divya garg_pwm end term report

Personal Wealth Management

End-Term Report on Financial Planning of Mr. Kshitij Garg

Submitted To: Prof. Vinay Kumar Dutta

Submitted By:

Divya Garg (221042)

FMG 22 A

This report is based on the personal wealth management for an individual named Kshitij Garg, taking care of all his financial goals & planning how to achieve all these goals timely without having any strain on the financial health.

ACKNOWLEDGEMENTI would like to express my profound gratitude to all those who have been

instrumental in the preparation of my report on Personal Wealth

Management.

At the outset, I would like to thank Prof. Vinay Dutta, Faculty at FORE

School of Management for providing me the opportunity to undertake this

project & gain insights about Personal Wealth Management which has

proven out to be very beneficial to me in my future assignments and career

ahead.

I express my profound sense of gratitude and veneration to you for your

deep insights and classroom teaching which provided me with valuable

qualitative data that have formed the backbone of this study.

I would also like to thank my client Mr. Kshitij Garg for his continuous co-

operation.

Divya Garg | 221042 | FMG 22 A

Personal Wealth Management Page 1

Contents

ACKNOWLEDGEMENT ................................................................................. 1

Executive Summary ............................................................................................ 4

Chapter 1: Introduction ..................................................................................... 5

Personal Wealth Management................................................................................................................5

Importance of the Study..........................................................................................................................6

Purpose of the study...............................................................................................................................6

Objective of the Study.............................................................................................................................6

Chapter 2: Literature Review ............................................................................ 7

Chapter 3: Client’s Profile ............................................................................... 10

Demographic Profile..............................................................................................................................10

Details of Family and Dependent...........................................................................................................10

Income Details:......................................................................................................................................11

Client’s Attitude towards Money...........................................................................................................11

Chapter 4: Financial Details of the Client ...................................................... 12

Personal Balance Sheet as on 31st March, 2014.....................................................................................12

Cash Flow Statement as on 31st March, 2014 (Monthly).......................................................................13

Ratios.....................................................................................................................................................16

Chapter 5: Personal Goal Setting .................................................................... 20

Short Term Goals (Up to 1 year)............................................................................................................22

Medium Term Goal (2 to 5 Years)..........................................................................................................22

Long Term Goals (More than 5 Years)...................................................................................................23

Chapter 6: PLANNING ................................................................................... 25

Insurance Planning................................................................................................................................25


Investment Planning..............................................................................................................................25

Tax Planning..........................................................................................................................................26

Retirement Planning..............................................................................................................................27

Limitations of the Study ................................................................................... 28

ANNEXURE ...................................................................................................... 30

Questionnaire 1: Risk Profiler................................................................................................................30

Questionnaire 2- Identification of Goals................................................................................................32

Questionnaire 3: Knowing Credit Habits................................................................................................33

Questionnaire 4- What’s Your Money Attitude.....................................................................................34

Questionnaire 5: Analysis of Financial Values........................................................................................35


Executive SummaryThis is a project which is very closely related to one’s personal life & is aimed at understanding the various aspects related to Personal Financial management. Financial Planning is important to lead a carefree and independent life. As is often said, money does not grow through savings alone, but through careful financial planning.

Through this project I have got an understanding of how a financial consultant plans out course of action for his client based on his life goals & objectives. This report has also helped me understand the role of a consultant and the importance of communication skills in this profession. It is important to gain trust of the client as wealth is a very private matter.

We see how Financial Planning is highly contingent on not just the person’s goals but also his life stage, risk appetite, capabilities and his liabilities. Each of these factors affects the way we plan to achieve these goals.

Overall, this project takes the case of an individual named Mr. Kshitij Garg & deals with his personal wealth management, taking into consideration his roles & responsibilities, and at the same time fulfilling his personal financial goals. Careful financial Planning can help an individual comfortably achieve all his financial goals without any special cut back in the lifestyle. Personal Wealth management aims at helping an individual comfortably achieve all these goals.

I have also gained a deep insight into how an individual’s risk taking capability and priorities in life significantly influence his ability to plan effectively and achieve these goals.


Chapter 1: Introduction

Personal Wealth Management

The term “wealth management” is thrown around plenty, in the

boardrooms of private client firms, in trade and mainstream articles and by

financial advisors in front of clients. From the affluent individual’s

perspective, wealth management is simply the science of solving/enhancing

his or her financial situation. From the financial advisor’s perspective,

wealth management is the ability of an advisor or advisory team to deliver a

full range of financial services and products to an affluent client in a

consultative way.

