Sample Financial Plan from Apnapaisa

8/22/2019 Sample Financial Plan from Apnapaisa

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Personal Financial Plan

Prepared For:

Mr. Rohan Mehta

Prepared By:

Mr. Harsh Roongtawww.apnapaisa.com

This is a sample financial plan only and the names are fictitious.

Private & Confidential

CEO


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Email: [email protected].: 022-6613 1999

Copyright 20012


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Dear Mr. Rohan,

We would like to thank you for choosing our financial planning services.

The enclosed plan formalizes our recent discussions on the investment ofyour available capital, allocation of surplus cash flows and reallocation ofsome of your existing portfolio.

Our objective is to accurately assess your financial needs and to provide

quality recommendations and ongoing services in accordance with thoseneeds.

The plan is based on the information provided by you on your currentcircumstances and objectives. Please read the plan carefully to check foraccuracy of the information provided.

This plan is an important document, in accordance with the best standardsof the profession. However, it needs to be regularly reviewed and updated

in response to changes in your own circumstances and other factors, suchas pension regulation, taxation and market movements.

Please feel free to contact us if you have any queries.

We look forward to reviewing and implementing these recommendationswith you.

Yours sincerely,

CMPankaaj Maalde, CFPHead - Financial Planning

12th March' 2012



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Executive Summary:

The main body of this report describes details of your present situation,your life's objectives and strategy to meet these objectives.

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Details of family members:

Rohan Mehta -Age: 30 - Health History: Good

Associated As Software Executive at TCS

Name Relationship Age Financially

Dependant

Ms. Neha Spouse 27 Yes

Mr. Karan Son 1 Yes

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Goals and Objectives:

Retirement Planning: You would like to provide a corpus for yourretirement at the age of 60 years. You would like to maintain thesame standard of living, which you are living at present.

Dream Vacation: You would also like to plan for a dreamvacation with your family after 7 years which will cost youRs.2.50 lakhs today.

Child's Marriage Planning: You would like to provide formarriage of your son when he reaches the age of 26 years.

Child's Education Planning: You would like to provide for thehigher education expenses for your son when he reaches theage of 21 years.

Copyright 20012Email: [email protected].: 022-6613 1999


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Particulars Monthly Annual Monthly Annual

Net Take Home Salary 50,000 600,000 50,000 600,000

Total Inflows 50,000 600,000 50,000 600,000

Household Expenses 22,500 270,000 22,500 270,000

Loan EMI's 13,500 162,000 8,300 99,600

Home Loan 13,500 162,000 8,300 99,600

Insurance Premium 6,917 83,000 3,117 37,400

Life Insurance 6,250 75,000 583 7,000

Health Insurance 667 8,000 2,533 30,400

Total Outflows 42,917 515,000 33,917 407,000

Savings 7,083 85,000 16,083 193,000

Actual Investments 6,200 74,400 11,700 1,83,600

Surplus 883 10,600 783 9,400

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Income-Expense Statement

Cash Flow Statement

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46%

27%

14%

13%

Household

ExpensesLoan EMI's

Insurance

PremiumActual

Investments

Current Cashflow

44%

20%

6%

30%

Household

ExpensesLoan EMI's

Insurance

PremiumActual

Investments

Recommended Cashflow

As per the information provided by you, the following are the Cash Inflows and outflows forthe current year:

Current Recommended



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Net Worth Statement

Particulars Rohan Mehta

Personal Assets 53,00,000

Residential Property 50,00,000

Jewellery 3,00,000

Investment Assets 8,40,000

Cash & Equivalents 40,000

Cash in hand 5,000

Savings Bank 35,000Debt & Equivalents 5,50,000

Fixed Deposits 1,25,000/ Certificate of Deposits

PPF 2,50,000

EPF 1,00,000

Insurance - Surrender Value 75,000

Equity & Equivalents 2,50,000

Direct Equity 1,00,000

Equity Oriented Mutual Funds 1,50,000

Total Assets 6,140,000

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Type Interest Rate EMI Outstanding% Balance

Home Loan 12 13,500 7,50,000

Total 13,500 1,200,000

Liabilities

Assets

Net Worth

Total Assets (investment assets) 8,40,000

Total Liabilities 7,50,000

Your Net Worth 90,000



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Asset Allocation

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Recommended AssetAllocation5%

30%

60%

5%Cash &

Equivalents

Debt &

Equivalents

Equity &

Equivalents

Gold & Other

Metals

Investment Avenue Current Recommended

Allocation AllocationCash & Equivalents 5.00% 05.00%

Debt & Equivalents 63.00% 30.00%

Equity & Equivalents 32.00% 60.00%

Gold & Other Metals 00.00% 05.00%

?Equity and debt, both, have an important role to play in your asset allocation.Equity can provide superior inflation adjusted returns over the long term and debtprotects your capital while growing.

