Personal Wealth Management Project Report

8/10/2019 Personal Wealth Management Project Report

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Declaration

I hereby declare that this project work titled Personal Wealth

Management of Ms. Deepti Sinha is a result of an original work done by

me under the guidance of Prof. Vinay Dutta.

(Priyanka Shukla)

Roll No.- 201109

PGDM (FMG 20)

FORE School of Management New Delhi


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Contents

Literature Review ...................................................................... 6

Chapter-1 Profile of the Client ............................................... 11 Family background & details:- .................................................................................................11 PAY SLIP .....................................................................................Error! Bookmark not defined.FINANCIAL FIGURES .............................................................................................................12 Balance Sheet ................................................................................................................................12 CASH FLOW STATEMENT ...................................................................................................13

Chapter-2 Goal Setting...........................................................14

Chapter-3 Budget Reallocation..............................................16Analysis of current situation.............................................................................................16Reviewed Cash Flow Statement........................................................................................17Initial Advice to the Client.................................................................................................19

Chapter-4 Ratio Analysis........................................................20Basic solvency ratio.............................................................................................................20 Liquidity ratio......................................................................................................................21Savings ratio.........................................................................................................................22Debt to Asset ratio...............................................................................................................22

Chapter-5 Suggestion..............................................................24

Chapter-6 How to Use funds to achieve the financial goals.25

Chapter-7 Investment..............................................................27

Portfolio Designing.............................................................................................................28Equity.............................................................................................................................29Fixed Income.................................................................................................................30Mutual Funds................................................................................................................30Gold Investing...............................................................................................................31

Chapter-8 Tax Planning.........................................................32


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Literature Review

LIFE

L-Love others and they will love you back

I-Importance in workplace, from family and friends

F-Financial relaxation in mind

E- Empathy to others, since there is no use in living just for self.

If we can define life in this form, financial freedom and tension from all financial burden is avery important aspect of life. And personal wealth management is the tool to achieve thatgoal.

Definition

Personal Money Management involves a whole range of personal wealth

management issues including:

Planning for and reaching your retirement goals,

Securing your personal financial future, Exploring new revenue/income sources, that are well within your risk threshold,

and

Providing a secure financial future for your family and your loved ones.

In order for you enjoy a comfortable retirement lifestyle, you need to not only protect

all your financial assets, but also to grow your wealth by making your hard-earned

cash work hard for you -before and after your retirement. Additionally, you would

also want to make sure you are doing everything you possibly can for providing for

your family, and for minimizing your taxes -while keeping all your investment

expenses to the minimum.

Considering the diverse range of investment opportunities available in today's highly

fluid and often challenging investment market, it is important that you have access to

an experienced personal wealth management advisor that works hard for you. Your

financial interest is best served by a personal wealth/investment advisor who is

prepared to spend time with you to fully understand not only your unique future
http://www.personalmoneymanagement.org/achieving-financial-security-goals-through-careful-money-managementhttp://www.personalmoneymanagement.org/achieving-financial-security-goals-through-careful-money-managementhttp://www.personalmoneymanagement.org/achieving-financial-security-goals-through-careful-money-managementhttp://www.personalmoneymanagement.org/achieving-financial-security-goals-through-careful-money-management


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Personal Wealth Management : Project 7

revenue goals and your retirement plans, but also your margin of risk tolerance.

Unlike the many broker-firm affiliated financial advisors whose primary interest is to

make more money for the broker firm (and thereby more commission for themselves),

you should look for an independent financial/wealth management advisor that guides

you in all matters related to reaching your financial goals, and does not charge

excessive fees for the same.

An experienced personal wealth and retirement planning expert is usually well-

positioned to assist you in all facets of personal money management including:

investments options, ongoing investment portfolio management, and tax planning

before and after you reach your retirement.

Experts in personal wealth management perform an important role for clients who

wish to make the most of their financial assets. Beyond just overseeing investments,

handling individual monetary resources can reach past stocks, mutual funds, and

bonds and administer other issues as well. Retirement planning that starts early is a

much easier and more painless way to provide for future needs. Insurance needs and

tax concerns can be difficult to direct without professional help. Money set aside for

educational purposes can offer children the kinds of choices that can influence their

futures in positive ways. Vacation homes and family travel can become a reality

through the skilled administration of finances. All in all, personal wealth management

constitutes a lot more than just paying bills and investing in the stock market. Most

organizations will help clients by going over their individual income and assets and

create a plan of action that is uniquely tailored to them. Whether the need is for asset

protection or trust administration, inheritance issues or tax expertise, consulting

professionals in the field can make the difference between financial success and fiscal

disappointment.