Private or Personal wealth management (PWM) is the term generally

used to describe highly customized and sophisticated investment

management and financial planning services delivered to high net worth

investors. Generally, this includes advice on the use of trusts and

other estate planning, vehicles, business succession or stock option

planning, and the use of hedging derivatives for large blocks of stock.

Experts in personal wealth management perform an important role for

clients who wish to make the most of their financial assets. Beyond just

overseeing investments, handling individual monetary resources can reach

past stocks, mutual funds, and bonds and administer other issues as well.

All in all, personal wealth management constitutes a lot more than just

paying bills and investing in the stock market. Most organizations will help

clients by going over their individual income and assets and create a plan of

action that is uniquely tailored to them. Whether the need is for asset

protection or trust administration, inheritance issues or tax expertise,


consulting professionals in the field can make the difference between

financial success and fiscal disappointment.

There are many benefits associated with personal wealth management. By

turning these complex issues over to experts in the financial field, a client is

free to handle other life priorities with reduced stress and less distraction.

Seasoned professionals can look at the life goals of the client and zero in on

the best way to meet those goals. Solid planning can address current as

well as future issues.

Importance of the StudyWealth management should be given utmost importance because if an individual doesn’t manage the wealth well, one day or the other it will disappear & he/she won’t be able to enjoy it over an extended period of time. So wealth management should be given as much attention as one gives on earning money. Though people plan for their wealth management perfectly, there are some common mistakes which people commit and tend to lose their hard earned money. The mistakes which they commit might look very simple, but the impact which they create might be complex and huge.

Wealth management is important not only for affluent individuals, but it is even more important for not so rich individuals because they lack the resources in case something bad happens. Affluent individuals often need sophisticated advice and strategic guidance to capitalize on opportunities to preserve, grow and transfer their wealth.

Purpose of the studyIncreased level of wealth created by individual and brighter economic prospects for the future has substantially augmented the demand for sound professional advice on setting financial goals, aligning financial planning with career planning, investment planning, retirement planning, tax and estate planning. With the help of this end term project, my aim is understand and study the strategies for managing wealth on trans-generational basis of an individual.


“To understand the Personal Wealth Management of a Mr. Kshitij

Garg, Manager, Risk & Process in Internal Audit at Deloitte India

Pvt. Ltd.”

Objective of the Study

1. Demographic profiling of the client

2. To list out the financial goals of the client in SMART format

3. To analyze client’s current financials and existing personal

investments.

4. To give observations based on personal financial ratio.

5. To Do Risk profiling and recommendations on retirement, tax, special

situations planning in advance.

Chapter 2: Literature Review The-teachings-of-warren-buffet

Subramanyam, P. V. (2013, October 1)

The article states on what Warren Buffet says about basic investing, spending, and savings are so true. Most of us know it, however too many of us do not live it.1. On Earning:

Do not depend on a single income. Invest and create a second/ third source of income: This means when you are young your first task should be saving and investing. By creating a second source of income you are quickly reducing your dependence on your job. This could


help you to set out on your own one day. The quicker you can do it, the better.

2. On Spending:If you buy things that you do not need, you may soon have to sell things you need. It kind of summarizes Gen X’s reaction towards ‘luxuries’. As a part of Gen X we were perhaps criticized for some of our expenses, so it could be a generational thing even for WB. However, having goals and knowing where you are going, and not spending just to ‘show off’ are important lessons for all generations.

3. On Savings:Do not spend what is left after spending; instead spend after you save/invest: Also called ‘Pay Yourself First’. If you realize that investing in a pension plan or for your kid’s education is just helping you to save more later on. It is not a sacrifice, it is just postponing consumption. So understand, invest and then spend.

4. On taking Risk:Never test the depth of the river with both your feet: If you are doing something, do small. If you are a first gen investor, do not be carried away by equity lovers like me and put all your money in equity. Do a SIP with a small amount, and test the waters. Do a SIP of Rs. X (which could be 10% of your take home pay) for 5 years and then step up. And for heaven's sake understand risk of inflation, and the concept of real returns

5. On Investing: Do not put all eggs in one basket: Immaterial of who you are and how much you understand, create a portfolio. A full range lunch plate is always better than just one item. So create a portfolio with bonds, bond funds, PPF, NSC, equity, mutual funds, and on the risk side medical and term insurance.

