financial planning & wealth management
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Financial Planning & Wealth Management. By CA Rajkumar S Adukia 09820061049/09323061049 [email protected]. Agenda. Explaining the essence of Financial Planning & Wealth Management Exploring Investment Planning/Wealth Management Knowing about Asset Allocation - PowerPoint PPT PresentationTRANSCRIPT
Financial Planning & Wealth Management
By CA Rajkumar S Adukia09820061049/09323061049
Financial Planning and Wealth Management 1
Explaining the essence of Financial Planning & Wealth Management
Exploring Investment Planning/Wealth Management
Knowing about Asset Allocation Do’s and Don’ts Mantras in Financial
Planning and Wealth Management Investor Risk Awareness
Financial Planning and Wealth Management 2
Agenda
INDIAN FINANCIAL SYSTEM
Money Market Instrume
nt
Capital Market
Instrument
Forex Market
Capital Market
Money Market
Credit Market
Primary Market
Financial Instruments
FinancialMarkets
FinancialIntermediarie
s
Secondary Market
Regulators
Financial Planning and Wealth Management 3
Financial Planning and Wealth Management 4
What is Financial Planning?
Financial Planning and Wealth Management 5
Steps in Financial Planning
Salary Earners – Government/Private Self Employed/Entrepreneurs/Traders Professionals Others – Students, Housewives, Retired Individuals
They can further be categorized into Beginners Middle Level Final Level
Financial Planning and Wealth Management 6
Categorizing Individual Investors
Every month Salary is wealth accumulation Rule of Thumb : Always hold 3 months salary
in savings (job change/delay in payout) Beginners: Be more aggressive (no or less
liabilities, consistent income level) Mid career people – Be Moderate ( more
liabilities, commitments) HNIs – A balance of Moderation and
Aggressiveness ( More Money)
Financial Planning and Wealth Management 7
Salary Earners
Investment – Own Funds/Borrowed Funds Average of Income Earned every month Insurance cover for business and personal
needs Surplus funds on savings Funds for further investment in business Loan repayment
Financial Planning and Wealth Management 8
Self Employed/ Entrepreneurs/Traders
Average earnings every month Loans for setting up Professional Practice
and its repayment Monthly commitments Surplus savings Fund for further investment Investment in Real Estate Sole proprietorship/ Firm/Company
Financial Planning and Wealth Management 9
Professionals
Housewives and Retired individuals should choose investments that are safe, followed by returns and liquidity. Tax saving aspect of the investment is less important
Students should invest in very safe securities that can also yield them high returns, liquidity and tax saving aspects can be given lesser importance
Financial Planning and Wealth Management 10
Others – Students, Housewives, Retired Individuals etc
Financial Planning and Wealth Management 11
A way to plan
A Plan is a Must!
Where Am I Now? Net Worth (Assets – Liabilities) Personal Budget
Where Do I Want to Go? Goals and Objectives
Major Purchase, Children’s Education, Retirement, Marriage, Vacation
How Do I Get There? Recommendations and Implementation The Plan!
Tax Planning Insurance Planning Retirement Planning Estate Planning Investment Planning/Wealth Management
Financial Planning and Wealth Management 12
Categorizing Financial Planning
Financial Planning and Wealth Management 13
Tax Planning
Financial Planning and Wealth Management 14
Tax Saving SectionsSection Quick Description Limit
80 CCC Pension Products Maximum Rs 1 lakh deduction for 80 C, CCC and 80 CCD put together
80 CCD C. Govt Employees Pension scheme
Maximum Rs 1 lakh deduction for 80 C, CCC and 80 CCD put together
80D Premium Paid on Medical Insurance for Family and Parents
Deduction between Rs 15,000-20,000, additional deduction of 15,000 for parents and Rs, 20,000 if they senior citizens
80 DD Maintenance and medical treatment of disabled dependent
Deduction upto Rs 1 lakh
80 DDB Treatment of Certain disease or ailment
Deduction upto Rs.60,000
80U Physically Disabled Assessee Deduction upto Rs 1 lakh
Financial Planning and Wealth Management 15
Tax Saving SectionsSection Quick Description Limit
80G Donation to certain charitable fund, institutions etc
50% to 100% of donation made subject to a max of 10%of gross annual income
80 GGA Donations for scientific research or rural development
100% deduction allowed to donations made to scientific research Sec 80GGC
80 GGC Donation to Political Parties Deduction upto Rs 60,000
80 E Interest Payable on Educational loan
No limit for deduction
80 EE Interest payable on housing loan Additional deduction up to Rs 1 lakh
80 GG For paying rent in case of no HRA Deduction upto Rs,24,000
80 CCG RGESS Deduction upto Rs 25,000 (50% of amount invested)
80TTA Interested received in Saving Bank Account
Deduction upto Rs 10,000
Financial Planning and Wealth Management 16
80CCG: Investment under any Equity Saving Scheme
Eligibility: Individual Acquires listed equity shares/ units in
accordance with the central government notified Scheme i.e Rajiv Gandhi Equity Savings Scheme,
maximum deduction: 50% of amount invested or Rs 25000/- whichever is less.
