financial planning pre-retirement stage

8/8/2019 Financial Planning Pre-retirement Stage

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Financial Planning

Pre-retirement stage

(Married couple with young children)


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What is Financial Planning?

# Financial planning is the process of successfully meeting financial needs of

life through the proper management of finances.

# It is your roadmap to Financial Health, & Sustainable Wealth creation.

Whyyou need Financial Planning?

# Life without financial planning is like Unplanned Vacation.

# If you wish to achieve your financial goals successfully & peacefully you must

plan your financial life.

Asset allocation.

Investing predefined percentage of your savings in different Asset classes

Financial planning


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Asset Classes to Invest

Art

Insurance

Commodities Real Estate

EquityEquity

Debt

GoldGold

Financial

Planning


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Wealth erosion

Over concentration

Over spending.

Preference of present consumption to future consumption.

Family discord.

Liability issues.

Taxes

Govt policies.


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The Pre-retirement stage

At this point, family responsibilities begin to wind down,and people start thinking about retirement. Because of this,it is vital that less volatilitybe accepted in their investmentresults.

To do this, there have to be a greater emphasis on passiveincome generation and capital preservation. Usually, thereis a trade-off between these aims and long term growth, soat this point the emphasis on growth should be gradually

reduced.

The final and for many of us hopefully, the longest stage,will be the Reap the Rewards. These run from the mid 50sthrough to total retirement onto death itself.


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Case details:

Ghajni and Pinky (Married Couple, with young

kids)

Ghajni:- He is 45 years old

Done his B.A. from Pune University

Started his career as a Head Master,now is aPrincipal of XYZ college

Drawing salary of Rs.504000/- p.a.(gross)


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Contd..

Pinky:-

-She is 40 years old and 12th pass, could notcomplete her B.A.

- She is a homemaker

Mayur :-

-He is 10th pass ,joined junior college ,few days

back . Mayuri :-

- She is in 8th std.


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Assumptions:

There is an increment of 3-4% in Ghajnis salary every

year.(revised AICTE payscale is around 3 %) He started working in 1990 with salary of Rs.120000/-

p.a.

He lives in own house.

He has his own bike (market value Rs.40,000/-).

He has some savings amount of Rs.125,000 in bankaccount and has also invested Rs.150,000 in Fixeddeposit @7.5% for 7 years with HDFC Bank and hasalso invested Rs. 200000 in stock market.

He has taken some personal loan of Rs.100,000/[email protected]% from bank for his personal use.

He has Gold ornaments of Rs.100,000/-


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Goal sheetSr.No. Particulars Monthly

Contributions(Rs)

Amount

Needed(Rs)

Year of

Accomplishment

1. Short Term Goals

Investment 5000/- 150000/- 2 yrs

Buying Car 8000/- 133000/- 4 yrs

2. Long Term Goal

Education

Mayur and Mayuri

(higher education)

4000/- + 2000/-

=6000/-

504000/- 7 yrs

Marriage 2000/- +1000/-

=3000/-

168000/- +

120000/- =

288000/-

7 yrs for mayuri

10 yrs for mayur

Retirement Corpus 3000/- 540000/- 15 yrs


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BUDGET SHEET

Particulars Monthly Expenses (Rs) Annual Expenses (Rs)

GAS 350 2500

TELEPHONE 700 8400

PETROL 1000 12000

LIC PREMIUM 200 2400

ELECTRICITY 650 7800

ENTERTAINMENT EXP 1000 12000

EMI (PERSONAL LOAN) 9580 114960

MISC EXP. 4000 48000

TOTAL 17480 208060


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NET WORTH SHEET -2011

ASSETS AMOUNT (Rs)

MOTORCYCLE 40000/-

SAVINGS 125000/-

INVESTMENTS 50000/-

GOLD 100000/-

HOUSE 500000/-

FIXED DEPOSIT 150000/-

TOTAL ASSETS 965000/-

Less LIABILITIESPERSONAL LOAN 100000/-

TOTAL LIABILITIES 100000/-

TOTAL NETWORTH 865000/-


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Asset allocatation (Jacobs method)

Particulars Amount (Rs) Return expected

Stocks

Large cap funds 40000/- 12%

Middle cap funds 30000/- 10%

ELSS 40000/- 8%

Pension funds 70000/- 7.5%

Mutual funds 42250/- 8.5%

Government bonds 70000/- 7.5%

Post office saving scheme 60250/- 8%Money market 17500/- 8%

Total Investment 370000/-


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Conclusion

Invest early in life.

(early the investment ,better the returns)

Save & invest regularly, systematically. Stay invested for long term till your goal

achieved.

Stick to asset allocation.

Monitor 3-6 monthly.

If necessary take expert help.

financial planning pre-retirement stage

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