6. On Expectation:Honesty is expensive; do not expect it from cheap people: Not everybody is honest, nor does everybody want to be honest. Honest advisers are difficult to find especially in Health and Wealth, be careful.

Financial Planning: From the Bible to the Internet


Redmer, T., & King, J. L. (September, 2012)

The need for biblically based financial planning has been around for many years. The ancient Babylonians were some of the first civilization’s to use a medium of exchange and also one of the first to vaguely see the need for some type of financial planning. Some say that only the Inca civilization in Peru successfully existed without some form of money. In Christ’s time on earth, as recorded in the Scriptures, money was used and sometimes abused by those that weren’t living a Godly life. Though the Bible doesn’t teach or offer a contemporary plan for financial success, it speaks to the issue of finances in many areas that include tithes and offerings, usury and greed. This paper offers Christian’s a history of money that shows where it came from and how we got to where we are today. This paper also offers various websites found on the Internet that will educate, inform and promote their successful financial future. This paper is written in light of Matthew 10:16, “I am sending you out like sheep among wolves. Therefore be as shrewd as snakes and as innocent as doves.”

Eight Principles of Strategic Wealth Management. Lucas, S. E. (January, 2012)

The author has stated the following Eight Principles of Strategic Wealth Management which he states that are at the heart of what he does every day. They are:

1. Take charge and do it early.2. Align family and business interests around wealth-building goals

and strategies.3. Create a culture of accountability.4. Capitalize on your family's combined resources.5. Delegate, empower, and respect independence.6. Diversify but focus.7. Err on the side of simplicity where possible.8. Develop future family leaders with strong wealth management

skills.


Keeping it Simple: Financial Literacy and Rules of Thumb . Drexler, A., Fischer, G., & Schoar, A. (July, 2011)

This paper determines whether and how financial literacy can be taught and, closely related, whether there is causal link between improving Financial literacy and Financial outcomes. It concluded that improved knowledge of financial accounting indeed has a positive effect on the management practices of individuals and small businesses.

Financial Life Well-lived: Psychological Benefits of Financial Planning Irving, K. (volume 6, no. 4, 2013).

As the financial planning industry undergoes a series of reforms aimed at increased professionalism and improved quality of advice, financial planner training in Australia and elsewhere has begun to acknowledge the importance of interdisciplinary knowledge bases in informing both curriculum design and professional practice (e.g. FPA 2009). This paper underscores the importance of the process of financial planning by providing a conceptual analysis of the six step financial planning process using key mechanisms derived from theory and research in cognate disciplines, such as psychology and well-being. The paper identifies how these mechanisms may operate to impact client well-being in the financial planning context. The conceptual mapping of the mechanisms to process elements of financial planning is a unique contribution to the financial planning literature and offers a further framework in the armamentarium of researchers interested in pursuing questions around the value of financial planning. The conceptual framework derived from the analysis also adds to the growing body of literature aimed at developing an integrated model of financial planning.


Chapter 3: Client’s Profile

Demographic Profile

Mr. Kshitij Garg was born in Muzaffarnagar, Uttar Pradesh. After attaining an age of 21 years and completing his graduation, he pursued his MBA from Institute of Management & Technology, Ghaziabad. He passed out from MBA in July 2007 and is currently working with Deloitte India Pvt. Ltd in Gurgoan. In 2010, he got married to Mrs. Reshu Bhardwaj, currently working presently at Central Warehousing Corporation (CWC). . His Father is working in corporate Bank and his mother is a house wife.

Name Mr. Kshitij Garg

Sex Male

Age 29

D.O.B. 10 - 08 – 1985

Marital Status Married

Educational

Qualification

B.Com, M.B.A

Profession Manager at RAS (IA)

Company Deloitte India Pvt. Ltd.

Location Gurgoan

Address 65/41, West Punjabi Bagh, New Delhi – 110026

E- Mail [email protected]

Table 1: Demographics Profile of Client

Details of Family and Dependent


mailto:[email protected]

Income Details:

ParticularsMonthl

y YearlyBasic Pay 70000 840000HRA (40% * Basic Pay) 28000 336000Medical 1250 15000Provident Fund (12% * Basic pay) 8400 100800Conveyance Allowance 8000 96000Other Allowances 9350 112200

Salary CTC 125000 1500000

Client’s Attitude towards Money

The degree to which the money controls client’s life is 6 which indicate a quite neutral attitude towards money and his way to deal with life situations.

