 05- Ti&e availa.le #$ resp$n'en# f$r inves#&en# &anage&en# Ti&e Availa.le !esp$n'en#s Percen#age Oes ?? 8AH -o 11> ?0H T$#al 096 0??E 1 01 ;1 ?1 A1 Qery Bood Bood Average Poor

Respondent
Respondent
Requirement Analysis and Financial Planning for Individual

<> Fig re 08- Ti&e availa.le #$ resp$n'en# f$r inves#&en# &anage&en# It reflects that not many have time to do financial planning! In such cases it is mostly o served that the investment decision was influenced y people around!

>.00 Case s# '*- Financial planning f$r single +$&en
This case study deals with )s! Asha #harma who was divorced and required assistance in financial planning! #he is 80 years old and is working as an Assistant )anager with 7P4 with post,ta( salary of Rs 81,111 per month /p!m!2! #he has a < years old son! #he had taken a car loan for < years W 10HL the 5)I for this comes to Rs A,<11! #he had taken a &oint home loan for 0.'7 apartment with her e(,hus and for 01 yearsL the 5)I for this

comes to Rs 0<,111! 'er total monthly e(penses are Rs 0;,<11 p!m! Ta.le 06- C rren# P$r#f$li$ Ins#r &en#s C$rp s :!s; Pu lic Provident Fund /PPF2P <1,111 Fi(ed *eposits /F*2P 101,111 6ash 111,111 Bold Iewellery 111,111 T$#al Asse#s 49?,??? P PPF will mature after 11 years and F* will mature after < years 8AH ?0H

Respondent able to allocate time for financial planning
Oes -o
Requirement Analysis and Financial Planning for Individual

?1 >.00.0 M* $.serva#i$ns• )s! #harma cannot maintain the same lifestyle given her current circumstances! • 'er investments were in conventional fi(ed income instruments with no e(posure to equity! • 'er loans i!e! car loan 5)Is and home loan 5)Is took away more than <1H of her salary! • .efore separation, she was dependent on her hus and for her personal e(penses! • #he was not familiar with different investment avenues! T(e c$ rse $f ac#i$n- After conducting several rounds of discussion with )s! #harma, I identified her immediate goal was to uy a house and the long,term goals were uying car, saving for her childKs education and her retirement! The ta le displayed elow summarises her financial goals and time hori"on! Ta.le 08- Financial g$al an' #i&e ($ri2$ns Financial g$als Ti&e ($ri2$n :*ears; F # re c$s# :!s; .uying a house < ?@<,111P #onKs 5ducation 10 8,111,111 Retirement 0A 11,011,111 P 6omprises of down,payment /8<,11,111 V 1<H2 T 1<1,111 of stamp duty N registration

>.00.1 Ass &p#i$ns
• +e

advised her to maintain at least Rs 111,111 in ank account to meet any contingency! • Interest income on cash is not considered as part of her monthly income! • +e assumed her salary will grow y 11H p!a! and inflation will increase y ?H p!a! • I have not considered the impact of alimony in this case study! 'owever, for women in similar situations that can e an additional source of income! • The current house will e either transferred in the name of her e(,hus and or sold! +e assumed that there was no profit generated from this transaction! • I assume her life e(pectancy to e @< years!

Requirement Analysis and Financial Planning for Individual

?1 • I have assumed return of @H p!a! post,ta( on investments in fi(ed deposits and equity! >.00.4 S$l #i$n C # '$+n e)penses- I started )s! #harmaKs financial planning y pro&ecting her monthly cash flows y getting the reak,up of income, e(penses and savings! The ta le elow shows that her monthly e(penses were more than >1H of her salary, which led to negligi le savings! 'ence the first advice was to stop spending li erally on things that were secondary for her day,to,day operations! #pending more can lead to increase in de t and reduced savings, which in turn would delay her financial goals! I advised her to sell her current car and prepay the loan and defer this goal y 8 years! Ta.le 09- Earning an' e)penses M$n#(l* % 'ge# C rren# :!s; !ec$&&en'e' :!s; A. Salar* 4?,??? 4?,??? %.T$#al E)penses :aF.FcF'; 15,6?? 0>,??? a2 'ousehold e(p! 1<,111 >,111 2 6hildKs 5ducation 1,111 1,111 c2 6ar 5)I A,<11 , d2 'ouse Rent , A,111 C.T$#al Savings :A7%; 6,6?? 01,??? Op# f$r Ins rance- The most important financial instrument that was missing in her portfolio was insurance! Insurance helps the insuredKs dependents in case of the eventuality! In this case, her <,Or old son was the sole dependent and has at least another 1< years efore which he can take care of himself financially! 'ence we suggested her to opt for #er& ins rance p$lic* for cover of Rs <1 lakhs for 01 years! The annual premium for this comes to Rs 1;,111! -e(t we advised her to opt for &e'ical ins rance with insurance cover of Rs < lakhs! The premium for the same worked out to Rs <,111 per year! % *ing ($ se- .ased on her income, financial commitments and a ility to service the loan, I advised her to opt for a 0%"K ($ se worth Rs 8< lakhs! #he should avail of home
Requirement Analysis and Financial Planning for Individual

