Financial Plan specially

prepared
for Mr. Sumeet
Singh
 Financial Plan specially prepared for Mr. Sumeet
Singh

Personal Information:
Name : Mr. Sumeet Singh Address : Varanasi
Age : 30 years
D.O.B : 06-Mar-1980 Contact No. : 9899999999
_________________________________________________________________________________________
_______
Family Members:

Name Relation D.O.B Age Dependent

Smita Singh Wife 15-April-1982 28 Yes

Moksha Singh Son 09-Nov-2005 05 Yes
Mokshda Singh Daughter 18-Mar-2007 03 Yes
Sanjeev Singh Father 20-July-1955 55 Yes
Beena Singh Mother 23-Aug-1958 52 Yes

Your Long Your Immediate

Term Financial Financial Goals
Goals
Goals Name Target date Goals Target date
(year) (year)/Objective
Education Moksha 2025 Protection Need Evaluate the
adequacy of your
existing insurance
Education Mokshda 2027
Marriage Moksha 2032
Marriage Mokshda 2031
Retirement Corpus Self 2060

Current situation and observations:

Net Worth Your current net worth is Rs. 93.35 lakh.

Cash Flow Your current surplus is Rs. 17,828 per month.
Life Insurance Currently, you have 10 different insurance policies total sum
assured of
Rs. 43.45 lakh, with total annual premium of Rs.2.33 lakh.
 Health Insurance Your employer has provided you with Rs. 3.50 lakh health
insurance
cover for the family.
Home Insurance Currently, you do not have any home insurance.
Motor Insurance Currently, you have motor insurance policy. However you have
not
shared the size and scope of the motor insurance coverage.
Savings Account Total savings account balance is Rs. 1.05 lakh.
Investments Currently, your total investment is Rs. 60,000
-NSC Rs. 5,000
-Fixed deposit with SBI Rs. 25,000
-ICICI Bond Rs. Rs. 15,000
-Mutual funds Rs. 7,000
-Direct equity Rs. 8,000
Retirals Your current PF balance is Rs. 4.77 lakh, PPF balance is Rs. 1.80
lakh.

Will Currently, you do not have will.

Income Tax You are availing benefits up to Rs. 1 lakh under section 80C (PF
Planning contribution, Insurance Premium).

Current Financial Situation : Your Net Worth and Cash

Flow in
September 2007

Net Worth : (Assets less Liabilities)

Assets Amount Liabilities Amount
(Rs.) (Rs.)
House 71,50,000
-Flat at Mumbai Rs.
36,50,000
-Flat at Indore Rs.
21,00,000
-Plot at Indore Rs. Your Net Worth
14,00,000 10000000 9535997

9535997

Car 2,50,000 Fixed Interest Investment

Cash at Bank 1,05,000
-HSBC Rs. 45,000
25,000 -
-ABN Rs. N
35,000 S
-HDFC Rs. C
35,000
-BOM Rs. R
10,000 s
. 9000000
5,000 8000000
-ICICI Bond Rs.
7000000
15,000
-Fixed Deposit Rs. 6000000

25,000 5000000

4000000

3000000

2000000

1000000

0 0

Assets Liabilties Net

Worth

Equity 15,000
-Direct Rs.
8,000
-Mutual Funds Rs.
7,000
Cash Value of Insurance 7,13,997
-LIC Jeevan Suraksha Rs.
1,35,000
-LIC Jeevan Surabhi Rs.
38,462
-LIC Jeevan Kishore Rs.
6,250
-LIC Endowment Rs.
4,25,000
-HDFC Young Star Rs.
1,09,285
PF Balance 4,77,000
PPF Balance 1,80,000
Jewellery 6,00,000
Total Assets 95,35,99Total 0
Liabilities
Net Worth 95,35,997

)
Current Monthly Cash Flow : (Income less Expenses)
Income Amount Expenses and Amount
(Rs.) Deductions (Rs.) Your monthly cash flow
70000 68333

Salary Income: Living Expenses:

Mr. Singh 83,333 Household 23,000 55000

)
expenses 50000 50505

45000
Less: Income Tax (15,000) Charity 500 40000
35000
Insurance 30000
Premium: 25000
20000 17828
Life Insurance 19,405 15000

10000
Deductions:
5000

PF (your 7,600 0
contribution and Income Total Surplus
Expenses
employee's and
contribution)
Total Income 68,333 Total Expenses 50,505
and Deductions
Surplus 17,828

Please note that you expect a bonus of Rs. 2 lakh in the current financial year. As this is
not guaranteed we have not included this in our analysis.