?Self-occupied residential property and Personal Jewelry are not treated as yourinvestment assets.

?Gold Investment works as a hedge against inflation and provides safety in badeconomic and political conditions.

?Real estate investment provides you a fixed income, potential for capitalappreciation and also helps in diversification of your portfolio. However, it is highlycapital intensive and most illiquid asset class.

?It is advisable to review and rebalance your investment portfolio periodically.



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Contingency Fund

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?You should keep aside at least 6 months expenses to be used only inemergencies such as job loss.

?Invest in liquid funds or savings cum fixed deposit accounts.

?Maintain discipline. Do not use except incase of emergencies.

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Current Monthly Expenses 37,700

Contingency Period (Months) 6

Contingency Funding (Required) 226,200

Current Contingency Funds

Investment Assets Utilized Current Value

Cash in hand 5,000

Savings Bank 35000

Fixed Deposit 125000

Insurance Surrender Value 75000

Total 240000

Contingency Funding

226,200240,000

13,800

Contingency Funding

(Required)

Available Resources Excess



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Loan Planning

Particulars Current Recommended

Loan Outstanding Rs. 7,50,000 Rs. 7,50,000EMI Rs. 13,500 Rs. 8,300

Rate of Interest 12.00% 10.50%

Savings in EMI Rs. 5,200

?Transfer the loan to another lender at prevailing rate i.e. 10.50%

?No pre-payment charges are payable on Floating rate loans.

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Life Insurance

Insurance Need Analysis:

Looking at your present age, income, life style and life goals and also taking into consideration yourassets and liabilities, your life insurance need is calculated as under:

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Insurance Need Analysis

7,915,052

765,000

7,150,052

Total Life Insurance

Required

Total Assets Insurance Cover

Required

Adequate Life insurance is a must to make sure your familys life style is not affected if you die early.

Analysis of current Policies and Recommendations:

?You have bought two traditional plans from LIC and are paying Rs.75,000 p.a. for arisk cover of Rs.10 lakhs.

?Taking into account various factors like present surrender value, maturity value andpremiums to be paid till maturity we advise you to surrender these policies as IRR

of these plans will not beat inflation.

?Your wife is a homemaker and does not require life insurance.

?Buy Avia I-life Plan, an online term plan of Rs.75 lakhs for a term of 30 years,which will cost you Rs.7,000 p.a.



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General Insurance

A serious illness could be catastrophic to your financial well being therefore, it isimperative you have adequate medical insurance coverage.

Needs Analysis

This section covers analysis of your current General Insurance policies,Need Analysis of the Client and our recommendations.

Current Recommended

New India Apollo Easy Apollo Optima

Assurance Health Standard Plus

Sum Assured 3 Lakhs 3 Lakhs 5Lakhs

Premium 8000 10200 3200

Type Floater Individual Individual

Members Self+Spouse+Child Self+Spouse+Child Self+Spouse+Child(Separate Policies) (Separate Policies)

?Your family floater health insurance is bought from New India Assurance Co. Ltd.has room rent sub-limit of 1% of sum assured. For impact of sub limit in room rentplease read this article,

?Disability Insurance pays a lump sum in the event of suffering from a debilitatingdisease such as cancer, stroke, organ failure or disability arising from an accident.

?You should take an accident insurance policy covering disability for Rs.50 lakhsand a critical illness policy for Rs. 30 lakhs for yourself. Both these policies put

together will cost you around Rs. 17,000 per year.

http://india.apnapaisa.com/blog/health-insurance/watch-out-room-rent-sub-limit-can-really-limit-your-health-insurance-claims/

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Health Insurance (Mediclaim):

http://india.apnapaisa.com/blog/health-insurance/watch-out-room-rent-sub-limit-can-really-limit-your-health-insurance-claims/http://india.apnapaisa.com/blog/health-insurance/watch-out-room-rent-sub-limit-can-really-limit-your-health-insurance-claims/http://india.apnapaisa.com/blog/health-insurance/watch-out-room-rent-sub-limit-can-really-limit-your-health-insurance-claims/http://india.apnapaisa.com/blog/health-insurance/watch-out-room-rent-sub-limit-can-really-limit-your-health-insurance-claims/


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Investment Planning

Direct Equity Investment:

?Direct investment in equity is not advised, as it requiresdepth research.?Invest money in good mutual fund schemes.?Sell your equity investments and reinvest in Mutual Fund

schemes as recommended.