?0 loan for A<H of the cost! I advised her to stay in a rented apartment till the time she is a le to accumulate the corpus for the down,payment and the stamp duty and registration fees! The monthly rental worked out to Rs A,111 p!m! -e(t step was to make a plan for accumulating corpus of Rs ?@<,111! The stamp duty and registration charges of Rs 1<1,111 will e taken care y the fi(ed deposit which will mature after < years! For the down,payment of Rs <0<,111, we advised her to invest Rs @,811 p!m! for ne(t five years, assuming return of @H p!a! post,ta(! S$nGs e' ca#i$n plan- )s! #harma wishes to send her son to engineering college after completion of &unior college i!e! after 10 years! The estimated e(penses for the same worked out to Rs 81 lakhs! +e advised her to avail e' ca#i$n l$an for A1H of the estimated cost! For the alance cost of Rs ? lakhs, we advised her to invest Rs 0,@11 p!m! for ne(t twelve years, assuming return of @H p!a! post,ta(! !e#ire&en# planning- )s! #harma plans to retire at the age of << years! Biven her current financial commitments, she cannot start planning for her retirement immediately! 'ence, it was suggested that she start her re#ire&en# planning from the age of ;8!

'er e(penses post,retirement will comprise of = 'ousehold e(penses, Premium towards medical insurance, 'ealth care e(penses and Travelling e(penses Assuming growth of 11H p!a! in salary, we e(pect her salary to e Rs 11 lakhs p!a! at age of ;8! 6onsidering her current household e(penses and travellingChealthcare e(pensesL her retirement corpus worked out to Rs 1!10 crores! Accordingly, I advised her to invest Rs ;;,011 p!m! from the age of ;8 years till the age of << years, assuming return of @H p!a! post,ta(!
Requirement Analysis and Financial Planning for Individual

?8 Ta.le 0>- S &&ar* $f Financial Plan Financial g$als Ti&e ($ri2$n :*ears; F # re c$s# :!s; S#ar# inves#&en# a# #(e age $f Inves#&en# ($ri2$n:*ears; Inves#&en# re3 ire' per &$n#( :!s; CAG! :E; .uying a house < ?@<,111P 80 < @,811 @H #onKs 5ducation 10 8,111,111 80 10 0,@11 @H Retirement 0A 11,011,111 ;8 18 ;;,011 @H Asse# All$ca#i$n- The risk,appetite of )s! Asha #harma is moderate! 'ence I recommended asset allocation of ;<H in equity and <<H in de t! As she does not have the required skill sets to invest in equity directly, I advised her to invest in equity mutual funds via #IP route! For de t investments, I advised her to invest in fi(ed deposits and de t mutual funds! I also advised her to invest in ta( efficient products like 5:## and PPF to save on ta(es! In c$ncl si$n- Person willing to have strong financial should follow elow asic points= • Indentify key financial goals! • Find a financial advisor! • Identify your risk appetite

• .uy Insurance! • #ave more, cut,down e(penses! • Review your financial plan!
Requirement Analysis and Financial Planning for Individual

?;

C(ap#er D- O.serva#i$n an' Fin'ings
1! A out >1H of the respondents do not seek advice from a professional financial planner! 0! 4nly ;@H of the respondents are regular Investors while <8H are satisfied with 1 or 0 policies 8! It was found that ?@H of the investors invest using scientific tools while rest are investing using intuition! ;! The investment criteria of the investors are mostly in real estate or their own usiness! <! It was noticed that investors are very conscious a out their money! They need more returns with less risk! ?! )ost of the investor are satisfied with their mode of investment! Investors who elong to income group 8,< lacs are investing in insurance while investors whose income is 1 lacs are still investing in insurance! @! It was found that >AH of investors are aware a out G:IP#!
Requirement Analysis and Financial Planning for Individual

?<

C(ap#er 0?- Li&i#a#i$ns Reasons cited for not undertaking financial planning are:
Will s#ar# financial planning la#er M-o one knows when the later would come! +e need to change this psychology and need to understand that financial planning is needed at every stage of life and earlier we start is etter! Wai#ing #$ (ave &$ne* #$ '$ financial planning M +e should reali"e that we need a plan to have money and not money to have a plan! Lac, $f ,n$+le'ge M there are plenty of ooks and we sites that can help to gain the knowledge of financial planning! A person can even engage a certified financial planner for this purpose! Misg i'e earlier n'er na&e $f financial planning ,+e need to understand that financial planning is not restricted to a particular asset class or product! %elieving financial planning is $nl* f$r ric( , It is a fact that financial planning is even more important for the person with an average income than it is for someone who earns a very high income!