Though the dark side is that his little casual attitude towards money is putting hindrance for planning for Children’s Education, Marriage & own Retirement Planning. He sometimes tends to get nervous with situations


Table 2: Details of Dependent and FamilyNo. of Family

Members

4

No. of Dependents 1

Wife’s Occupation Service

No. of Children 1 (3 and half year old)

Siblings One Brother (Doing

MBA, 22 Yrs.)

Mother’s Age 49

Father’s Age 53 (Earning)

Nature of family Nuclear Family

where he is short of money and therefore indicates a need of financial planning to manage his and family’s lifestyle in a better way.


Chapter 4: Financial Details of the Client

Personal Balance Sheet as on 31st March, 2014

Balance Sheet

AssetsAmoun

tTotal (Rs.)

1 Liquid Assets

Cash in Hand 440000

Savings a/c Balance @ 4% p.a110000

0

Cash Value of Life Insurance350000

0 5040000

2 Real estate

Investment in Flat 14500000

3 Personal Possessions

Automibile i.e. Car 650000

Household Furniture and appliance 270000

Home Computer 15000

Jewellery 240000 1175000

4 Investment Asset

Provident Fund 130900


Deposit in Systematic Mutual Fund @ 9%p.a 220000

Investment in Fixed Deposit @ 9.75% p.a 120000 470900

Total Assets 21185900

LiabilityAmoun

tTotal (Rs.)

1 Current Liablities

Balance on Auto Loan 200000

2 Long Term Liabilities

Home Loan250000

0

Education Loan (Rs. 4 lac @11% p.a.) 660000

Total Liabilities 2460000

Net Worth 18525900Table 3: Balance Sheet of Mr. Kshitij Garg as on 31st March, 2014

Cash Flow Statement as on 31st March, 2014 (Monthly)

Calculation of Take-Home SalaryParticulars Monthly (Rs.) Annually (Rs.)

Basic Pay 70000 840000HRA 28000 336000

Medical 1250 15000Conveyance Allowance 8000 96000Other Allowances 9350 112200Total of Take-Home before PF and Tax 116600 1399200


(-) deductionsPF 8400 100800Income Tax 8070 96840

Take-home Salary 100130 1201560Table 4: Salary Details of Mr. Kshitij Garg as on 31st March, 2014

Cash Flow Statement

ParticularsAmou

nt Monthly Annually

Cash Inflows

Salary (Gross) 125000 1500000

Less: Deductions

Income Tax 8700

Social Security (EPF/ Gratuity/ Pension Fund) 8400

Total Deductions 17100 205200

Interest earned on Savings @ 4% p.a 44000 528000

Earnings from Investment from FD & MF 11700 140400

Total Income 163600 1963200

Cash Outflows

Fixed (Non- Discretionary) Expense


Petrol/Transportation Expense 8000 96000

School Fees 5000 60000

Life Insurance Cover (LIC) 5000 60000

Loan Payments (Auto+home) 36500 438000

Education Loan Interest 12000 144000

Total Fixed Outflows 66500 798000

Variable (Discretionaey) Expense

Food & Clothing 32000 384000

Personal Care (dry cleaning, laundary, cosmetics) 800 9600

Electricity/ Water 6500 78000

Medical Exp 1250 15000

Telephone 2500 30000

Entertainment Expenses 14000 168000

Others 7213.3333 86559.9996

Total Variable Outflows64263.33

33771159.99

96

Total Cash Outflow130763.3

333 1569160

Cash Surplus +(or deficit -)32836.666

7394040.000

4

Investments

Monthly Saving for contingencies (savings deposit) 4000 48000


Investment in Mutual Funds 8000 96000

Fixed Deposit 12000 144000

Miscellaneous Payment Tools 5836.6667 70040.0004

Total Investments32836.66

67394040.00

04

Total surplus (Cash in Hand) 3000 36000Table 5: Cash Flow Statement as on 31st March, 2014

RatiosSix financial ratios were calculated to understand the current financial

health of Mr. Garg & family in a better way and to suggest them the

corrective actions keeping the ideal ratio in mind.