When searching for an organization to handle personal wealth management, there are

a number of qualities to look for. Most agencies are interested in sticking with the

client over the course of their life, so finding a qualified organization is very

important. A potential client should seek professionals that are able to answer

complex questions and are willing to go the extra mile to make sure that a client's

individual needs are met. If an agency is not willing to dedicate a great deal of time to


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develop a plan of action that covers current and long range needs, a client might be

better off going elsewhere. As tax laws and markets change, professionals should be

able to demonstrate that they are taking pains to stay up to date with current

conditions. Is an agency willing to regularly review a client's personal wealth

management issues to make sure that everything is staying on target? As years pass,

families change. Does the agency seem willing to help the client adapt to these

changes and is there an understanding of what these changes can mean to the financial

health and future of the client?

Estate planning is an important part of PWM program. The future of a client's

potential heirs is a very important concern. Clients work a lifetime for assets that they

wish to see passed to the next generation. Careful estate planning can limit the bite

that taxes can take out of a client's holdings after death. Without careful management,

valuable assets can be frittered away. Skilled professionals can work to make sure that

the client's wishes are carried out and disputes over assets are held to a minimum. The

last thing that an individual wants to worry about is estate related issues that tear a

family apart. While no organization can completely prevent such things from taking

place, a well handled estate can diminish the threat of such disagreements. Many

clients also wish to leave a portion of their assets to charity. A skilled financial

professional can help make sure that this wish is carried out and can also work with

surviving members in a professional and courteous manner. The Bible talks about the

value of friendship. "A man that hath friends must shrew himself friendly: and there is

a friend that sticketh closer than a brother." (Proverbs 18:24)

Handling trusts can be another important concern in the area of personal wealth

management. Establishing a trust is an alternative means to ensure that valuable assets

are passed on to loved ones. A trust involves a transfer of assets to institutions or

individuals. A trustee is appointed to oversee these assets. This trustee does not

necessarily own the property, but is responsible for making sure that the wishes of the

client are carried out. The client will remain in control of these assets and could even

appoint themselves as trustee. Concerns over lawsuits and other liabilities often

motivate clients to establish trusts. Assets that have been transferred to a trust will

generally remain protected from risk and from any future claims of creditors. Ofcourse, knowledgeable expertise in this area is very important since every situation is


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Chapter-1 Profile of the Client

Profile of the client

Personal Details:-

Name: Deepti Sinha

Age: 24 years

Education qualification: B.Tech (IT)

Family background & details:-

Family Members Occupation

Father Business

Mother Home Maker

Brother Non- Dependent- Student(Expenses covered

by Father)


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FINANCIAL FIGURESPersonal Balance Sheet as on 31 st October, 2012.

(Prior to the suggestion of financial planning)

Balance SheetCommon Size

Assets Amount (in `) All in %

LIC 100000 17.95

PF 27000 4.85

Gratuity 10000 1.79

Liquid Assets

Cash In Saving

A/c 40000 7.18

Cash in Hand 15000 2.69

Personal

Possessions

Scooty 40000 7.18

Car 140000 25.13

Stereo/Video 15000 2.69

Laptop 120000 21.54

Sundry 50000 8.99Total (A) Total 557000 100.00%

Liabilities

Personal Loan 120000 54.54

Credit Card 100000 45.46

Total (B) Total 220000 100%

Net Worth (A-B) Net Worth 337000


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CASH FLOW STATEMENT( for the period of 1 st Nov 2011

to 31 st Oct 2012)

Inflation=10%

Amount

Common

Size 2013

Inflow (Predicted)

