D’Invest Quotient Your Partners In Financial Planning And Wealth Management Amalaraj Marian amalarajm@sancharnet.in marianamalaraj@hotmail.com Phones 9822004673 9225119965

Points to ponder. “Take care of the pennies and the pounds take care of themselves” “Every drop is important to make an Ocean” “The shade or the fruits of the tree which you are enjoying today were planted by someone many years ago”

Financial Managaement Why? I have an hour to make or break your next 50 years may be more. If you get it right today you will take right steps in the years to come, and build up your financial strengths over a period of time. People are unique hence financial planning is necessary and in the same manner solutions will be different.

Financial Planning Why? People will be different today, but what they do from now will determine how they shape their destinies and their financial status. Understanding the world of Finance is very important. You are not just earning but you are meeting current needs and planning for all your future situations in your life.

Financial Planning Why? One needs to know and take care of the following INCOME TAXES DIFFERENCE BETWEEN NEED AND WANTS SAVINGS, INVESTMENTS AND PROTECTION INFLATION

INCOME YOUR GROSS INCOME MINUS STATUTORY CUTS (PF, TAXES ETC) NET INCOME AVAILABLE AS TAKE HOME

INCOME STATUTORY CUTS CANNOT BE AVOIDED IT IS FOR SOCIAL SECURITY. BUT YOUR TAXES CAN BE MANAGED BY HOW BEST YOU MANAGE YOUR FINANCES AND MINIMISE YOUR TAXATION. KNOWLEDGE AND FREQUENT UPDATION OF KNOWLEDGE IS VERY IMPORTANT TO MANAGE EFFECIENTLY YOUR TAXATION.

NET TAKE HOME INCOME WHAT YOU WANT ONCE YOU HAVE THIS MONEY IN YOUR BANK YOU NEED TO BECOME CAREFUL AS TO HOW YOU MANAGE THIS ASPECT OF YOUR LIFE. YOU NEED TO SPEND WITH LOT OF CARE SO THAT YOU ARE NOT WASTING. IT IS VERY IMPORTANT TO UNDERSTAND WHAT YOU NEED V/S WHAT YOU WANT

UNDERSTANDING NEED AND WANT YOU NEED TO SPEND FOR YOU UPKEEPING FOOD, CLOTHING ETC (BASIC NECESSITIES) BUT YOU DEFINITELY DON’T NEED TO EAT FOOD IN HIGHEND HOTELS OR BUY BRANDED CLOTHES. YOU NEED A BIKE TO CONDUCT YOUR DAY TO DAY ACTIVITIES BUT CAN YOU AFFORD A BIKE WORTH RS 50000/-. YOU GO AND BUY A BIKE FOR RS 100000/- PLUS IS A FOLLY.

ITS YOUR CHOICE YOUR SAVINGS AND INVESTMENTS V/S LOANS. AFTER MEETING YOU VERY NECESSARY EXPENDITURE, YOU CAN SAVE MONEY TO MANAGE OTHER FINANCIAL NECESSITIES. YOU NEED TO KEEP ASIDE YOUR SAVINGS FOR A) SAVINGS FOR IMMEDIATE AND FUTURE NEEDS. B) DEPLOYING THIS SAVINGS IN SUCH A MANNER THAT YOU TAKE CARE OF TAXES AND THE FUTURE OBJECTIVES. (INTELLIGENT)

ITS YOUR CHOICE YOUR SAVINGS AND INVESTMENTS V/S LOANS. IF YOU TEND TO MIS- MANAGE YOUR FINANCES YOU WILL END UP WITH A DEFICIT. THIS IS A PATHETIC SITUATION BECAUSE YOU WILL END UP BORROWING. MEANS YOU WILL BE AT THE MERCY OF THE PERSON WHO HAS LENT YOU THE MONEY. YOU WILL END UP GIVING MORE BY WAY OF INTEREST. WHICH WOULD WIPE AWAY YOUR ABILITY TO CREATE WEALTH FOR FUTURE.

UNDERSTANDING WHAT IS SAVINGS AND INVESTMENTS SAVING IS THE MONEY WHICH YOU CAN SET ASIDE AFTER MEETING YOUR NEEDS. BUT IF YOU LET IT LAY IN YOUR CUPBOARD IS A FOLLY BECAUSE AT THE END OF THE YEAR INFLATION WOULD HAVE ROBBED A PART OF THE VALUE!!!! YOU WOULD BE JUST BE BETTER HOLDING IT IN A BANK MAYBE YOU WILL ADD 3-5% TO IT. BUT THIS WILL ALSO ERODE VALUE OF YOUR MONEY.

UNDERSTANDING WHAT IS SAVINGS AND INVESTMENTS BUT MAKING AN FIXED DEPOSIT WOULD BE BETTER BECAUSE YOU MAY JUST MANAGE TO PROTECT THE PURCHASING POWER OF YOUR MONEY. WHAT CAN SOLVE THIS PROBLEM? INVESTMENTS ARE THE VENUES WHICH LOOK TO BEAT THE NEGATIVE EFFECTS OF (INFLATION AND TAXES) AND FETCH A RETURN OVER AND ABOVE THIS

UNDERSTANDING WHAT IS SAVINGS AND INVESTMENTS LETS USE THE FOLLOWING EXAMPLE YOU HAVE RS 100. THE INFLATION IS 6%. YOUR TAX BRACKET IS 30% YOU GET 9% INTEREST. WHAT IS YOUR RETURN? RS 100*9%= 9-(INFLATION 6+TAX 2.70)- RS 00.30 SO THE KEY LAYS IN THE RATE OF RETURN