Analysis of Current Investment:

Mutual Fund Investment:

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Recommendation:

?Instead of investing in sectoral or thematic funds, invest in well-diversified funds, whichinvest in stocks of many sectors, which give good diversification across sectors. Hence,we recommend switching as above.

?We suggest you to keep all your Mutual Fund units under Growth option and inrecommended Mutual Fund Portfolio.

?All your existing investments have been allocated towards your all major goals.

?Equity schemes of mutual fund invest around 90-100% in shares of listedcompanies and the balance 0-10% in highly rated debt instruments.

?Balanced mutual fund schemes invest around 70-80% in shares of listedcompanies and the balance 20-30% in highly rated debt instruments. Theyprovide an ideal mix of safety (debt instruments) and growth (equity).

?We suggest you to have a periodical review process to monitor your portfolio andrebalance your portfolio as per your asset allocation.

S.No. Name of the Scheme Current Value Recommendation Allocated to Goal

1 BIRLA MID - CAP 70,000 Redeem & Switch to DSP Karans Education

FUND - DIVIDEND BR Top 100 Equity Fund

2. DSP BLACKROCK 50,000 Redeem & Switch to Karans EducationSmall & MID cap Fund DSP BR Top 100- Regular Plan - Growth Equity Fund

3. ICICI Prudential 30,000 Redeem & Switch to DSP BR Karans EducationInfrastructure Fund Top 100 Equity Fund

- Growth



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Retirement Planning

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Retirement Analysis

330,000 3,320,677

72,349,647

Current Annual

Expenses

Annual expenses at

Retirement Age

Corpus required for

Retirement

?We have allocated your present E.P.F. and P.P.F. to this goal.

?You are advised to start a fresh investment of Rs.9,900 in ratio of 90% inequity fund and 10% in debt.

?Invest Rs. 8,900 in HDFC TOP 200. Invest balance Rs.1,000 in either PPF orin SBI Gold Fund.

You would like to provide a corpus for your retirement at the age of 60 years. You would like tomaintain the same standard of living, which you are living at present.


Investment Current Term Expected Future ValueAssets Utilized Value Rate of Return

P.P.F 2,50,000 30 8% 25,15,000

E.P.F. 1,00,000 30 8% 1,19,71,000

Total Investment 3,50,000 1,44,86,000Utilized


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Education PlanningYou would like to plan for your son's higher education and would like to provide a sum of Rs. 4.50lakhs in present value for this goal.

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Need analysis & funding:

Particulars Karan

Current Age 1

Goal Age (Graduation) 18

Years For Goal 17 Yrs

Expected Rate of Return 14.30%

Inflation 8%Current Value 6,50,000

Future Value 24,00,000

Required Lump sum Funding 2,48,000

Assets to be used for Karan's Education corpus

Investment AssetsUtilized of Return Value

Direct Equity 1,00,000 17 14.30% 9,70,000Sale Proceeds

Equity Mutual Fund 1,50,000 17 14.30% 14,55,000

Total 24,25,000

Current Value Term Expected Rate Future

Education Planning

650,000

2,400,000

Current Value Future Value

?Sell your existing equity shares and transfer to Franklin India Blue Chip Fund.

?

Sell your existing equity mutual funds, and shift to DSP BR Top 100 Equity Fund.



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Marriage Planning

Need analysis & funding:

Particulars Karan

Current Age 1

Marriage Age 26

Years till goal 25

Expected Rate of Return 14.30%

Current Value 7,50,000


Required Monthly Funding 1,800

You would like to plan for your son's marriage at the age of 26 years andprovide a sum of Rs. 7.50 lakhs in present value for this goal

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Marriage Planning

750,000

5,100,000

Current Value Future Value

?Start fresh SIP of Rs.1,800 per month in the ratio of 90:10 in ICICI PruDynamic Fund and SBI Gold Fund respectively. Such allocation of equity andgold is assumed to give return of 14.30% per annum.