Salary 642000 100% 706200

Bonus 150000 165000

0

Outflow 00

Discretionary Cell Phone 12000 1.86 13200

Internet

Connection 12000 1.86 13200

Entertainment 60000 9.34 66000

Restaurants 50000 7.79 55000

health Clubs 10000 1.55 11000Clothing 30000 4.67 33000

Gifts 50000 7.78 55000

Cosmetics 10000 1.55 11000

Family Trip 25000 3.89 27500

Total (A) Total 259000 40.34 284900

0.00 0

Non

Discretionary Toiletries 12000 1.87 13200

Home Repairs 6000 0.94 6600

Transportation 10000 1.55 11000

Living expenses 60000 9.34 66000

Electricity 5000 0.77 5500


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Loan instalment 57600 9.90

Total (B) Total 150600 23.45 102300

0.00

Total Expenses(A+B) 409600 48.19 592994

0.00

Surplus 232400 36.13 319000


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Chapter-2 Goal Setting

Goal setting is done in accordance with the wish list of the client. Through the questionnaire

filled and the informal interviews I had with the clients, she had the following goals in mind.

1. Clear the debts on credit card as soon as possible.2. Set up an corpus for monthly expenses during her tenure in MBA college.(joining in

year 2015)3. Start building a corpus for down payment of a house, which she will buy at age 30.4. Proper alignment of insurance needs.5. Set up a retirement corpus.

We will look at these goals in SMART format.

1. Clear the debts on credit card in at most 6 months (Short term 0-2 years)

S-Specific : Clear the debt of Rs 100000.

M-Measurable : The debt is Rs 10000.

A- Attainable: She has a yearly bonus due in March 2013 of Rs. 1.5 lac

R- Realistic : Same as above

T-Time Bound: Starting December 2011, she has set a date of 6 months.

2. Set up an corpus for monthly expenses during her tenure in MBAcollege(executive MBA of 1 YEAR).(joining in year 2015)

S-Specific : A corpus for footing her expense for 1 year during the course

M-Measurable : She needs Rs 10000 per month at current date

A- Attainable: She will have a surplus of Rs 3.5 lac per year.


T-Time Bound: 25 months


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3. Start building a corpus for down payment of a house, which she will buy atage 30. ( MID TERM goal )

S-Specific : A corpus for 10 lac in 7 years.

M-Measurable : She needs to save around Rs 1300 per month at current date



T-Time Bound: 25 months

4.Proper alignment of insurance needs

S-Specific : A insurance for health and car

M-Measurable : A yearly payment of around 15000.



T-Time Bound: Once a year.

5. Start setting up a retirement corpus for retirement.

S-Specific : A investment in Public Provident fund for Rs 1 Lac.

M-Measurable : Rs 1 Lac is an yearly deposit.A- Attainable: She will have a surplus of Rs 3.5 lac per year.


T-Time Bound: Till retirement


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Chapter-3 Budget Reallocation

Analysis of current situation :

1. There seems to be an inherent flaw in the way Miss Deepti has been spending her income.More than 40% of her income goes into discretionary expenses.

It is very high amount.

2. Also her surplus are very less considering that she is staying in accommodation provided by her father and all other expenses are shared between her housemates(elder brother andsister) .

3. Also her personnel loan(Rs 1 lac) was to meet her credit card expenses, which wereincurred while she was earning less in her previous job.

It seems to be wrong practice but she has been able to reduce the credit card debt of over Rs 2lac to 1 lac after taking a personal loan of 1lac. She has not let the expenses pyramid on hercredit card in the last 6 months.

4. There is no income generating asset at this time in the portfolio.

Let us try to realign her expenses (discretionary):

Current

Cell Phone 1000

Internet Connection 1000

Entertainment 5000

Restaurants 4200

health Clubs 900

Clothing 2500

Gifts 4200

Cosmetics 900

Family Trip 2100

21800


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Proposed

Internet Connection 1000

Entertainment 1500

Restaurants 1500health Clubs 1000

Clothing 1000

Gifts 1000

Cosmetics 900

Family Trip 2100

10,900

We are talking about saving in expenses of about Rs 10900 per month.

Reviewed Cash Flow Statement

Let us look at the new cash flow expense:

CASH FLOW STATEMENT

Amount

Common

Size

Inflow

Salary 642000 100%

Bonus 150000

Outflow

Discretionary Cell Phone 12000 1.86

Internet Connection 12000 1.86

Entertainment 18000 2.81

Restaurants 18000 2.81

health Clubs 10000 1.55

Clothing 12000 1.86


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Gifts 12000 1.86

Cosmetics 10000 1.55

Family Trip 25000 3.89

Total (A) Total 129000 20.1

0.00

Non

Discretionary Toiletries 12000 1.87

Home Repairs 6000 0.94

Transportation 10000 1.55

Living expenses 60000 9.34

Electricity 5000 0.77

Loan instalment 57600 9.90

Total (B) Total 150600 23.45

0.00

Total Expenses

(A+B) 279600 43.55

0.00

Surplus 362400 56.45

We can see that the surplus now becomes very huge, even though the lifestyle is maintained.This can be explained as below:

1. Client is residing in a house for which there is no rent expense.2. There is no dependent.3. Initially her discretionary expenses were very high.4. There is no planning involved for retirement or emergency.