Financial Planning and Wealth Management 17
Invest in Equity Scheme and Save Tax
Our risks include Our Lives Medical Contingencies Assets
Insurance Planning the 1st Step Opting for adequate life insurance cover is essential Insurance requirement to be reviewed every 2 years Insurance secures our
Future Finances Loved Ones
Financial Planning and Wealth Management 18
Insurance and Health Planning
Term Insurance Whole Life Policy Endowment Policy Money Back Policies Annuities and Pension Unit Linked Insurance Plan Postal Life Insurance Riders: Comprehensive Coverage
Financial Planning and Wealth Management 19
Types of Life Insurance Policy
Covers employees of Central and State Governments, Central and State Public Sector Undertakings, Universities, Government aided Educational institutions, Nationalized Banks, Local bodies etc. Officers and staff of the Defence services and Para-Military forces
Upper limit Rs 10 lacs all schemes put together Offers Single as well as Group Insurance The policy can be assigned to Financial Institutions for taking
loan. Issue of Duplicate Policy Bond in case of the original Policy Bond
is lost Intra conversion of policies allowed
Financial Planning and Wealth Management 20
Postal Life Insurance (PLI)
PLI offers 7 (Seven) types of plans: Whole Life Assurance (SURAKSHA) Convertible Whole Life Assurance (SUVIDHA) Endowment Assurance (SANTOSH) Anticipated Endowment Assurance
(SUMANGAL) Joint Life Assurance (YUGAL SURAKSHA) Scheme for Physically handicapped persons Children Policy
Financial Planning and Wealth Management 21
Postal Life Insurance (PLI)
RPLI offers following types of plans: Whole Life Assurance ( GRAMA SURAKSHA) Convertible Whole Life Assurance (GRAMA SUVIDHA) Endowment Assurance ( GRAMA SANTOSH) Anticipated Endowment Assurance (GRAMA SUMANGAL) GRAM PRIYA Scheme for Physically handicapped persons
Min Sum Assured Rs.10,000 & Max Sum Assured Rs.3,00,000/- Max age limit of entry is 55 years in case of Whole Life and
Endowment Assurance while it is 45 years otherwise. All the schemes have compulsory medical examination. For the non-medical policies, the maximum limit of Sum
Assured is Rs.25,000/-, and maximum age is 35 years. Non-standard age proof for Rural PLI policies, the maximum
age limit is 45 years
Financial Planning and Wealth Management 22
Rural Postal Life Insurance (RPLI)
Salaried professionals in Private Sector are not eligible but they can have RPLI policies subject to fulfilling other conditions.
If one spouse is working in a Government Organization but the other is not, there is 'Yugal Suraksha' scheme under which both can jointly get a policy
If one quits the Government service, one can continue by making payment at any one of the 1, 55,000 post offices throughout the country
If the premia are not paid for 6 months in case policy is in currency for 3 years (or) 12 months in case policy is more than 3 years old, then the policy becomes void.
No Home Loan available Revival shall not be allowed on more than two occasions during the
entire term of the policy. One forgets to pay one’s premium in a month, then one can
pay the premium in the subsequent month, by paying a minimum fine of Re. 1/- per hundred of sum assured.
Surrender value depends on the surrender factor and type and term of policy
Financial Planning and Wealth Management 23
Points on PLI
Anyone
Professional opportunity for Chartered Accountants
CAs can also take up this role given their understanding of the benefits of the insurance and client base and interaction
Chartered Accountants advice is much valued upon
Financial Planning and Wealth Management 24
Who can become Insurance Brokers?