UNDERSTANDING WHAT IS SAVINGS AND INVESTMENTS THE PROBLEM IS YOU FIXED DEPOSITS WOULD VARY BETWEEN 8%-10% OR MAY BE 11%. YOU NEED TO FIND A PRODUCT THAT SHOULD GIVE YOU A RETURN WAY ABOVE THIS AND THIS IS POSSIBLE USING DIFFERENT ASSETS AND UNDERSTANDING AND MANAGING THEIR RISKS

UNDERSTANDING WHAT IS SAVINGS AND INVESTMENTS AND RISKS THE OTHERS THAT FORM A PART OF THE ASSETS IN AN INVESTORS PORTFOLIO ARE REAL ESTATE, GOLD AND OTHER COMMODITIES, AND EQUITIES . THE POTENTIAL OF THESE ASSETS TO GIVE A HIGHER RETURN IS THERE BUT EACH HAS ITS OWN REQUIREMENTS TO MANAGE THE UNDERSTANDING AND THE AMOUNT OF RISK THAT THESE ASSETS CARRY.

UNDERSTANDING WHAT IS SAVINGS AND INVESTMENTS AND RISKS HENCE TO GET A MASTERY IN THESE AREAS POSE A BIG QUESTION. WE CAN OFFSET THE RISK BY TAKING THE RIGHT AMOUNT OF ASSET ALLOCATION WHICH COMES WHILE YOU DO YOUR FINANCIAL PLANNING WITH YOUR ADVISOR. SO IT IS VERY IMPORTANT TO GET YOUR FINANCIAL PLAN IN PLACE WHILE YOU EMBARK ON YOUR LIFE’S JOURNEY.

HOW PREPARE YOUR FINANCIAL PLAN? IMPORTANT IS TO IDENTIFY ALL YOUR FUTURE REQUIREMENTS VIS RETIREMENT, HOUSING, CHILDRENS EDUCATION ETC. PUT A PRESENT VALUE TO THESE REQUIREMENTS AND TIME FRAME YOU WOULD LIKE THE MONEY TO BE CREATED FOR THIS REQUIREMENT. YOUR PLANNER WILL CALCULATE THE FUTURE POSSIBLE AMOUNT OF THIS REQUIREMENT AND THE ASKING RATE OF INVESTMENTS FROM NOW ON

HOW PREPARE YOUR FINANCIAL PLAN? EXAMPLE YOU NEED TO KEEP ASIDE MONEY FOR YOUR CHILDS EDUCATION SAY 5 LAKHS ( IN TODAYS TERM) YOU WILL NEED THIS AFTER 15 YEARS. THE REQUIRED RATE OF RETURN IS 12%. THE INFLATION IS 6%. HOW MUCH YOU NEED TO INVEST MONTHLY FROM NOW ON?

HOW PREPARE YOUR FINANCIAL PLAN? ANSWER RS 500000/- WILL GROW TO A REQUIREMENT OF APPROX RS 1200000/- IN 15 YEARS AT 6% INFLATION. SO YOU WILL HAVE TO SAVE APPROX RS 14500/- PM FOR 15 YEARS TO GET THE VALUE OF RS 1200000/- IF YOUR RETURN RATE IS 12%. THIS WAY YOU WILL HAVE TO LIST OUT ALL THE GOALS OF YOUR LIFE, AND CREATE A PLAN WHICH WILL THE ROAD MAP YOU WILL HAVE TO STICK TO IN THE TIMES TO COME.

PROTECTION AFTER DOING ALL THIS YOUR JOB IS NOT OVER. YOU NOW NEED TO PROTECT YOUR FAMILY AND YOUR SELF FROM UNCERTAINITIES OF LIFE IT COULD BE FROM ILLNESS TO DEMISE. IN A SITUATION LIKE THIS YOUR FINANCES ARE ADVERSELY AFFECTED AND YOU NEED TO PROTECT IT BY ALL MEANS IN FACT THIS WILL COME TOP ON THE PRIORITIES ABOVE ALL THE OTHER DECISIONS THAT ONE WILL BE TAKING.

PROTECTION THERE ARE TWO TYPES OF UNCERTAINITIES IN ONES LIFE. MEDICAL: THIS WILL CRIPPLE YOUR FINANCES IF YOU ARE NOT ADEQUATELY PROTECTED. ANY ILLNESS OR HOSPITALISATION TODAY WILL DRAIN ONES FINANCES BY A TIDY SUM RUNNING INTO SEVERAL LAKHS OF RUPEES. DEATH: UNTIMELY DEATH ROBS YOUR FAMILY FROM THE FUTURE EARNINGS AND ARE LEFT TO FEND FOR THEM SELVES THIS IS THE LAST THING ONE WANTS FOR ONES LOVED ONES.

PROTECTION MEDICAL COULD BE COVERED IN TWO FORMS A) MEDICLAIM B) CRITICAL ILLNESS/ SURGERY COVER. DEATH NEEDS TO BE COVERED VERY CAREFULLY. ONE NEEDS TO WORK OUT MANY THINGS BEFORE TAKING INTO ACCOUNT WHAT KIND OF INSURANCE COVER ONE WOULD REQUIRE. SOME KEY POINTS WILL BE….

PROTECTION HUMAN LIFE VALUE. STANDARD OF LIVING + INFLATION OVER YEARS. PLUS TOTAL LIABILITIES OUTSTANDING VIZ LOANS, UNFINISHED ISSUES LIKE CHILDRENS EDUCATION, SETTLEMENT ETC. THIS WAY THE COVER NEEDED WILL RUN INTO A TIDY SUM.

THANK YOU FOR YOUR TIME. AMALARAJ MARIAN