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Dream Vacation

You would also like to go for dream vacation with your family in 2019 i.e. after 7 years andwould like to spend Rs.2.50 lakhs in present terms.

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Current Value 2,50,000

Inflation 10%

Current Age 30

Goal required at age 37


Investment Rate of Return 12.90%

Monthly Investment Required 3,600

Recommendation

?Start a fresh SIP of Rs. 3,600 per month in HDFC Prudence Fund.

Estate Planning

?

We strongly recommend making a Will



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Asset Re-allocation

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Investment Existing Assets Retirement Contingency ChildrensAssets Fund Education

Cash in Hand 5,000/- 5,000/-

Savings Bank 35,000/- 35,000/-

Fixed Deposits 1,25,000/- 1,25,000/-

PPF 2,50,000/- 2,50,000/-

EPF 1,00,000/- 1,00,000/-

Insurance 75,000/- 75,000/-- Surrender Value

Direct Equity 1,00,000/- 1,00,000/-

Equity/Balanced 1,50,000/- 1,50,000/-Mutual Fund

Total Assets 8,40,000/- 3,50,000/- 2,40,000/- 2,50,000/-

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Plan Assumptions

Plan Assumptions

Retirement Age 60. N.A.

Life Expectancy 80 80

Inflation Rate 08.00%Portfolio Returns Liquid Funds 05.00%

Portfolio Returns Debt 08.00%

Portfolio Returns Equity Funds 15.00%

Portfolio Returns Balanced Funds 12.90%

Portfolio Returns - Gold & Jewelry 08.00%

Self Spouse

All returns are assumed as net of Indian Income tax.None of the returns are guaranteed.



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Summary of Recommendations

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Liquid Fund/ Rs.2.26 Lakhs Start ASAP

Savings cum FD

Buy Aviva I-Life Plan Rs.75 Lakhs ASAP

Surrender LIC policies After buying online policy

Life Insurance

Contingency Planning

Self Buy Bajaj Allianz Critical Illness Rs. 30 Lakhs

Self Buy Apollo Personal Accident Rs. 50 Lakhs

Family Buy Apollo Easy HealthStandard Plan - Individual Rs. 3 Lakhs

Family Buy Apollo Optima Plus - Individual Rs. 5 Lakhs

Health Insurance

Sr. Goals / Plans Target Amt Remark / suggestions StatusNo.

1. Retirement SIP of Rs. 8,900 HDFC Top 200 FundPlanning

2. Education Sell equity shares and reinvest inPlanning Franklin India Blue Chip

Sell existing Mutual Fund and reinvest inDSP BR Top 100 Equity Fund

3. Marriage SIP of Rs.1,800 ICICI Pru Dynamic Plan

Planning & SBI Gold Fund in 90:10 ratio.

4. Vacation SIP of Rs.3,600 HDFC Prudence FundPlanning

Other Goals


Rs.1,000/ month PPF


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Some good practices of financial planning

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1. Build a contingency fund of 3 to 6 months of your household expenses along withEMI and insurance premiums. This money will help you in critical cases where the

income of the family stops due to any reasons. If you make provision for such acontingency fund, then you will not have to liquidate your long-term savings atthat given point of time. This money should be kept in your sweep in sweep outaccount of your bank to earn higher interest rates.

2. Always keep your insurance and investment separate. You should always take aterm insurance policy to have enough cover on your life. Also you should haveenough mediclaim policies to take care of expenses arising out of hospitalizations.

3. Set goals that are measurable and realistic don't set goals that are too big, it mayaffect your financial planning badly. While making a financial plan for yourself, youshould keep the assumptions on the return on investments realistic. For exampleduring some years, equities had given returns of more than 40% per annum. Butwhile planning for your goal, you should not assume your investments to grow at40% per annum.

4. Prioritize your goals you should always list down all your goals on a piece of paperand then prioritize all of them. Once prioritizing is done, you should start planningfor goal number 1 and then move down on the list of priority.

5. Each and every asset and investment should be mapped to one particular goal and

should not be touched otherwise In case of any emergency, the person shoulduse the contingency fund and should not think of liquidating any asset that is keptfor any long-term goals.

6. Invest systematically invest through SIPs and don't try to time the market. Keepon investing every month rather than keeping it in your savings bank account.Never stop an ongoing SIP when the markets are low.

7. Make sure that the recommendations provided to you by your financial planner areexecuted properly and without any delays. Also you should keep the planner

posted with any developments like change in income, any major health issueswithin family that may affect your financial planning.