Ratio Calculations Value

Basic Solvency CashMonthly Expenses

1,540,000 130763.3333 11.777

Liquidity Ratio Liquid Assets Net Worth5,040,000 18525900 27.21%

Savings Ratio Savings Gross Income29836.6667 180700 16.51%

Debt to Asset Ratio

Total Liabilities Total Assets

2660000 21185900 12.56%

Debt to Income Ratio

Total Debt Payment

Total Take Home Salary

48500 107900 44.95%

Solvency Ratio Total Net Worth Total Assets


18525900 21185900 87.44%Table 6: Financial Ratios

1. Basic Solvency Ratio: This ratio indicates an individual’s ability to meet his or her monthly expenses in case of an emergency or a catastrophe.

Basic Solvency Ratio=Near Cash/Monthly ExpensesCash (near cash) includes all liquid assets like savings a/c, Fixed Deposit; cash in hand and Liquid Funds. Monthly Expenses include mandatory fixed and variable expenses.

The ideal ratio is 3 but Mr. Garg is having a ratio of 11.77. This means there is too much of liquid cash or idle cash, which can be invested for better purposes that will start generating returns.

2. Liquidity Ratio: This ratio helps a person to know his financial liquidity. Maintaining a certain level of liquidity is essential to ward off any unforeseen financial hardships. Property can be considered as a good investment avenue but lack of liquidity is its biggest drawback and while equity is risky; its biggest advantage is liquidity.

Liquidity Ratio= Liquid Assets/Net worth

Liquid Assets include all cash (near cash assets), equities, Equity Mutual Funds, Debt funds and other assets which can be redeemed within three to four working days.

The liquidity ratio is 27.21% which is much more than the ideal value of 15%. This means that 27.21% per cent of his portfolio comprises of liquid assets which could be converted into investments for better returns.

3. Savings Ratio: This ratio indicates the amount an individual sets aside

as savings for his future goals.

Savings Ratio = Savings/Gross Income


Savings include any form of savings like Fixed Deposits, Liquid Funds,

Mutual Funds, Equities, Debt, Bonds, PPF, Post Office Small Saving

Schemes and others where the individual saves on a regular basis.

Mr. Garg savings Ratio is 16.51% per cent. This is marginally above the

ideal minimum savings of 10 per cent meaning that sufficient income is

invested for meeting future obligations.

4. Debt to Asset Ratio: This ratio helps a person to understand whether

he is over borrowed or is in a comfortable position, i.e., if he faces any

solvency problems. This ratio should always be used when one is

planning to take a new loan. If an individual is over borrowed, it is best

to avoid getting into something new. Instead the person should wait until

he has finished paying off his previous loan amount.

Debt to Asset ratio= Total Liabilities/ Total Assets

Mr. Garg debt to asset ratio is close to 12.56% per cent. This is very

good as the ideal ratio is considered to be less than 50%. That is your

total debts should not increase more than 50 per cent of your total

assets. So the low leveraged personal balance sheet shows a remarkable

position as the assets invested in are also those which can appreciate

and give higher returns.

5. Debt to income ratio: It is the percentage of consumer's income that

goes towards payment of debts. This ratio is calculated by dividing total

annual debt payments by total annual take home salary.


Debt to income ratio = Total debt payments / Total take home

salary

The ideal Debt to Income ratio should not exceed 45%. That is your total

annual debt payments should not exceed more than 45 per cent of your

total annual take home salary. However, Mr. Garg debt to income ratio is

44.95% which is optimal.

6. Solvency Ratio: Long term solvency ratio compares an individual's net

worth against total assets accumulated by him/her. This ratio indicates

the ability of an individual to repay all his/her existing debts using

existing assets in case of unforeseen events.

Solvency Ratio = Total Net Worth/ Total Assets

The ideal ratio should be minimum 50%. Mr. Garg’s solvency ratio is

extremely good as its 87.44%, which clearly indicates his strong ability to

service her debts.


Chapter 5: Personal Goal SettingGoal setting is a very powerful technique that can yield strong returns in all

areas of your life.

Benefits of personal goal setting:

Clear and focused direction giving a sense of security and purpose.

Maximum use of time.

Enthusiasm is high for what you want.

Moving steadily towards and achieving the results you really want and

ultimate success.

Boosted self-esteem, confidence and belief in your ability to make

things happen and feel in control


5. Create some short-term

goals. 1. Think about the "big picture."

2. Break the "big picture" down into smaller and more specific goals.

6. Set priorities.

SMART Goals identified on the basis of Questionnaires & Interaction


8. Keep track of your progress

7. Keep incremental goals small

4. Make each goal a positive statement

3. Use the SMART method to create actionable goals.

Short Term Goals (Up to 1 year)

Goal No.1: Paying off Car loan

Specific: Paying off the car loan completely

Measurable: Need to repay a sum of Rs. 200000 (present value)

Attainable: Repaying Rs.18150 each month(time=12 months)

Realistic: Mr. Garg is Earning and bank has provided him with

subsidized loan.