Reasons for failure of financial plan are:"
N$ financial e' ca#i$n M This is pro a ly e the num er one reason why we mess up our financial lives, ecause no one has taught us how to manage finances! Investing simply without knowing what we are doing is financial suicide! )ore over not many are willing to learn it on their own! +ith lack of knowledge we are ound to have a wrong way! +e need to understand that almost everything today is related to money in one way or another! Leaving planning $p#i$ns an' c($ices #$ $#(ers M +e are never responsi le to ourselves in life, ut the truth is that personal finances are persons own responsi ility! )ostly elieve that government or employer would take care of their financial well eing in future! Person

should understand that the est government or employer can do is guide and provide opportunities! !el*ing $n l$ s* a'vis$rs M There are many financial agents which claim to have all the knowhow of financial planning! +ith lack of awareness we elieve the agents and put all
Requirement Analysis and Financial Planning for Individual

?? our hard earned money on their recommendations which may not e right all the time! #uch advices are mostly related to a product category and do not cover financial principal of diversification! E)pensive free a'vice M In India advice come free from every corner, and every other person loves to do that! Advices can come from family mem ers, friends, and professionals! +e should know from whom to take advice! Gree' M 5veryone ones to get rich over a night, when greed enters the mind it locks logical thinking! In the process of getting more we often lose more! +e should understand that there is risk attach to every investment which may not suite our risk appetite! Give n$ pri$ri#* #$ pers$nal finance &anage&en# M +e all know financial planning is important ut when it comes to implementing it3s not the same! Any investment o &ective should e preceded y a proper financial plan! Investment without o &ective can lead us nowhere! N$ clear $r specifie' financial g$als M )any of us are not clear a out our financial goal, we &ust want to earn money! )aking lots and lots of money is not a proper goal! +e fail to understand the various need which would come with our growing age! F$ll$+ing #(e cr$+' &en#ali#* , #ome call it the $herd% mentality, too! +hen people lindly follow the advice of other its ound to meet disaster!
Requirement Analysis and Financial Planning for Individual

?@

C(ap#er00- S gges#i$ns an' !ec$&&en'a#i$ns
After all this it can e stated that the fundamental corner stone3s of successful investing are= • #ave regularly, Invest regularly • #tart 5arly • *iversify • Gse ta( shelter • 7eep a regular check on investment and modify plans as and when needed People need to e educated and informed a out Financial Planning and this provides a greater opportunity to financial product distri uter like Reliance )oney to educate people! 6ompanies can arrange for seminars and sessions through which they can provide information to people and in return can get prospective clients from the audience! In this way oth the audience and the company can also e enefited! Financial planning is not a onetime activityL the initiative should e taken y financial planner to put this forward to their client! Regular meetings should e conducted etween the financial planner and client to review the investment portfolio! Alteration should e made in portfolio as per need and requirement of the client! This will ensure that the investment o &ectives are achieved! It will create goodwill for the financial planner and his company! This is one area where many planners are lacking today! Follow,up, follow,up, follow,up is need of hour and it should e understood y financial service provider!

Boal should e properly divided into short term, medium term and long term! Proper allocation should e done in various instruments according to the time period of goal! There are various instruments availa le which can site different time period needs! If investment are giving regular return or are going to get matured should e reinvested properly! If an investor is seeking help from advisor then he should collect enough information of product from different sources! It will help to take proper investment decision and choose a right advisor! It is also necessary that advisor should have enough e(perience! Thus the ultimate responsi ility is on the investor when it comes to taking investment decision!
Requirement Analysis and Financial Planning for Individual

?A Always keep investment a simple affair! *iversification is must ut not to a greater e(tend! Investor should know e(actly what he is investing in! If they do not have adequate information, question should e asked to financial advisor! It is etter to invest in instruments which we can understand rather than eing dependent on someone else advice! All the documentations should e complete and need to e preserved! At time of maturity it is necessary to produce the investment documents which act as a proof! .ut many times investors do not have proper documents which dishonors the claim at maturity! It is also recommended that all the disclosure documents also e preserved as it would help in case of any dispute in settlement! Investment through #IP should e encouraged! A little amount regularly invested for long period can create a greater wealth! #IP helps in Rupee cost averaging, develop ha it of saving and it provides convenience of investment! .uy and hold! Investment should e done fairly for a longer period of time only then capital appreciations is possi le!
Requirement Analysis and Financial Planning for Individual