8. Sit down once every year to review and revisit all your goals. Also reprioritize themin case needed. The best time to do so is the month before your birthday orwedding anniversary.

9. Put automatic payments (ECS) on all insurance premium and SIP. You bankaccount will be automatically debited and you will never forget to issue a cheque.Provide your mobile number to the insurance companies and mutual fund houses.They send reminders to maintain the required balance in your account a few daysbefore the ECS is due.



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Some good practices of financial planning

10. Start moving your assets from risky assets like equities or alternative investmentsto debt instruments systematically when your goal is around 2-3 years away thiswill ensure that in case the equity markets falls just before your goals are arriving,your corpus would be protected to a very great extent.

11. Invest in direct equities only if you have enough knowledge and expertise to do so.Don't invest on tips from your friends and relatives. Also don't try to go long whenyou think the markets are low and short when you think the markets are highest.Markets have surprised us many times with their bulls and bears. Never borrow toinvest in stock markets.

12. Keep all your insurance and investment documents at one place and inform yourspouse, parents and kids about the same in case of any emergency, they cantrace them easily. Many a times, when a person gets admitted, then the familymembers have no clue about the mediclaim card that needs to be shown to thehospital. Also sometimes, family members sit down to hunt for a LIC policy whichhas matured and the maturity amount will be given to the insured only when theinsurance policy is provided to the insurance company.

13. Don't delay, investments or payment of your credit card bills/loan EMIs both ofthem can affect your financial future badly. If you delay in starting your

investments on time, then you will lose the opportunity to create enough corpusesfor your future goals. In case you delay in making payments for your credit cardbills and loan EMIs then you will land up lowering your CIBIL score and risk yourchances of getting a loan in future.

14. Get your CIBIL report of Rs. 450 annually and go through it to check if there areany of the information mentioned there are not true. In case any of the informationmentioned there are not correct, you should report the same to CIBIL and get thesame rectified at the earliest to avoid any complications in future.

15. Provide your mobile number to all the bank accounts and credit cards anytransactions that is done on your debit card or your credit card is reported to yourmobile number. In case any transaction is suspicious, you can report the same tothe bank immediately and they will look in to the same.

16. You should make sure that you have put nominations for all your investments.These can anything like a bank FD to mutual funds or direct equity. You should alsoprepare a will to plan for your estate since nominations are not sufficient to makesure that there is no dispute about the assets in the event of the death of theowner.

Continue...



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Any financial plan made by us is based on information detailed by the informationprovided by the client in the data gathering sheet and the personal discussions with the

client. A copy of the data gathering sheet is available on request. The informationcontained in the financial plan must be read carefully. In case any relevant informationis overlooked or misinterpreted, then we request the client to contact us beforeproceeding with the implementation of the plan. The financial plan is completely basedon the information supplied to us by the client, which we assume to be correct. Noresponsibility can be accepted if the information provided to us is incorrect orinaccurate. This plan is prepared solely for the use of the client to whom it is addressed.This financial plan is a forward-looking document where we have assumed certainreturn on investments on various investment classes and inflation. These forward-

looking statements involve, and are subject to known and unknown risks, uncertaintiesand other factors, which could cause actual results, performance or achievements todiffer from the future results, performance or achievements expressed or implied bysuch forward-looking statements.

All these forward-looking statements attributable to ApnaPaisa herein are expresslyqualified in their entirety by the above-mentioned cautionary statement. ApnaPaisadoes not accept any direct or indirect liability for any results, performance orachievements that differ from results, performance or achievements implied by suchforward-looking statements.

We do not promise that the investments you make based on this plan will be profitable.Investments are always subject to various market, currency, and economic, politicaland business risks. We will not be liable for any losses that may be caused directly orindirectly by such investment decisions.

This financial plan is based on the current situation and goals, which will change withthe passage of time. Any material change in the financial situation of the client willnecessarily render the contents of the plan out of date. Material changes refer tochange in income/salary levels, assets acquired, liabilities incurred, change in numberof dependents, health condition, or the passage of time of more than 12 months or the

effect of inflation or deflation.

We strongly recommend that

a) You review this plan periodically to ensure that your plans actual performance isconsistent in meeting your goals, and

b) You update your plan annually to ensure that your plan is updated for yourchanging situation and goals.

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Disclaimer

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Thank you

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Sample Financial Plan from Apnapaisa