Assumptions used in the analysis (based on data you have shared):

1. Life Expectancy of Mr. Singh and Mrs. Singh is 80 years.
2. An inflation rate of 5% p.a. is assumed.
3. You and your spouse expect to retire at age 60 and will not take up any part/full time
employment after retirement.
4. Rate of return on debt investments is expected to be 8.50% p.a.
5. Rate of growth on large cap equity and mid cap equity is expected to be 12% p.a. and
14% p.a respectively.
6. Education expenses are expected to be increasing at 10% p.a. (5% more than rate of
inflation).
7. You expect your salary income to increase at the rate of 8% p.a. net of tax till
retirement. Household expenses are expected to increase at 9% p.a. (4% more than
rate of inflation) year-on-year.
8. Analysis assumes that returns on your investment portfolio till retirement is 9% and
after retirement, the portfolio value increases at the rate of 8.50% p.a. This analysis is
based on your risk profile being conservative.

Note: All assumptions made are based on your input and are not a performance guarantee of
any specific investment.
Protection Planning:

Life Insurance

Observation:
● You are adequately covered for life insurance.

Analysis:
Currently, your total life insurance cover is Rs. 43.45 lakh and you pay an annual premium of
Rs. 2.33 lakh.

Sum Assured (Rs.) Annual Premium (Rs.)

LIC-Jeevan Suraksha 2,70,000 10,000
LIC-Jeevan Surabhi 1,00,000 10,895
LIC-Jeevan Kishore 25,000 1,408
LIC 5,00,000 1,624
LIC-Endowment 8,50,000 38,052
Birla Sun Life-Gold Life 5,00,000 36,000
Birla Sun Life-Flexilife 6,00,000 30,000
HDFC-Double Benefit 3,00,000*2 33,040
HDFC-Double Benefit 2,00,000*2 21,840
HDFC-Young Star 5,00,000 50,000
Total 43,45,000 2,32,859

Below graph depicts your insurance need vs current coverage

Insurance Need Vs Current Coverage

4500000
4000000

3000000 3500000

2000000 2500000
(Rs.)

1
1000000
mou

500000

500000 0

-1000000 -500000

-2000000-1500000

-2500000

-3500000-3000000

A. Financial Needs B. Dependant's Expense C. Liabilities/ Responsibility (e.g home loan) D. Current insurance coverage E. Existin g resources (Investments, etc) F. Insurance Need (A+B+C-D-E)

Recommendation:
• Mr. Singh, iTrust's analysis shows that you are adequately covered for life insurance
and do not require to buy any further insurance as of now.
• However, if the following conditions occur, we encourage you to review your insurance
coverage immediately
• Change in family size
• Increase in salary
• Increase in assets and liabilities
• Any other life changing events (change in job, any new financial goals, etc)
Back up data for the above analysis:
Total Protection Need:

Description Amount (Rs.)

A. Expenses that need protection
Expenses that need Expected Age till which support is Total Protection
protection in case of expense required needed (Rs.)
any unfortunate events (Rs.) p.m. (years)
Radha Singh-Spouse 8,000 80 22,63,400
Nakul Singh-Son 3,500 25 4,96,617
Arti Singh-Daughter 3,500 25 6,14,198
Vijay Singh-Father 2,500 80 2,55,532
Gita Singh-Mother 2,500 80 2,97,201
Total 39,26,947
B. Goals that need protection
Education and Marriage goal of Nakul and Arti 17,04,163
Total 17,04,163
C. Liabilities that need protection
Outstanding Loan 0
Total 0
Total funds needed to cover expenses (A+B+C) 56,31,110

Less: Assets currently available to support family

Life Insurance: 43,45,000
Proceeds from life insurance already owned 43,45,000
Investment Assets: 43,22,000
Investment portfolio and saving accounts 1,65,000
PPF and PF current balance 6,57,000
Flat-Indore* 21,00,000
Plot-Indore* 14,00,000
Total Available Assets 86,67,000
Additional Life Insurance Required (56,31,110-86,67,000) -30,35,890
*We have assumed that you are the sole owner of these two assets and that your survivors will
be the sole beneficiaries of these assets after your death.