Initial advice to the client :

This is the perfect time to save and start planning for the future since her disposableincome is very high and there are no dependents. Also she is not paying any house rentsince she is living in a house owned by her father. But this state is not going to continuefor long.


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Chapter-4 Ratio Analysis :

Personal financial ratios

There are six ratios which help you to do the analyses of your finances and determineyour financial health. They are:

Basic solvency ratio Liquidity ratio Savings ratio Debt to asset ratio Solvency ratio and Net invested assets to net worth

Basic solvency ratio This ratio indicates your ability to meet monthly expenses in case of any emergencyor catastrophe. It is calculated by dividing the near-term cash you have with yourmonthly expenses.

Basic solvency ratio = Cash / Monthly expenses (this ratio is not mentioned inpercentage)

You can also call it as emergency or contingency planning ratio. This ratio helps you prepare for unforeseen problems.

Near-term cash

The numerator of the basic solvency ratio formula, cash (near cash), would generallycomprise of the following heads:

Savings account Bank fixed deposits Liquid funds Cash in hand

The above components are liquid assets which come handy at the first possible hint offinancial trouble. Liquid funds can be redeemed immediately. Same goes for fixeddeposits as they can be broken and liquidated immediately in case of an emergency.

Monthly expenses

Only the mandatory fixed and variable expenses are taken here for simplicity. Anyentertainment expenditure should not be taken as these expenses if need can beavoided.

Mandatory fixed expenses include the money you pay for EPF/ PPF contribution, loanEMIs, insurance premium, professional license fees and rent.


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Mandatory variable expenses, on the other hand, comprise of food, transportation,clothing/ personal care, medical care, utilities, education expenses and miscellaneouscompulsory expenses (the above expenses can vary depending on individuals).

For Deepti,

Cash= 55000

Monthly expenses= 22000

Therefore Basic solvency ratio= 55000/22000

2.5 times

What sis adequate ratio= atleast 3 months.

How liquid are you?

Liquidity ratio = Liquid assets / Net worth

Where liquid assets comprises of:

Savings account Bank fixed deposit Liquid funds Cash in hand Equities (shares) All open-ended mutual funds

And any other type of assets, which can be liquidated within three to four workingdays!

What is this ratio for Deepti:

55000/337000

16.3 %.

Is it sufficient?

Yes it is good. Atleast 15% is the ideal ratio.


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What is the situation here?

Total liabilities= 200000

Total Asset=550000

Ratio= 36.36%

Is it good?

Yes. Anything below 50% is good enough.


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Chapter-6 How to Use funds to achieve the financial goals:

There is a surplus of Rs 362000.

There is a yearly bonus of Rs 150000

So per year we have Rs 500000 for investment purpose.

Of this amount Rs 150000 will be available on year-on-year basis.

And Rs 30000 on per month basis.

1. To create emergency fund: Following the saving rule, 10% of gross income will gointo saving. That means Rs 7000 per month will go to savings.

2. To Invest in PPF: Rs 100000 from yearly bonus will go for this purpose.

3. To invest in mutual fund: Rs 8000 will go for this purpose.

4. Savings for education expenses: As a fund for monthly expenses, Rs 100000 isrequired. Time is 25 months. Rs 4000 per month will go for this purpose.

5. Corpus for downpayment for house loan: A corpus of around Rs 1500000 is required.Considering inflation and rate of return, per month Rs 17500 will go as a investmentfor this purpose. Since this money is required after 7 years, investment in equity(particularly growth shares) is advisable.


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Chapter-7 Investment

Investor profile:

We will now try to find a perfect portfolio for Miss Deepti considering her goals and her profile.

What is portfolio and portfolio management?