?>

C(ap#er 01- C$ncl si$n
The #aving ehavior has een changed considera ly over the last couple of years! The savings rate in India is comparatively higher than various other countries! 5arlier the trend of saving was in terms of physical assets ut it has started to shift now to financial instruments! This trend partially reflects the relentless e(pansion of the various ranch networks of the financial institutions into the countyKs rural areas and partially holds the increasing trend of the easy accessi ility of the alternative investment opportunities! Today corporate securities have ecome a part of household savings wherein retail individuals prefer to invest his saving in security market! The reasons cite for this are the growth seen in the stock market and a low interest rate and return offered y traditional instruments! Also the growing income of working class has also contri uted largely to the changing pattern of saving in India! The household savings in India can e roadly categori"ed into the following types= • #avings in physical properties • #avings in financial instruments or financial household savings Financial household savings in India usually include the following= • #avings deposits with anks • :ife insurance policies • Provident funds

• Pension funds • :iquid cash of households • *eposits with non, anking financial institutions • Gnit Trust of India Investment #chemes The ma&or portion of financial saving goes into pension funds and life insurance! It has een found recently that the traditional instruments of savings like special ta( incentives or higher interest rates are not a le to increase the rate of private saving rate in the long run! It is also found that the response of saving for the interest rate changes in India was amongst the lowest in the developing countries!
Requirement Analysis and Financial Planning for Individual

@1 4ver past 81 years, the prime two instruments for household long term saving like pension saving and life insurance have come to an idle state! 4n the other hand, the mutual funds started to ecome more successful in the early years of 1>>1s! 6onsidering these two factors, we can conclude two weaknesses of the saving market in India! First, pu lic sector dominates the markets! #econd, the allocation of portfolio is under control that makes the low returns from the market developments!

Financial Planning B Age Appr$ac(
Nee' Anal*sis7S#age I 7 H$ ng Pr$fessi$nal Life S#age Anal*sis • Age of 01yrs and 81yrs M young group! • #tarted with new &o or profession! • )ay or may not have a #pouse! • Am itious and 6areer Focused! • Pro a ly do not have any dependents! • )ight not have made any Investment • :ikes to #pend Financial Nee's Anal*sis • )ight have a financial support from parents! • -o ha it of Investments and likes to spend! • )ay e thinking of .uying a 'ome or 6ar! • Planning to get married! • )ay e thinking of 'igher 5ducation! • 6an take high risk Financial Planning • Gnderstanding the importance of savings and enefits of compound growth returns! • #ave more and invest more, its only possi le during this stage of life, where responsi ilities are less!
Requirement Analysis and Financial Planning for Individual

@1 • :ife Insurance -eeds are almost negligi le, ut should e included in investment as it will not only provide life cover ut also would create a ha it of #aving! G:IP would e etter option in this stage! • 5quity and equity related instrument can occupy a greater portion of portfolio!

• -eed for liquidity is less ut still keeping in mind the era of pink slip contingency plan should e in place! • #hould think for uilding real estate! • Qery long term investment Life Ins rance Nee' Anal*sis7S#age II7 Ne+l* Marrie' Life S#age Anal*sis • Age of 81yrs to ;<yrs! • )arried and have *ependents, 7ids! • Income on rise! • )ight have taken some :oan i!e 'ome :oan, 6ar :oan etc! • 'ave a high 5(penditure! • 5ffective ta( planning is needed! • )ight have started some Investments in 5quity or )utual Funds! • Risk appetite is )oderate Financial Nee's Anal*sis • 'ave a high *e t Repayment through Instalments i!e! 5)Is • )ay want to save for 6hildren3s education! • Persons need to financially protect their Family and *ependents from unfortunate events! • 5lderly parents also need financial support! • #tart saving for retirement Financial Planning • -eed a more sta le portfolio, with moderate risk! • #hould concentrate on less volatile investment • Insurance is a must, include child plan and retirement plans under this!
Requirement Analysis and Financial Planning for Individual