Time Bound: Free of this loan by the end of Mrach, 2015

Goal No.2: Plasma LED for House

Specific: Collecting Corpus for LED TV

Measurable: To Build a corpus of 1 Lakh

Attainable: It can be attained by regular savings of Rs 8500-

9000 per month

Realistic: Mr. Garg is Earning and has good savings.

Time Bound: By Year 2014

Medium Term Goal (2 to 5 Years)

Goal No.3: Payoff Brother’s Education Loan

Specific: Paying off Brother’s Education Loan

Measurable: To Build a corpus of 6.60 Lakh

Attainable: Keeping aside savings Rs 14,700 every month in

Fixed Deposit account @ 9% p.a.

Realistic: Mr. Garg is Earning & His brother will start earning

next year.



High Priority

Medium Priority

High Priority

Goal No.4: International Holiday with family.

Specific: Collecting Corpus for World Tour

Measurable: To Build a corpus of 10 Lakh

Attainable: He can save 10% of his monthly Income for this

purpose. He should not take Personal Loan to go on

International Holiday with family.

Realistic: Mr. Garg is Earning and has ample Net worth.

Time Bound: By Summers 2018

Long Term Goals (More than 5 Years)

Goal No.5: Planning for Son’s higher education

Specific: To build a corpus for son’s higher education

Measurable: Need to save a sum of Rs. 15,00,000 (future value)

for the same

Attainable: Saving Rs 14,700 /- per month in SIP and then convert

this annual sum to Fixed Deposit account @ 9% p.a.

Realistic: Same as above

Time Bound: Will be able to accumulate the sum by 2025

Goal No.6: Building corpus for retirement

Specific: To build a corpus for retirement planning to

continue the same lifestyle after retirement

Measurable: To accumulate Rs. 500,00,000 (FV) for the same

Attainable: Will continue to contribute a sum of Rs. 8400/- per


High Priority

Low Priority

month towards gratuity and provident fund

Realistic: Same as above.



Medium Priority

Chapter 6: PLANNING

Insurance PlanningHe has taken a Life Insurance Cover (Future Plus) Rs.200, 000 which has

present value of Rs. 3500000. The Insurance Plan will mature in year 2020.

Insurance policies suggested to Mr. Kshitij Garg

There should be a term life policy for Mr Garg to the extent of 15 times

his annual income. The ICICI term policy can be taken for the same as it

can be taken online and thus it will be less expensive.

A family health cover is recommended to the Mr.Garg which can cover a

medical expense of upto Rs 5 lac. It is recommended to take a family

floater policy instead of individual medical insurance cover.

Mr. Garg doesn’t have any home insurance cover. It is suggested to the

family to get an insurance cover for Home of Rs 25, 00,000 (Premium –

Rs 2550 per annum) and Home Content Insurance against theft &

burglary of Rs 2, 50,000 (Premium of Rs 500 per annum).

The client also needs other non-life insurance covers such as accidental insurance along with other contracts of indemnity to indemnify against the loss of their prized possessions like home, vehicle etc.

Investment PlanningInvestment means putting your money in an investment alternative with the

expectations of getting an expected return on the amount invested.

Investment always involves a risk-return trade-off. Hence, before suggesting

any type of asset class for investment to the client, it is necessary to

understand his risk appetite.

Analyzing the Risk Appetite of Mr. Kshitij Garg


He is service class person in age group of 20-30 years. There may be chance

of job loss or job switch. He believes that with his experience and expertise

will bring him out of any uncertainty. In the worst case he might not bring

home a salary for maximum 2-3 months. He has enough past savings to

thrive on.

His Current Investments:

Investment in Mutual Fund 2,20,00

0

Investment in Fixed Deposit 1,20,000

Mr. Kshitij Garg seems to be quiet risk averse as majority of his investments

are in a fixed return assets i.e. Fixed Deposit schemes and Mutual Fund.

Therefore, he can invest in Equity to seek higher returns as he doesn’t seem

to have any major obligations. He is suggested to diversify his product and

investment portfolio by including both high risks high return and low risk

low return investments.

Tax PlanningMr. Kshitij Garg are in higher tax bracket of 20 % so tax planning for them is very necessary as till now they are paying approximately Rs 104400 as their annual tax.

