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Financial Planning for Young

Investors
(An initiative of SEBI &
NISM)

Mentor
Dr. Satinder Makin
Some Other Regulators
Banking Sector RBI
Insurance Insurance Regulatory &
Sector Development Authority
(IRDA
Mutual Funds Associations of Mutual
Funds in India,
AMFI(association of SEBI)
Companies Ministry of Corporate
Affairs(MCA)
Ministry of Finance (MoF)
Pension Fund Pension Fund Regulatory
and Development Authority
(PFRDA)
Provident Fund Ministry of Finance (MoF)
Objective of
Workshop
Financial Literacy &Awareness
WHY
YOUNG PROFESSIONAL
??
Time Value of Money
Principal Amount= 1 Lac
If Rate of Interest =12%
Then time to double the Investment=6 Years
Years Money Age to be started
gets
20 25 30 35
0 1
26 31 36 41
6 2 times
32 37 42 47
12 4 times
38 43 48 53
18 8 times
44 49 54 59
24 16 times
50 55 60 65
30 32 times
56 61 66
36 64 times
62 66
42 128 times
48 256 times
What is Right Age to start
Financial Planning
This is Power of
Compounding
Need for Financial Planning
Right amount of Money at right time in future
Financial Planning
Step-1
Decide Your financial Goal

SHORT TERM

MIDDLE TERM

LONG TERM
Financial Planning
Step-2
Assess your current financial
Position
Assets Liabilities
Financial Planning
Step-3
Budgeting
Income Expenditures
How to Control Expenditures
How to Control Expenditures
IMPORTANT NOT
IMPORTANT
1 2
IMPORTANT & NOT
URGENT URGENT IMPORTANT
BUT URGENT
3 4
IMPORTANT NOT
NOT BUT NOT IMPORTANT
URGENT URGENT & NOT
URGENT
Savings
Follow Rule of 20%
Savings
Risk of Inflation
Investment
Long Term

Gives Return

Grows with time


Investment
Strategies
Check Your Risk
Appetite

R
I
S
K
Remember 3 Things while
Investing
Risk & Return
Trade off

Low Risk Low Return


Approximate time to
Double the Investment
Rule of 72
ROI p.a Time
8% 9 years
10% 7.2 Years
12% 6 Years
15% 4.8 Years
18% 4 Years
20% 3.6 Years
Investment Products

Savings & investment related products

Tax Saving Products

Protection Related Products

Borrowing Related Products


Savings & investment related products

Bank Products
Saving Account
Recurring Deposits(RD)
Fixed Deposits(FD)
Public Provident Fund
National Pension Scheme

Average Rate of Return=8%


Post Office Products
Savings Account
Recurring Deposit (RD) Account
Time Deposit (TD) Account
Monthly Income Scheme (MIS)
Public Provident Fund (PPF)
National Savings Certificates (NSC)
Senior Citizen Savings Scheme (SCSS)
Sukanya Samriddhi Accounts
Kisan Vikas Patra (KVP)
https://www.indiapost.gov.in
Tax Saving Options

Section 80C gives rebate upto Rs. 1,50,000 for


select investments like life insurance premiums,
housing loan principal, PPF, ELSS, etc.

Long Term Capital Gains are not taxable for


equities

80D (medical insurance), 80G (donations) and 24D


(Housing loan interest repayment) are other
important sections
Mutual
Funds
A mutual fund is a professionally managed investment
fund that pools money from many investors to
purchase securities.

Average Rate of Return=12-15%


15.47
Other Investment
Options

Bonds / Debentures
Equity shares
Derivatives
Futures & Options
Real Estate
Gold
Risk Instruments
category
Low risk Cash, bank FD
Medium Debentures, bonds,
risk fixed income
mutual funds
High risk Equity shares,
equity mutual funds
Investment Options Expected
Return

Bank deposits 8%
Post Office Small 8-9%
Saving schemes
Bonds / Debentures 8-9%

Mutual funds 12-15%


Equity shares 18-20%
Derivatives 30-40%
Futures & Options 30-40%

Real Estate
Gold
Protection Related Products
Life Insurance

Health Insurance

General Insurance

Loan Insurance
Borrowing Related Products
Personal loans

Home loans

Reverse mortgage

Loan against securities

Credit card debt


Steps to avoid excess Debt

Set debt limits

Shop carefully for debts

Dont give into temptation

Automatically have money go towards

your bills
Ponzi schemes
Ponzi schemes promise high
returns and low risk
Initial investors may get high
promised returns
Money from initial investors is
given to new investors thus it is
only rotation of funds, not
investment of funds
If its too good to be true its
probably not true. Its a Ponzi!
For More Information
http://investor.sebi.gov.in/
http://sachet.rbi.org.in/

For Complaints
http://scores.gov.in/
Helpline
Number
1800 266 7575
1800 22 7575
Dr. Satinder Makin
Email-id: drsatindermakin@gmail.com