Health Insurance

Observation:
You have an employer provided health insurance cover. However you have not shared
your coverage details.

Recommendation:

• In addition to a company sponsored plan, it is always advisable to have self-funded

Health Insurance plan. Often a company sponsored plan does not fulfill all needs, or
might not be sufficient to cover a family of 3-4 members. Further, on the off-chance that
you change your job, you will not get any coverage during your transition period. And,
your new plan might not cover any pre-existing ailments. Therefore, we would
recommend that you should consider an additional plan.
• You should buy a health insurance policy with coverge of Rs. 3 lakh under floater
scheme for family of 4, which would cover you, your wife, father and mother. Currently,
there is no health insurance plan in India that will cover more than a family of 4
members. Based on age of your father who is 70, the premium would be approximately
Rs. 8,376 for a family of 4 as per the quotation taken from Reliance HealthWise Policy.
• Further for your two child Nakul and Arti you should take another policy under floater
of 2 members for sum assured of Rs. 2 lakh, the premium of which would be
approximately Rs. 999 p.a. as per the quotation taken from Reliance HealthWise Policy.

Home Insurance

Observation:
You do not have a Home (buildings/contents) Insurance for any of your house.
Recommendation:
You should buy a Home Insurance policy in the near future for your house where you are
residing. The sum assured of this policy will depend upon the value of building and
different contents in the house . The approximate premium for various sum assured slab
has been mentioned in Ne 0124 - 478 - 0222 xt Step section.

Motor Insurance

Observation:

You have not shared the details of motor insurance. However we assumed that you
have compulsory motor insurance which covers third party liability and / or death and
property damage..

Recommendation:
We recommend you to go for comprehensive policy for vehicle insurance to cover
against the risk of fire and / or theft and third party/ theft risks.
Retirement Planning:

Observation:

● Mr. Singh, your current retirement savings will not be sufficient to meet your post
retirement expenses.
Analysis:
We understand that you intend to retire at age 60. To maintain your life style after retirement,
you need a regular income of Rs. 23,500 per month in today's value. This will increase at the rate
of 9% p.a till your retirement age. Thereafter it will increase at 5% p.a.

As per our analysis, you need to have a corpus of Rs. 2.56 crore at retirement age. Your
current savings in insurance, PPF, PF (including employer's matching contribution) can be
expected to rise to approximately Rs. 1.33 crore at your retirement age. Based on your
current situation a shortfall of Rs. 1.23 crore is expected.

Recommendation:

To address the shortfall of Rs. 1.23 crore at your retirement age, you need to start investing
Rs. 16,632 per month in the recommended asset allocation.

Retirement Need vs Available Resources

27500000
25000000

22500000

20000000
.)

17500000
(

15000000
Amou

12500000

10000000

7500000

5000000

2500000
0

A. Total Need (After retirement expenses) B. Resources (Provident Fund) C. Shortfall

Back up data for the above analysis:

Below table depicts figures at your desired retirement age of 60.

Expected value at retirement Amount (Rs.)

Current estimate of retirement expenditure per 23,500
month in today's value (100% of current living
expenses of Rs. 23,500)
Future value of monthly retirement expenses goal 1,43,557
as of the year of retirement
Total funds needed to fund retirement over 2,56,85,415
life expectancy
Less: Future value of current investments
Value of PF and PPF 92,09,524
Value of maturity proceeds received 41,17,417
periodically from various Insurance
policies
Total Resources 1,33,26,941
Shortage amount needed less resources available 1,23,58,474
Monthly contribution required to cover 16,632
 shortfall

Investment Planning and Cash Flow recommendation:

A. Your Current Portfolio Allocation:

Funds Funds Amount Current Investment Allocation

Type (Rs.)
Mutual Funds/Direct Large cap 15,000
Equity
Fixed Interest Fixed 45,000
Investments
Fix ed
Total 60,000 Equity Large Interes t/Debt
Cap Funds
25.00% 75.00%

B. Emergency Fund:

For all families, it is advisable to keep a pool of money that is readily accessible at short notice
to meet emergencies and towards unforeseen events. This is especially important for you as
you do not have any private health insurance (above your company plan). Typically, an amount
equal to 3-6 months of living expenses is recommended to be kept aside as an emergency
fund.