Application in Case of Mr. Kshitij Garg:

He is getting tax deductions on Employee Provident Fund, Life insurance

Premiums, Bank Fixed deposits.

Interest payments on Home Loan of up to Rs 150,000 pa are entitled for reduction under Section 24. Mr. Kshitij is liable to pay an Interest on Home loan which is partially on loan. Therefore, he can claim tax deductions under HRA


At Present Mr. Verma has no medical insurance, but he should plan for his family medical insurance to claim deduction of upto Rs 15,000 pa under section 80D of Income Tax Act.

At Present Mr. Verma does not make any contributions towards Charity. By doing donations to particular funds/institutions, Tax advantages under Section 80G will be available to Mr. Garg.

His focus should be towards investing into tax efficient investments after the retirement.

Retirement PlanningMr. Kshitij Garg plans to have a corpus of Rs. 5 crores by the time he

retires at the age of 60. He expects his career to experience a steady rise

through the ranks of the company, and a rise in salary along with that. Mr.

& Mrs. Garg are in service where their gratuity and provident fund account

is being credited every month by their employer which is one most

important aspect in saving for retirement.

Thus, the suggestion for Mr. Kshitij is to put a portion of some of his income

(which is expected to rise substantially in the next 15 years) to retirement

fund. The Plan suitable for Mr. Garg is LIC Jeevan Nidhi.


Limitations of the Study The most important limitation of this study is the authencity in the

information provided by the client. Also future cannot be accurately

predicted so there would always be some element of uncertainty in the

projections.

The study couldn’t test about the 100% accurate wealth management

and financial planning as the client may skip some information and he

might not want to share 100% correct information.

Also this study is very individualistic in nature as it is applicable to only

one individual. It cannot be extended to any other individual.


References

Drexler, A., Fischer, G., & Schoar, A. (July, 2011). Keeping it Simple: Financial Literacy and Rules of Thumb. 36.

Irving, K. (volume 6, no. 4, 2013). The Financial Life Well-lived: Psychological Benefits of Financial Planning. Australasian Accounting, Business and Finance Journal, 60.

Lucas, S. E. (January, 2012). Eight Principles of Strategic Wealth Management. Knowledge at Wharton School Publishing.

Prince, R. A. (2014, 5 16). What Is Wealth Management? Retrieved 11 28, 2014, from Forbes: http://www.forbes.com/sites/russalanprince/2014/05/16/what-is-wealth-management/

Redmer, T., & King, J. L. (September, 2012). Financial Planning: From the Bible to the Internet.

Subramanyam, P. V. (2013, October 1). the-teachings-of-warren-buffet. Retrieved November 28, 2014, from Yahoo! Finance India: https://in.finance.yahoo.com/news/the-teachings-of-warren-buffet.html

Why Set Goals? (n.d.). Retrieved 12 1, 2014, from Goal Maker: http://www.goalmaker.com/whyset.html

Dun & Bradstreet; “Wealth Management”; Tata McGraw-Hill, 2009 Edition


ANNEXURE

Questionnaire 1: Risk Profiler1) Your Age is under the bracket of:

a. Under 25

b. 25 – 35

c. 35 – 50

d. 51 – 65

e. Over 65

2) What is you working status?

a. I have a job

b. I am a businessman

c. I am retired

d. I am presently without a job

3) How long have you been working?

a. Less than a year

b. Since 2 – 3 years

c. Since 3 – 5 years

d. More than 5 years

4) How many dependents do you have?

a. 0

b. 1 – 2

c. 3 – 4

d. Above 4


5) Do you own your home?

a. Yes

b. No

6) What is your savings as a percentage of your annual earnings?

a. Under 10%

b. 10% - 25 %

c. 25% - 40%

d. 40% - 50%

e. Above 50%

7) What is your present investment pattern?

a. Only in fixed income such as bank deposits, PPF, etc

b. Mainly in fixed income and a portion in mutual funds

c. Mainly in equity direct equity

d. Gold and Art Collectibles

e. Real Estate

8) Are you satisfied with the returns you are getting on your existing

investments?

a. Unsatisfied – too low

b. Somewhat satisfied

c. Satisfied

d. Satisfied – but too high for comfort

9) What is the situation of your wealth build-up?


a. No wealth built up

b. Very little wealth built up

c. Build up is satisfactory

d. Build up is very satisfactory

10) What is your approach in making final decisions?

f. Make a quick decision based on information received

g. Make a decision after validating information received

h. Make a decision after validating information received and

collecting additional information

i. Usually make a decision after tremendous pondering and speaking

to almost all the people I know

Questionnaire 2- Identification of Goals

1=most important || 9= least important

Financial Concerns

6 To minimize income taxes.

8 To be able to retire comfortably.

1 To have adequate funds to cover both routine living expenses &

foreseeable future needs, including education expenses of my

children.

