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FINERVA A G S
Personal Finance Workshop
A G S InfotechHotel Fariyas, Lonavla
24th June & 1st July 2008
FINERVA A G S
Agenda
Introductions
Tools to Create Wealth
Budgeting to Create Surplus
FINERVA A G S
Introduction
FinervaFinerva = Finance + Minerva (Roman
Goddess for Wisdom)India’s First Company (also only one till now)
dedicated to Personal Finance Education3 core values:
Simplifying Personal Finance Make Meaning Create Value
FINERVA A G S
…Introduction
Trainer – J.KarthikeyanPromoter Director of FinervaBE, MBA, AFP10 years experience in Manufacturing and
ServicesOver 3500 hours of training experienceVisiting Faculty in Anna University &
Bharathiar University for MBA students
FINERVA A G S
Tools to Create Wealth
a. Basics of Cash Flow Asset Vs Liability Chart
Mark the table in your workbook appropriately
FINERVA A G S
FINERVA A G S
Asset - Liability
Cash Flows
FINERVA A G S
Applying Cash Flow to our lives
Exchange of phonesBike with high resale
valueHaving assets and
heavy loansHouse that we live inVehicle loansBorrowing for tax
saving investment
FINERVA A G S
Tools to Create Wealth…
Balancing Return & Risk
What is risk? Any deviation from expectation is risk Which has higher risk?
– When I expected 10 % I got 9%.
– I expected 35% I got 31.5%
– I expected 100% I got 90%
FINERVA A G S
Which decision is better?
An army general has 100,000 soldiers.
If he fights he will lose 20,000 persons.
If he retreats he will lose only 20% of his army.
Which decision will reduce the loss of lives?
FINERVA A G S
Risk…
Is there zero risk? No. That is why Countries are rated too. Sometimes the sovereign rating can be lesser than
some companies in the country.
FINERVA A G S
…Tools to Create Wealth
Tools to meet my requirement Comparision chart for
different investments
FINERVA A G S
Equity Shares
Current Yield – Low
Capital Appreciation – High
Typical Returns - 19.25% as per SENSEX returns since
1979
Risk – High
Marketability / Liquidity – High
Tax Treatment - No long term capital gains tax after 365
days. Dividends received are tax free
Convenience - High
FINERVA A G S
Debentures
Current Yield – Moderate
Capital Appreciation – Moderate
Typical Returns - 8% depending on company
Risk – Low
Marketability / Liquidity – Average
Tax Treatment - Interest received is taxable
Convenience - Average
FINERVA A G S
Mutual Fund - Equity
Current Yield – Low
Capital Appreciation – High
Typical Returns - 39% Average over 3yrs Highest return
- 69%
Risk – High
Marketability / Liquidity – High
Tax Treatment - Section 80C benefits for Equity Linked Savings
Schemes. No long term capital gains tax after 365 days. No tax on
dividends received.
Convenience - Very High
FINERVA A G S
Mutual Fund - Debt
Current Yield - Moderate
Capital Appreciation – Low
Typical Returns - 8% Average over 1yr
Risk – Low
Marketability / Liquidity – High
Tax Treatment - Dividends received are tax free
Convenience - Very High
FINERVA A G S
Bank Deposits
Current Yield – Moderate
Capital Appreciation – Nil
Typical Returns - 8% Average
Risk – Negligible
Marketability / Liquidity – High
Tax Treatment - Section 80C benefits for 5 year deposit.
All interests are taxable
Convenience - Very High
FINERVA A G S
Public Provident Fund
Current Yield - Moderate but locked till end of the term
Capital Appreciation – Nil
Typical Returns - 8%
Risk – Negligible
Marketability / Liquidity – Low
Tax Treatment - Section 80C benefits. Maturity tax free.
Can not be attached in case of insolvency
Convenience - Low
FINERVA A G S
Life Insurance Policies Endowment
Current Yield - Moderate but locked till end of the term
Capital Appreciation – Nil
Typical Returns - 5.5% Average
Risk - Moderate
Marketability / Liquidity – Average
Tax Treatment - Section 80C benefits and Section 10
(10)D benefits
Convenience - Low
FINERVA A G S
Rent from house
Current Yield – Low
Capital Appreciation – High
Typical Returns - 5% Maximum
Risk – Negligible
Marketability / Liquidity – Low
Tax Treatment - Expenses can be deducted before
calculating tax
Convenience - Fair
FINERVA A G S
Gold and Silver
Current Yield – Nil
Capital Appreciation - Moderate
Typical Returns - Matching inflation
Risk – Average
Marketability / Liquidity – High
Tax Treatment - No tax benefits capital gains tax
applicable
Convenience - High
FINERVA A G S
ULIP's with minimum 5 times cover
Current Yield – Nil
Capital Appreciation – High
Typical Returns - 28% Average over 3 yrs
Risk - Can be adjusted based on market conditions
Marketability / Liquidity - High (but after three years)
Tax Treatment - Section80C and Section 10(10)D
benefits
Convenience - High
FINERVA A G S
ULIP Pension plans
Current Yield – Nil
Capital Appreciation – High
Typical Returns - 28% Average over 3 yrs
Risk - Can be adjusted based on market conditions
Marketability / Liquidity - High (but after three years)
Tax Treatment - Section 80C benefits & 1/3 tax free
commutation on maturity amount. Pension received is
taxable
Convenience - Average
FINERVA A G S
Insurance Planner Income replacement method
FINERVA A G S
Retirement & Milestone Planner
FINERVA A G S
Budgeting to Create Surplus
Budget – Myths And Reality What ever I plan does not work? So why
plan? A plan does not ensure that the goal is achieved. Plan is required to first set a goal and then to
remind you to reach it And alert you when there is a deviation A company has become big because they have
a budget…
FINERVA A G S
Budget Myths & Reality
Anything on sale can be bought
A sale is profit for the sales guy Is the thing on sale what you want. Buy anything based on a list of needs and excess
cash.
Budget is for countries and big companies.
FINERVA A G S
Budget – Myths and Reality
There is not enough money for everyone to be rich
Money is not a limited quantity commodity (at least at our level)
The more value you create for your company and others, the more money you have.
FINERVA A G S
Budgeting – Myths and Reality
That guy is filthy rich! He should have
done some criminal activity some time in
life.
This is a statement out of guilt and envy
Sometimes used to protect our image in front of
our children.
FINERVA A G S
My Present Budget
Fill in your Budget Worksheet
FINERVA A G S
FINERVA A G S
Creating a Surplus for My Goals
Can you see where your goals are being SPENT?????
Identify expenses which can be reduced
Identify loans which need to be closed immediately
Identify investments that need to be started immediately
FINERVA A G S
Thank you