Saving Account Balance Rs. 1,05,000

Less: Emergency Fund Rs. 70,000
Balance Transferred to Investment Portfolio Rs. 35,000

Observation:

Total savings account balance is Rs. 1.05 lakh.

Recommendation:
● At this point of time it is recommended that you should set aside three months
household expenses i.e. Rs. 70,000 for meeting any contingency requirement.
● The excess balance of Rs. 35,000, earning a low rate of 3.50% p.a. to be reallocated to
investment portfolio with equity and debt exposure.
C. Re allocation within existing portfolio
I. Current Portfolio
Current Portfolio Rs. 60,000
Add: Amount released from Saving Accounts Rs. 35,000
Total Rs. 95,000

Recommendation:
We recommend that you re-balance your portfolio of Rs. 95,000 with 25:75 allocation in
equity:debt as shown below:

Total Portfolio Rs. 95,000 100%

Equity Rs. 23,750
Debt Rs. 71,250

Please see the following table on how to re-balance and re-allocate the
funds:

Current Mutual Funds Investment Rs. 15,000

Add: Amount re-allocated from saving Rs. 8,750
accounts
Total Recommended Equity Exposure Rs. 23,750

Current Fixed deposits/Debt Rs. 45,000

Less: Amount re-allocated to equity Rs. 26,250
Total Recommended Fixed Deposit Rs. 71,250
Exposure

II. Your Current Surplus Allocation:

You have a cash surplus of Rs. 17,828 per month. Based on your conservative risk
profile as declared by you, iTrust recommends the following investment allocation:

Proposed Monthly Cash Flow Amount Recommended Investment Allocation

(Rs.)
Total amount available (Current 17,828
cash surplus)
Monthly Savings required to meet 16,632
the post retirement expenses
Monthly Savings required to meet
1,196
other financial goals (children's Fixed
education, marriage etc.) Equity-Large Interest/Debt Cash/Liquid
Cap Funds
25.00% 50.00%

Recommendation:
● Currently your monthly cash surplus is Rs. 17,828 per month out of which which you
are investing Rs. 6,000 in equity oriented mutual funds through SIP. This will be a
contribution per month towards building a capital pool to achieve all financial goals
throughout your life time.
 However, we recommend you to realign your SIP and monthly savings with 25:75
allocation in equity:debt.
● Continue to keep Rs. 6,000 in equity oriented mutual funds through SIP and the
balance of Rs. 11,825 (Rs. 17,825 less Rs. 6,000) to be invested in mix of Medium-term
and Short-term debt funds.
D. Projection of Savings and Portfolio Value during the next few
years
An approximation of your portfolio over the next ten years is shown below. We have
used your assumption of expected 8% annual salary increase. These two cash inflows result
in a continuous growth in your yearly savings (net of your expenses). For the purpose of
this calculation, it is assumed that these annual savings are invested in the recommended
portfolio allocation. The portfolio value is net of cash outflows for your goals.

Year Annual Savings Investment

(Rs.) Portfolio* (Rs.)
2007 2,13,941 3,03,941
2008 1,42,546 4,73,842
2009 1,77,850 6,94,338
2010 2,15,702 9,72,531
2011 2,56,281 13,16,339
2012 2,99,777 17,34,586
2013 3,46,394 22,37,093
2014 4,29,390 21,05,771
2015 6,37,236 29,32,526
2016 7,24,582 39,21,035

*Closing Blance of Investment Portfolio

Opening Balance of Portfolio
Less: Financial Goal
Add: Annual Savings (Income-Expenses)
Add: Any Assests Available
Add: Return on last year's Portfolio
Equals: Closing Balance of Portfolio
Your Long Term Financial Goals:
● Provide for Children's Education - Nakul and Arti
● Provide for Children's Marriage - Nakul and Arti

Recommendations: (Following recommendations are based on assumption that you will

save Rs. 3,074 per month in the recommended portfolio)

Education goal - Nakul

● We understand that you expect to incur an expense of Rs. 5 lakh (in today's value) 7
years down the line (in the year 2014) on Nakul's education. Further we understand
that you have not made any specified allocation for this goal.
● Assuming an inflation rate of 10% for education cost, the future value of this goal will
be Rs. 9.74 lakh after 7 years.
● At the end of the years 2013, the value of your portfolio can be expected to rise to
approximately Rs. 22.37 lakh. So from the portfolio you can use Rs. 9.74 lakh for
Nakul's education.

