2. Introduction
“Thodi si tu lift karade
Bangla motor car dila de
Ek nahin do char dila de ”

3. What is financial planning ?
 Making funds available from one’s current
resources to meet future needs
 Entire gamut of FP explained by RETIReS
 R……. Risk
 E……. Estate
 T……..Tax
 I………Investment
 Re……Retirement
 S………Savings

4. Core of FP
 “If you want to know what God thinks of
money, just look at the people he gave it to ”
Dorothy Parker
 No sane man would like loose out his money
 People like to derive maximum utility from use
of money
 When it comes to savings & investment, we
want our money to give us best returns

5. Contd……
 FP is an attempt to maximise returns keeping
in view liquidity and safety of funds.
 Good financial planning will not protect one
against crises arising out of unforeseen
circumstances.
 It cannot avert the circumstances, but can
provide necessary financial support
 FP can be of short/long duration
Plan for shorter duration ensures proximity to
reality

6. FACTORS DETERMINING FP
 Country’s economic environment ( tax changes)
 Change in job market
 Inflation
 Changes in pattern of savings instruments and
savings habits.

7. Need for awareness
 Living beyond one’s means spells doom
 Financial problems come uninvited without
notice
 Financial problems create tension
 Requires foresight, time & patience to prepare
plan
 No one in family can be ignored as each needs
money
 FP provides a direction, builds motivation ,
support.

8. UNDERSTANDING FP
 Life insurance alone is the instrument available to
take care of all aspects of FP.
 Saving , investing & spending are 3 important terms
of FP
 Saving = Asset accumulation
A short & long - term perspective
 Investing = Asset creation
Making money out of money, focus on capital growth,
a long-term perspective , creation of physical/ financial
assets, investing depends on level of risk tolerance

9. Contd…….
 Spending = Asset protection
Spending is protecting our LIFESTYLES , lives &
assets.
 We may spend more & save less , taking care
of all expenses ( most cases) – financial failure
 Save more, spend less, not considering unexpected
expenses. Not feasible when huge expenses occur
& savings are depleted – financial dependency
 Save, invest, spend – savings ( unexpected expenses)
& investments (long-term goals accompany each
other) - financial independence

10. BUT WHAT HAPPENS
WHEN 3 Ds STRIKE ?
HOW TO ENSURE
PROTECTION & YET GET
BENEFITS OF S-I-S ?
MAY LEAD TO F FAILURE

11. FP & LIFE INSURANCE
 Important to understand person’s objective in a
long-term financial instrument like LI
 Value -creation main objective
Spiritual value – peace of mind
Emotional value - love for family
Financial value - tax saving, capital creation
 LI instrument – takes care of s-i-s , leads to asset
accumulation, creation & protection
 LI offers a complete financial solution

12. Contd……
 Asset creation - opportunity to earn in ULIPS
 Asset protection – cover against 3Ds
 Asset accumulation – account grows with scope to
reinvest further by recycling accumulated account.
HENCE LI IS AN INTEGRATED FINANCIAL
PLAN THAT WORKS IF SOMETHING
HAPPENS & ALSO IF NOTHING HAPPENS.
GUARANTEES LIFETIME INCOME TO FAMILY
IF ONE DIES & LIFETIME INCOME TO ONE
IF HE LIVES.

13. APPROACHES TO FP
 Depends on individual - may be conservative (safety),
enterprising ( take some risks), speculative
( take high risks for high returns ).
 Approaches vary due to given factors –
Age/family – affects ability to take risks
Responsibilities
Financial strength
Tax savings
Temperament
Specialised knowledge
Insurance status

14. BASIS OF FP - LIFE CYCLE NEEDS
 Need for FP persists throughout life
 Most people have at least one unsatisfied need
at any time.
 Most people will have both financial protection
and investment needs simultaneously throughout
life
 Priorities of financial needs change with age.
 To appreciate how these changes come about
financial planners use the Life Cycle Needs Guide.

15. LIFE CYCLE OF INDIVIDUAL
 Childhood stage - Learner
 Young Unmarried stage – Earner
 Young Married stage - Partner
 Young Married with Children stage - Parent
 Married with older Children stage - Provider
 Post –family/ Pre-retirement stage – Empty Nester
 Retirement stage – Enjoyer
3 phases of one’s life - birth & education (22 )
Earning years(38) & retirement (20-30)

16. Learner - costs of education
 High cost of private education plus inflation
 To achieve success, parents use life insurance as
a FP tool.
 In case of demise of a parent, LI looks after
education

17. Earner stage
 Young , healthy, carefree, easy access to money,
single young adults.
 Many may possess extensive funds but no
specific savings/FP plan for emergency.
 Need for protecting new-found status & earning
capacity
 Priorities list need to be topped by disability
insurance to protect loss of income.
 May have o/s loans, high credit card balances

18. Earner
 Generally in age group 25-30
 Youth is chewing gum ….it never ends
 Why forget the future while enjoying today , is
the mantra.
 Could go for policies which mature at 55-60
 If no dependants, need not have LI, only risk
cover/accident cover.