Portfolio management involves deciding what assets to include in the portfolio,

given the goals and risk tolerance of the portfolio owner. Selection involves deciding

which assets to acquire/divest, how many to acquire/divest, and when to

acquire/divest them. These decisions always involve some sort of performance

measurement, most typically the expected return on the portfolio, and

the risk associated with this return (e.g., the expected standard deviation of theexpected return). However, due to the almost-complete uncertainty of future values,

Investor Deepti Sinha

Age 24

Type Of Investor Moderate

Occupation Salaried Person

No. Of Dependents None

Liability Very Less

Risk Appetite Medium

Return Required Medium

Knowledge Low

Absorbing Power Medium


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this performance measurement is often done on a casual qualitative basis, rather than

a precise quantitative basis (which would give a false sense of precision). Typically

the expected return from portfolios of different asset bundles is compared.

Portfolio DesigningWe recommend the following portfolio for Miss Deepti. This portfolio has been

designed keeping in mind the following factors:-

Risk- Moderate risk taking ability.

Return Requirements- Moderate return requirements.

Liquidity- Low liquid funds.

Tax- Tax saving funds are Moderate

Time- Since she is yet to start a family many of her requirements are going to

change in future.

Transaction Costs- Investments that require high transaction costs are avoided

as it creates a liquidity issue and also affects the return on investment.


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Now let us look at the type of investment option under each instrument:

1. Equity-

In equity investment also there can be various kinds of strategy, like investing in

1. high growth shares2. income

3. balanced4. momentum

Again seeing the profile of investor, I will suggest a moderate risk strategy.

2. Fixed Income:

40%

10%20%

30%

Sales

Equity

Fixed Income

Gold

Mutual Fund

40

20

30

10

Sales

Growth

Income

Balanced

Momentum


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4. Gold Investing

Suggestion to invest in gold may seem an odd advice but at such times it is very good option.Following are the benefits in investing in gold.

Benefits:

Portfoliodiversification

Inflationhedge

Currencyhedge

Riskmanagement

Demand andsupply


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2. Reduction of tax liability beyond Section 80C deductions - If your salarysurpasses Rs 250,000 pa and the reductions under Section 80C are not enough tominimize the general tax liability consider the following:

Home loan: Interest payments of upto Rs 150,000 pa are entitled for reductionunder Section 24.

Medical insurance: A deduction of upto Rs 15,000 pa under section 80D is

applicable under this. Donations: Tax advantages under Section 80G entitle the donations to

particular funds/institutions.

3. Assert tax advantages on house rent paid - If HRA is not included in the salarystructure then the salaried individuals can asset rent paid by them for residentiallodging. This reduction is accessible under Section 80GG and is smallest amount ofthe following:

25% of the total earnings or,

Rs 2,000 every month or,

Surplus of housing charge paid over 10% of total salary

4. Reorganize the salary - Reorganizing the salary and incorporating certainapparatus can help in the long run in minimizing the tax liability. In order to assert tax


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benefits salary reform is a more competent measure. The following can be included inan individual's salary structure:

Food coupons can release up to Rs 60,000 per year from tax.

Medical expenses which are compensated by the employer spare up to Rs15,000 per year.

House Rent Allowance (HRA) should be incorporated in the salaries ofindividuals who stay in rented houses

Transport allowance discharge upto Rs 800 per month.


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References :

http://www.mint.com/blog/goals/12-steps-to-financial-fitness/

HSBC personal wealth management website http://www.christianet.com/debt/personalwealthmanagement.htm "The Handbook of Personal Wealth Management"- Jonathan Reuvid Hinden, Stan, How To Retire Happy: Everything You Need to Know About the 12

Most Important Decisions You Must Make Before You Retire , McGraw-Hill

Professional Publishing, 2000.