Education goal - Arti

● We understand that you expect to incur an expense of Rs. 5 lakh (in today's value) 13
years down the line (in the year 2020) on Arti's education. Further we understand that
you have not made any specified allocation for this goal.
● Assuming an inflation rate of 10% for education cost, the future value of this goal will
be Rs. 17.26 lakh after 13 years.
● At the end of the year 2019, the value of your portfolio can be expected to rise to
approximately Rs. 81.21lakh. So from the portfolio you can use Rs. 17.26 lakh for Arti's
education.

Marriage goal - Nakul

● We understand that you expect to incur an expense of Rs. 5 lakh (in today's value) 15
years down the line (in the year 2022) on Nakul's marriage. Further we understand
that you have not made any specified allocation for this goal.
● Assuming an inflation rate of 5%, the future value of this goal will be Rs. 8.32 lakh
after 15 years.
● At the end of the year 2021, the value of your portfolio can be expected to rise to
approximately Rs. 99.11 lakh. So from the portfolio you can use Rs. 8.32 lakh for
Nakul's marriage.

Marriage goal - Arti

● We understand that you expect to incur an expense of Rs. 6 lakh (in today's value) 20
years down the line (in the year 2027) on Arti's marriage. Further we understand that
you have not made any specified allocation for this goal.
● Assuming an inflation rate of 5%, the future value of this goal will be Rs. 15.92 lakh
after 20 years.
● At the end of 20 years, the value of your portfolio can be expected to rise to
approximately Rs. 2.24 crore. So from the portfolio you can use Rs. 15.92 lakh for
Arti's marriage.
Your Immediate Financial Goals:
● Home Improvement Loan

Analysis:
Goals Financial need Target date
(Amount in Rs.)

House Improvement 5,00,000 2008

Loan

Home Improvement Loan:

Recommendation:
● We understand that next year in 2008 you want to take a home improvement loan of
Rs. 5 lakh. Currently you can get such a loan at the rate of 11.5% p.a. For the period of
7 years the estimated EMI will be Rs. 8,693 (within advisable limit). Please note that
this rate of interest on the loan is for illustrative purpose only. Actual rates will depend
upon then prevailing market rate in 2008.

Estate Planning
Observation:
● You do not have any will.

● You have 5 dependants.

Analysis:
Your current Net Worth is Rs. 93.35 lakh. As you build your portfolio, your net worth
will increase further. These assets ought to be allocated to the beneficiaries in order to
plan your estate and avoid the problems of dying intestate.

Recommendation:
We strongly recommend that you start thinking about your will and actually execute a will
within the next few years. At your age, now that the size of your family is stable
and because you have a very substantial amount of assets, including a portfolio which is
growing quite fast, it is critical that you identify who your beneficiaries will be and in what
proportion do you want them to benefit. This will help your survivors avoid
numerous problems later on.
Summary of Recommendations:
Goals/Needs Recommendation
Contingency Fund Maintain Rs. 70,000 (3 months of living expenses) in the
savings account to meet future contingencies.
Life Insurance You are adequately covered for life insurance.

Health Insurance You should go for self-funded Health Insurance plan under
floater scheme for your family

Home Insurance We recommend you to go for a home (building and content)

insurance for the house where you are residing .
Motor Insurance You have not shared the details of motor insurance. However
we assumed that you have compulsory motor insurance which
you must get it renewed in time.
Home Improvement Loan In the year 2008 you can take a home improvement loan of Rs.
5 lakh.