19. Advantages of starting an early
security program
 Provision for a guaranteed, immediate financial
security ensured. Lower premiums charged at
young age.
 Qualify for lifelong protection while insurable ,
regardless of later hazards that may be ventured
through chosen life-style vocation or occupation.
 Start building cash reserves for emergencies.
 Final rewards are high due to compound
interest schemes prevalent in LI plans
 Option to change policy-type with flexibility

20. contd…..
 In case of early death, funds available can pay
off debts & honour any bequests as per will.
 If policy commences at early age, higher pension
values obtained
 Get satisfaction & peace of mind
 Life insurance needs low- should accumulate
growth assets( home/stocks/mutual funds)
aggressively due to high risk-taking ability now.

21. Partner / Parent
 Nuclear family –breakdown of joint family.
 When children arrive & there is single earning
spouse, require emergency fund for survivors
through LI.
 In case of dual income, families buy less LI. View
second income as insurance against first. Complacency
rules.
 Need LI for both partners to maintain standard.
 Have young children.Has taken home loan.Starts
investing in earnest. Should have adequate LI, asset
protection & continue asset creation.Current needs
minus existing assets – difference is LI

22. Partner/Parent
 Age group 31-40 years
 Needs are many – rent, school fees, vacations….
 Now there are dependants
 If non-working spouse, buy term plans till 60
years -for protection, not investment
 If businessman, then your risk & growth comes
from investing in own business.
 In asset-building, home buying is top priority
 Invest in children’s insurance plans

23. Provider
 The middle years. People constantly making
commitments, acquiring assets, incurring additional
debts to fulfill dreams
 Higher education goal of children approaching,
home loan nearly repaid, income peaking,
investible surpluses high, financial protection for
family, sufficient income against disability,
emergency fund to meet exigencies.
 LI needs low as asset base builds up.Take term
plans to cover shortfall in existing assets.

24. Provider
 The maturing years - 41 to 50 years
 Persons could switch over from being employee
to entrepreneur
 At this age risk cover important ( protection )
 You begin to get real about the possibility of
being where your father is today ….70 plus enjoying
golf & gardening
 LI needs to continue as long as dependents exist.
 If entrepreneur, your assets are your business - can
sell assets in future if required after working

25. Empty Nester
 The retirement countdown begins – 51 to 60 years
 Needs are to ensure healthcare, ensure additional
income during retirement
 Children are independent, home loan repaid, no
other debt, investible surpluses peak.
 Divert new surpluses to build retirement corpus,
reduce portfolio risk.
 Maintain life cover as long as earning, increase
health cover since premia increase with age
 Save as much as possible during these years.

26. Empty nester
 Disposable income is high, rebalance investment
portfolio and tone down aggressive investment
 Invest in pension plans if not done earlier
 JUST BEFORE RETIREMENT -
Top up health insurance
Clear off all debts prior to retirement
Try to live in a smaller city/town
Do not be covered by life insurance after 60 .
Develop skills for engagement/income ( if reqd)

27. Enjoyer
 The final phase -60 plus.
 Security & comfort top priority for all.
 Different people perceive retirement differently.
 Some look forward, some dread.
 Obstacles that prevent people from planning for their
retirement are –
Lack self-discipline to save sufficiently during earning
years
Investment & reinvestment a formidable challenge to
most
Few people posses expertise to provide constant
liquidity that lasts till one lasts.

28. Contd…..
 Health expenses replace work-related expenses.
 Creating cash flows & beating inflation top
priority.
 Create adequate cash flows from safe investments
& invest surpluses in instruments that comfortably
beat inflation to prevent erosion of retirement
capital.
 No life cover needed. Retirement corpus should
fund needs.

29. RECAP
 Basic objective of FP is to allow you to lead
the life you want during old age comfortably
without compromising on basic values
 Goal should be financial security to take care
of all financial needs post-retirement
 How much money one needs for these goals
that could be 2 /20/40 years away can be
arrived at by FP so as to maintain same
standard of living.
 LI is excellent instrument in case of RP

30. THANK
YOU !