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Assignment

On

Financial Planning

Submitted to Submitted by

Prof. P. Chhabra Bhoopendra Tiwari

PGDBM 13 (A)

EMPI B School PGDBMEMPI B School

New Delhi

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Financial Plan prepared for Mr. K. L. Shukla

Personal Information:

Name: K. L. Shukla Address: Vil.- Pure Khushiyal, Post- Mishrauli

Age : 29 yrs Dist.- Sultanpur (UP)

DOB : 21-Sep-1980 Office Address- 23/11, Sayajiganj, Vadodara,

Gujrat

Phone No. : 9662518590

Family Members:

Name Relation D.O.B. Age Dependent

Mrs. Amrawati Mother 12-May-1965 45 yrs Yes

Mrs. Sandhya Wife 2-Nov-1983 26 yrs Yes

Amit Son 8-Nov-2008 1 yrs Yes

Long Term Financial Goals

Goals Name Target Date (Year)

Education Amit 2026

Marriage Amit 2035

Second Home in Lucknow Self 2015

Immediate Financial Goals

yTake a life insurance plan in order to meet expenses of the dependents in caseof an unfortunate event.

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Current Monthly Cash Flow: (Income less Expenses)

Income Amount (Rs.) Expenses Amount (Rs.)

Gross Salary

(30000)

Less Tax (1200)

28800 EMI 5300

Living Expenses 15000

Agriculture

Income

5000 Other Expenses 3000

PF Contribution 4000

Total Income 33800 Total Expenses 27300

Surplus 6500

Current Financial Situation:

Asset Amount (Rs.) Liability Amount (Rs.)

Home 10,00,000 Home Loan 10,00,000

Saving A/C 20,000

NSC 90,000

Fixed Deposit 90,000

Total Asset 12,00,000 Total Liability 10,00,000

Net Worth 2,00,000

Assumptions used in the analysis (based on data you have

shared):

yAnnual inflation rate 5%yFor education - 5%yRetirement age - 60 yrsy

Life Expectancy for self and dependants 80 yrsyYou are the only earning member in your family

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Protection Planning:

Observation:

There may not be sufficient resources to protect your total outstanding liabilities in

case of an unfortunate accident to you; currently, you are inadequately covered for

insurance.

Analysis

Currently you dont have any insurance

Recommendation:

yMr. Shukla, I recommend you to buy a Term Life Insurance Policy.The Term Life Insurance Policy should be of sum assured Rs. 27lakh for a term of 12

years. The premium of this policy will be Rs. 1,150 per month (Aviva Life Insurance

Risk Care Term Policy). This will enable your survivors pay off liabilities in case of

your premature death.

Back up data for the above analysis:

Below table depicts the need of your dependants till their life expectancy and liability

to be protected in case of any unfortunate event happening today:

Total Liability that needed for Protection Amount (Rs.)

A Home Loan 10,00,000

B Education & Marriage of Amit 18,00,000

Total Expenses that needed for protection

Expenses that

needed in case of

any unfortunate

happen

Expected

Expenses

(P.M.)

Age till which

support required

(yrs)

Total Protection

needed

(Rs.)

Smt. Sandhya 3,000 80 3,95,000

Amit 5,000 24 5,05,000

Expenses needed for protection (C) 9,00,000

Total Protection Needed (A+B+C)Current Coverage (8,70,000)

37,00,000

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Reti ement Pl nning:

Observati n:

Rs. 82,000 aft your retirementto meet your post retirement expenses.

Anal sis:As pert e current analysis you need Rs. 1.23crore (approximately) to meet your postretirement expenses. Your current Provident Fund contri ution and yourtotal current

contri ution of Rs. 8,000 per mont (your contri ution and your employercontri ution) to t e P.F will add uptoRs. 1.18 crore (approximately) by your

retirement age. Our analysis forecasts t att ere is still a shortfall of Rs. 5lakh to meetyour after retirement expenses.For that you can take an endowment policy and

premium would be Rs.153.

0

0.2

0.4

0.6

0.8

1

1.2

1.4

in crore

in crore

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Financial / Accumulation Goals:

yPay for children's education.yProvide for children's marriage expenses.

Analysis

Goals Financial need Target Date

Amit education 10,00,000 2026

Amit marriage 8,00,000 2035

House in Lucknow 15,00,000 2015

Recommendations:Following recommendations are based on assumption:

y For education of amit I would recommend you take a PPF for 15 years andinstallment would be Rs.3,100 on the name of Amit.(rate of interest is 8%)

y For Amit marriage I would suggest to invest in mutual fund for 25 years andinstallment would be Rs. 500. (Rate of interest 12%)

y For house plan you dont have sufficient amount of money so I would suggestyou to postpone for some time after repayment of your loan then you can use

that money for this purpose.

CONCLUSION:

The value of this plan lies in its implementation. Once your plan accurately reflects

what you're personally trying to accomplish, the quicker you take action, more likelythe desired results will be achieved. No financial plan is of any value unless it is

implemented promptly. Our services are available to assist you in this endeavor on an

annual basis.

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