Education and Marriage You need to save Rs. 1,196 per month in the recommended
goal of children portfolio to meet Nakul's education goal in the year 2014, Arti's
education goal in 2020, Nakul's marriage in 2022, and Arti's
marriage in 2027.
Post Retirement Expenses You need to save Rs. 16,632 per month in the recommended
portfolio to meet the after retirement expenses.
Will Start thinking about writing a will. You should execute a will in
next few years.
Next Steps
1. Health Insurance
• You should buy a health insurance policy with coverge of Rs. 3 lakh under floater
scheme for family of 4, which would cover you, your wife, father and mother.
Currently, there is no health insurance plan in India that will cover more than a
family of 4 members. Based on age of your father who is 70, the premium would be
approximately Rs. 8,376 for a family of 4 as per the Reliance HealthWise Policy.
• Further for your two children, Nakul and Arti, you should take another policy under
floater of 2 members for sum assured of Rs. 2 lakh, the premium of which would be
approximately Rs. 999 p.a. as per the Reliance HealthWise Policy.
2. Retirement, Education, Marriage goals
Start investing Rs. 17,828 as per our recommendation with 25:75 allocation in
equity:debt. Your relationship manager can suggest names of funds to invest in. We
would encourage you to invest in these suggested funds as soon as possible.
3. Re-allocation of current investment portfolio
As per our recommendation you should re-align your existing portfolio of Rs.
60,000 along with Rs. 35,000 from saving account
4. Home Insurance
You should get home insurance for your home where you are residing. The
premium chart for the “Home Contents” insurance as per Reliance Home Protect
Policy is shown below.

Premium Chart
Standard Silver
Sum Assured (Rs.) 50,000 1,00,000 2,50,000
Premium excl Terrosim 499 799
(Rs.)
Premium incl. Terrosim 505 810
(Rs.)

5. Home Improvement Loan

iTrust's Relationship Manager can assist you in getting details about the process of a
home improvement loan.

6. Will

Please identify who you want your beneficiaries to be and in what proportion you
would like them to inherit your assets. iTrust can help you in the process of drafting a
will. The lawyers charges will be aproximately Rs10,000 which include
registration fees at the sub- registrar's office. You will have to make yourself
available for one day to be physically present at the sub-registrar's office during the
process of registration.

As time passes, your needs, situation and context changes. Therefore, review your plan
regularly. We would advise another meeting in August 2008 to review your financial
plan.
 DISCLAIMER

This financial plan is based on information detailed in your personal Client Information and
Investment Profile Questionnaire and personal discussions with you. A copy of your
Questionnaire is available on request. You must read the information contained in the
Questionnaire and in this financial plan carefully. If you believe that any relevant information
may have been overlooked or misinterpreted, please contact us before proceeding with the
implementation of the plan. We have relied on information supplied to us by you, which, we
have assumed to be correct. No responsibility can be accepted if the information that you
have provided is incorrect or inaccurate. This plan is prepared solely for the use of the client
to whom it is addressed.

This financial plan is a forward-looking document. The words "forecast", "anticipate",

"estimate", "project", "intend", "expect", "should", "believe", and similar expressions are
intended to identify forward-looking statements. These forward-looking statements involve,
and are subject to known and unknown risks, uncertainties and other factors, which could
cause actual results, performance or achievements to differ from the future results,
performance or achievements expressed or implied by such forward-looking statements. All
forward-looking statements attributable to iTrust herein are expressly qualified in their
entirety by the above mentioned cautionary statement. iTrust does not accept any direct or
indirect liability for any results, performance or achievements that differ from results,
performance or achievements implied by such forward-looking statements.

We do not promise that the investments you make based on this plan will be profitable. The
investments are subject to various market, currency, economic, political and business risks. We
will not be liable for any losses that may be caused directly or indirectly by circumstances
beyond our reasonable control or on account of our good faith decisions or actions.

This document does not constitute an offer to sell or a solicitation of an offer to buy any
security or other financial product, which may be referred to herein.

This financial plan is based on your current situation and goals, which will change with the
passage of time and your age. Any material change in your financial situation will necessarily
render the contents of the plan out of date. Material changes refer to change in income/salary
levels, assets acquired, liabilities incurred, change in number of 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 plan’s
actual performance is consistent in meeting your goals, and b) you update your plan annually to
ensure that your plan is updated for your changing situation and goals.