Private Wealth Management: The Complete Reference for the Personal Financial

Planner G. Victor Hallman, Jerry S. Rosenbloom McGraw-Hill Professional

Economic Times Website- Retirement Calculator

http://economictimes.indiatimes.com/personal-finance/calculators/retirement-savings-

calculator-/right-sum-to-retire-with/calculator_show/6706882.cms

Economic Times- Tax Calculator

http://economictimes.indiatimes.com/taxcalculators.cms

Money control .com Myiris.com World Wealth Report 2008-Merrill Lynch, Capgemini http://soundpersonalfinance.coms

Wealth Management July 06 Pvt banking poll-r8 report The Economist Intelligence Unit, January 2008
http://www.mint.com/blog/goals/12-steps-to-financial-fitness/http://www.mint.com/blog/goals/12-steps-to-financial-fitness/http://www.christianet.com/debt/personalwealthmanagement.htmhttp://www.christianet.com/debt/personalwealthmanagement.htmhttp://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Jonathan+Reuvid%22http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22G.+Victor+Hallman%22http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Jerry+S.+Rosenbloom%22http://economictimes.indiatimes.com/personal-finance/calculators/retirement-savings-calculator-/right-sum-to-retire-with/calculator_show/6706882.cmshttp://economictimes.indiatimes.com/personal-finance/calculators/retirement-savings-calculator-/right-sum-to-retire-with/calculator_show/6706882.cmshttp://economictimes.indiatimes.com/taxcalculators.cmshttp://soundpersonalfinance.coms/http://soundpersonalfinance.coms/http://soundpersonalfinance.coms/http://economictimes.indiatimes.com/taxcalculators.cmshttp://economictimes.indiatimes.com/personal-finance/calculators/retirement-savings-calculator-/right-sum-to-retire-with/calculator_show/6706882.cmshttp://economictimes.indiatimes.com/personal-finance/calculators/retirement-savings-calculator-/right-sum-to-retire-with/calculator_show/6706882.cmshttp://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Jerry+S.+Rosenbloom%22http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22G.+Victor+Hallman%22http://www.google.co.in/search?tbo=p&tbm=bks&q=inauthor:%22Jonathan+Reuvid%22http://www.christianet.com/debt/personalwealthmanagement.htmhttp://www.mint.com/blog/goals/12-steps-to-financial-fitness/


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Questionnaires

Questionnaire-1

Identification of Goals

1=most important

9= least important

Financial Concerns

6 To minimize income taxes.

7 To be able to retire comfortably. 1 To have adequate funds to cover both routine living expenses

& foreseeable future needs.

9 To increase the assets going to my heirs by using various estate

planning techniques.

3 To accumulate sufficient assets to enable me to increase my

standard of living, acquire a business, purchase a vacation home

etc. 4 To have sufficient funds & insurance coverage in the event of

serious illness.

5 To develop an investment program that will provide hedge

against inflation

2 To be able to finance my higher studies. 8 To enable my family maintain their standard of living in the

event of my death.


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Questionnaire-2.

Financial Values

Read the pair of words below, then circle one item in the pair that would be your first choice

in answering the question If you had an extra Rs. 1 Lac, on which of the two items wouldyou spend your money? You must ma ke one choice in each pair.

Housing (Dream Home)Investments/ Retirement Savings

Hobbies/SportsCharitable Giving/Religious Activities

Education: Self/OthersVacation/Travel

Vacation/TravelPersonal Appearance/Grooming/ Clothes

Retirement Savings/ Investments Hobbies/Sports

Charitable Giving/Religious ActivitiesSocial Activities/ Eating Out

Social Activities/ Eating OutCar

Housing (Dream Home)Retirement Savings/ Investments

Education: Self/OthersHousing (Dream Home)

Hobbies/SportsHousing (Dream Home)

Personal Appearance/Grooming/ ClothesCar

Charitable Giving/Religious ActivitiesSocial Activities/ Eating Out

Retirement Savings/ InvestmentsHobbies/Sports

Personal Appearance/Grooming/ ClothesVacation/Travel

Hobbies/SportsCar

Retirement Savings/ InvestmentsSocial Activities/ Eating Out

Housing (Dream Home)Vacation/Travel

Education: Self/OthersCar

Vacation/TravelCharitable Giving/Religious Activities

Personal Appearance/Grooming/ ClothesEducation: Self/Others

Total the number of times you circled each item in the pair activity

Rank your values

Car 2

Charitable Giving 1

Education 4

Hobbies/Sports 2

Housing 4

Personal Care 3

Social 3


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Questionnaire 3:-

Emergency Funds: Are you prepared?

Is your job stable? Not at all More or

less

Completely

How dependent are you on interest, dividends and

capital gains on your investments to cover your

regular expenses?

Totally Slightly Not at all

Do you have life, health, auto and disability

insurance?