@0 • #hould concentrate on reducing de ts • Relatively long term investment Life Ins rance Nee' Anal*sis7 S#age III7Pr$ ' Paren#s :Pre7!e#ire&en#; Life S#age Anal*sis • Age of ;<,?1 years! • )a&or e(penses go towards 6hild higher education and marriage! • Reduced :oan .urden • 'ave a good Income! • Retirement on mind! • :ow risk taking appetite! Financial Nee's Anal*sis • #aving for retirement! • 6hilds 'igher 5ducation 5(penses or )arriage! • Previous Investments giving Bood dividends and Returns! Financial Planning • #hould invest in instruments which provide regular return, such as fi(ed income

products! • )a&or portion of investment should e diverted towards retirement plan! • 'ealth insurance should e included! • Investment should e highly liquid Life Ins rance Nee' Anal*sis7 S#age IA7 P$s#7!e#ire&en# Life S#age Anal*sis • Age ?1 years or a ove! • Retired from employment! • )ight have taken some assignment as consultant! • Planning to pursue long cherished ho ies! • 6hildren are financially independent and married!
Requirement Analysis and Financial Planning for Individual

@8 • Reduced monthly income! • )ight have small or no :oan outstanding lia ilities! • )arginal or "ero risk appetite! Financial Nee's Anal*sis • -eed regular income to maintain current life style! • -eed to protect investments from market risk! • -eed to save for spouse! • Require enough cash alance for any emergency medical e(penditure for oth self and spouse! Financial Planning • #ingle Premium Immediate Annuities • 'ealth Insurance is a must • Regular income products • #hould do estate planning
Requirement Analysis and Financial Planning for Individual

@;

C(ap#er 01- %i.li$grap(*
We.si#es
"ttp<66%%%.!f!ans.co;

)onday Ath Aug 0111, 8=<1P)
"ttp<66%%%.fpsb!nd!a.org6

)onday Ath Aug 0111, ;=1<P)
"ttp<66prof!t.ndtv.co;6Persona+(!nance6&ns'rance.asp)

Tuesday 1?th Aug 0111, 8=1<P)
"ttp<66prof!t.ndtv.co;620086016161907476=o;pare-*!fferent-&ns'rance-P+."t;+

+ednesday 1@th Aug 0111, 11=1<A)
"ttp<66b's!ness.red!ff.co;6report620096;a.6156perf!n-t.pes-of-+!fe-!ns'rance."t;

Friday 0nd #ep 0111, 10=0<P)
"ttp<66%%%.;.%ea+t"g'!de.co;6persn+."t;

Friday 0nd #ep 0111, 10=1<P)
"ttp<66%%%./!ngs%oodcons'+tants.co;6$!fet!;e(!nanc!a+P+ann!ng."t;+

+ednesday 1;th #ep 0111, 11=8<A)

"ttp<66%%%.b's!nessg.an.co;

+ednesday 0Ath #ep 0111, 11=1<A)
"ttp<66%%%.!tr'st.!n6f!nanc!a+-p+ann!ng6art!c+e.act!on6>"at-&s-(!nanc!a+-P+ann!ng-&nd!a

Friday @th 4ct 0111, 10=1<P)
"ttp<66%%%.dna!nd!a.co;6;one.6report?'n!on-b'dget-2009-10-"!g"+!g"ts?1271503

Friday @th 4ct 0111, 10=;<P) http=CCfinance!mapsofworld!comCsavingsCindiaChousehold!html Friday @th 4ct 0111, 10=0<P)
Requirement Analysis and Financial Planning for Individual

@<

Anne) re
Questionnaire

12 +hat is your AgeE a2 01,81 Ors 2 81,;< Ors c2;<,?1 Ors d2 A ove ?1 Ors 02 +hat is your IncomeE a2 Gp to 0,11,111 2 0,11,111 , 8,11,111 c2 8,11,111 , ;,11,111 d2 ;,11,111 , <,11,111 e2 A ove <,11,111 82 +hat kind of risk you can take in your investmentE a2 'igh 2 )oderate c2 :ow ;2 +hat kind of investment you have doneE a2 :ife Insurance 2 Fi(ed *eposit c2 )utual Fund d2 5quity )arket e2 Bold f2 PPF g2 Post office deposit <2 Are you satisfied with your investmentE a2 Oes 2 -o c2 -eutral ?2 +hat is your source of information for investment decisionE a2 -ews Papers, Pu lications and media 2 Professions c2 AgentsC.roker d2 Friends, peer group etc @2 +hat is your investment o &ectives a2 Principle safety 2 )aintain standard of living c2 A meet future e(penses d2 #afeguard against contingencies A2 'ow frequently you do investmentE a2 )onthly 2 Duarterly c2 'alf yearly d2 Annually e2 #ingleC4ne time >2 'ow do you scale yourself in Financials knowledgeE a2 Qery Bood 2 Bood c2 Average d2 Poor 112 *o you have enough time to manage your investment affairs a2 Oes 2 -o