7 To increase the assets going to my heirs by using various estate

planning techniques.

5 To accumulate sufficient assets to enable me to increase my

standard of living, purchase a vacation home etc.


2 To have sufficient funds & insurance coverage in the event of

serious illness.

4 To develop an investment program that will provide hedge

against inflation

9 To accumulate a sizeable estate to pass on to my heirs.

3 To enable my family maintain their standard of living in the

event of my death.

Questionnaire 3: Knowing Credit HabitsThis questionnaire is to know about your credit habits. Please fill to the best

of your knowledge

1. I pay my bills when they are due

a) Always b) Almost always c) Sometimes

2. After paying my regular bills each month, I have money left from my

income

a) Yes b) Sometimes c) Never

3. I know how much I owe on my credit cards each month before I receive

my bills

a) Yes b) Sometimes c) Never

4. When I get behind in my payments, I ignore the past due notices

a) Never or not applicable b) Sometimes c) Always

5. When I need more money for my regular living expenses, I take out a

loan or use my credit card or overdraft or saving account

a) Never b) Sometimes c) Often


6. I pay more than the minimum balance due on my credit card account

a) Always b) Sometimes c) Never

7. To pay off my current credit and charge card accounts it would take

me….

a) 4 months or less b) 5-8 months c) Over 8 months d)Not

Applicable

8. My consumer loans (including car loan, but not home loan payment) and

credit card bills each month always average more than 20% of my take-

home pay.

a) No b) Sometimes c) Always

9. If I had serious credit problems, I would contact my creditors to explain

the problem

a) Yes b) Probably c) No

Questionnaire 4- What’s Your Money Attitude

Answer all the questions given below, circling yes or no, depending in how you feel about the statements:

I need more money than I can use. Yes No

It bothers me when I discover I could have gotten the same thing for less somewhere less.

Yes No

I behave as if money were the ultimate symbol of success. Yes No

I show signs of nervousness when I do not have enough money. Yes NoI dream I will one day be famous rich. Yes No

I find it difficult to part with money for any reason. Yes No


I worry that I will not have enough money to live comfortably when I retire.

Yes No

Money controls the things that I don’t do in my life. Yes No

When I was a child, money seemed to be the most important thing in my life.

Yes No

I argue or complain about the cost of things. Yes No

Count the number of yes answers to find out the degree to which money controls your life.= 6

Questionnaire 5: Analysis of Financial Values

“If you had an extra Rs. 1.5 lac, on which one of the two items (in each

row) would you spend your money?” You must make one choice in each

pair.

S.no

.Option 1 Option 2

1 Housing (Dream Home)Investments/Retirement

Savings

2 Education: Self/Others Vacation/Travel

3 Retirement Savings/Investment Hobbies/Sports

4 Hobbies/SportsCharitable

Giving/Religious Activity

Vacation/Travel

Personal

Appearance/Grooming/Cloth

es

6Charitable Giving/Religious

Activity

Social Activities/Eating

Out

7 Social Activities/Eating Out Car


8 Housing (Dream House)Retirement

Savings/Investments

9 Education: Self/Others Housing (Dream House)

10 Hobbies/Sports Housing (Dream House)

11Personal

Appearance/Grooming/ClothesCar

12Charitable Giving/Religious

ActivitySocial Activities/Eating out

13 Retirement Savings/Investment Hobbies/Sports

14

Personal

Appearance/Grooming/Cloth

es

Vacation/Travel

15 Hobbies/Sports Car

16Retirement

Savings/InvestmentsSocial Activities/Eating Out

17 Housing ( Dream House) Vacation/Travel

18 Education : Self/Others Car

19 Vacation/TravelCharitable Giving/Religious

Activities

20Personal

Appearance/Grooming/ClothesEducation: Self/Others


divya garg_pwm end term report

Documents

personal financial management

personal financial goals

financial planning of

financial details

financial consultant

careful financial planning

ones personal life

years22long term goals