Little/No

cover

Some risks

Covered

All risk

Covered

As a multiple of your regular monthly expenses

(including loan repayments and insurance premiums),

how much of your investments are in liquid options

like savings account, savings cum deposit accounts

and liquid funds?

15 days Two months Three

months

What is the percentage of regular income generating

assets to your net worth?

0-5

percent

6-15 percent Over 15

percent

Do you have access to comparatively cheap credit like

overdraft facilities against assets like shares and

home?

No access Limited

access

Ample

access


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Questionnaire 4:-

Are you in a DEBT TRAP?

You have more than three credit cards. Yes NoYou are using your savings to pay current

expenses.

Yes No

If you or your spouse lost your job, you have less

than three months take-home pay in a liquid

instrument.

Yes No

You usually only make the minimum payment

on your credit cards.

Yes No

You are over the limit on your credit cards. Yes No

You dont know how much you owe. Yes No

You make late payment a habit. Yes No

You charge more on your cards each month than

you make in payments.

Yes No

Has a collection agency called recently about an

overdue bill?

Yes No

Are you threatened with repossession of your

car, cancellation of your credit cards, or other

legal action?

Yes No


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Questionnaire 5

RISK TAKING ABILITY

1. How do you think of risk in a money context?

a. Danger b. Uncertainty c. Opportunity

2. How easily do you adapt when things go wrong financially?

a. Not easily b. Some resistance c. Very easily

3. In a new job, you want a. Security and pension b. Salary and security c. High salary

4. Your portfolio has

a. Only PF and FDs b. PF, FDs and funds c. Mostly funds and

stocks

5.

How much fall in your investment makes you panic?a. Any fall b. 10% c. 20%

6. If a bluechip crashes, will you buy more?

a. Definitely not b. Not sure c . Definitely

7. A PSU bank making an IPO is offering a soft loan to subscribe. Will you take it?

a. No. b. Maybe c. Yes

8. Hows your investment knowledge?

a. Bad b. Average c. Good

9. How important is it to make your money inflation-proof?

a. Not important b. Not sure c. Very important


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Questionnaire 6-

Test to Measure Investment Risk Tolerance

1. You are winner of a TV game show. Which price would you choose?

Rs 30,000 in cash ( 1 point) A 50 percent chance to win Rs 60,000 (3 points) A 20 percent chance to win Rs 150,000 ( 5 points) A 2 percent chance to win Rs 1,500,000 ( 10 points)

2. You are down Rs 15,000 in a game. How much you would be willing to put up to

win Rs 15,000 back?

More than Rs 15,000 ( 8 points) Rs 15,000 ( 6 points) Rs 7,500 (4 points) Rs 3,000 ( 2 points)

3. A month after you invest in a share, it suddenly goes up 15 percent. With no

further information, what would you do?

Hold it, hoping for further gains (3 points) Sell it and take your gains (1 point) Buy more-it will probably go higher (4 points)

4. Your investment suddenly goes down 15 percent one month after you invest. Its

fundamentals still look good. What would you do?

Buy more. If it looked good at the original price, it looks even better now

(4 points)

Hold on and wait for it to come back (3 points)


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Sell it to avoid losing even more (1 point)

5. Youre a key employee in a start -up company. You can choose one of two ways to

take your year-end bonus. Which would you pick?

Rs 60,000 in cash (1 point) Company stock options that could bring you Rs 300,000 next year if the

company succeeds, but will be worthless if it fails ( 5 points)


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Questionnaire-8

Measuring and Reviewing Insurance Coverage

1. Do you understand the individual coverages, protection types, and amount ofeach insurance policy you have?

No

2. Does your current insurance protection make sense given your current

financial situation (as opposed to your situation when you bought the

policies)?

No3. If you wouldnt be able make it financially without your income, do you have

adequate long-term disability insurance coverage?

No

4. If you have family members who are dependent on your continued income, do

you have adequate life insurance coverage to replace your income should you

die?

Yes

5. Do you buy insurance though agents, fee-for-service financial advisors, and

companies that sells directly to the public, bypassing agents?

No

6. Do you carry enough liability insurance on your home, car and business to

protect your assets?

No

7. Have you recently (in the last year or two) shopped around for the best price

on your insurance policies?

No

8. Do you know whether your insurance company has good track records when it

comes to paying claims and keeping customers satisfied?

Yes

Documents

Personal Wealth Management Project Report