Financial Planning and Wealth Management 25
Retirement PlanningAllocation of finances for RetirementNo Government sponsored retirement planNuclear FamiliesUnforeseen Medical expensesEstate Planning The Flexibility to Deal with ChangesSystematic investment every month is a
way to a tension free healthy retirement.
Decide of age for retirement Annual income need for retirement years Current market value of all the savings and
investments Determine a realistic annualized rate of return Consider company pension plan if any Now compute the value required on retirement
Financial Planning and Wealth Management 26
Retirement Planning - Steps
Public Provident Fund (PPF) National Savings Certificate (NSC) Employees Provident Fund (EPF) Mutual Fund Products Insurance Products New Pension Schemes Reverse Mortgage
Financial Planning and Wealth Management 27
Retirement Investment Options
1.Bajaj Allianz – Suvarna Vishranti2.ING Vysya – ING New Best Years3.ICICI Pru – ICICI Pru Forever Life4.HDFC Life – Classic Pension Plan5.Metlife – Met Pension-Par6.Kotak Life – Retirement Income Plan7.SBI Life – Lifelong Pension Plus (NP)
Financial Planning and Wealth Management 28
Traditional Retirement Insurance Schemes
8. Tata AIG – Life Nirvana9. Aviva – Pension Builder10.Sahara Life – Sahara Amar Jeevan11.Bharti Axa – Wonder Years Retirement Plan12.Future Generali – Pension Plus13.Aegon Religare – Pension Plan14.IDBI Federal – Retiresurance Guaranteed
(NP)15.Birla Sunlife – Secure 58 Plan (NP)
Financial Planning and Wealth Management 29
Traditional Retirement Insurance Scheme
Accumulating and Disposing of an estate to maximize the goals of the estate owner.
Distribute wealth to a certain beneficiary or beneficiaries to whomever the owner wishes.
Important to take the help of an attorney experienced in estate law
Financial Planning and Wealth Management 30
Estate Planning
Asset transfer to beneficiaries Tax- effective transfer Planning in case of disabilities Time of distribution can be pre-decided Business succession Selection of Trustee or guardian or the
executor
Financial Planning and Wealth Management 31
Estate Planning Objectives
Steps Listing of assets and liabilities Open family discussion on selecting the guardian Update the current beneficiaries like life insurance Decide upon the distribution of the assets on death Funeral arrangements with spouse and family Assistance of an estate planning authority
Tools Life Insurance Will Trust
Financial Planning and Wealth Management 32
Steps and Tools in Estate Planning
Power of Attorney Wills Title Deed Trust Deed Partition Deed Gift Deed Insurance Papers
Financial Planning and Wealth Management 33
Documentation
Elements of Wealth Management Asset Allocation
Financial Planning and Wealth Management 34
Wealth Management
It is all about weaving an investment net with Equity Fixed Income Deposits Post Office Schemes Gold Commodities Currency
Financial Planning and Wealth Management 35
Investment and Wealth Planning
Derivatives Mutual Funds Exchange Traded Funds Real Estate Alternative Investment Investment Options for Non-Resident Indians
Financial Planning and Wealth Management 36
Investment and Wealth Planning
Financial Planning and Wealth Management 37
The Right Asset Mix
Asset mix is the balance between stocks, bonds and cash, returns and risk level monitor
Stocks - greater growth & greater volatility Gold – the bumper crop Mutual Funds – the fund equalizer EFTs – the norm Real Estate – the cash cow
Financial Planning and Wealth Management 38
Life Stage and Right Asset Mix
Life Stage 1
Cash 0%Stocks
65%Bonds35%
Life Stage 2
Cash 5%Stocks
50%Bonds45%
Life Stage 3
Cash 10%
Stocks 25%
Bonds65%
Financial Planning and Wealth Management 39
Portfolio Management – A Balance
Containing all the asset classes in well balanced proportion.
Example of well balanced portfolio. – Equity 30% – Debt 30% – Gold 10% – Real Estate 30%
Find the best that suits you!
Comprises of – Shares & Stocks
Variety – Blue Chip, Growth Stocks, Income Stocks, Cyclical Stocks, Defensive Stocks, Speculative stocks
Advantage – Greater returns, diversification, liquidity, information, tax benefits, appreciation, dividends, pledge, voting
Regulator – BSE, NSE,
Markets – Primary & Secondary, Online Trading
Investors – Retail Institutional Investors, Non Institutional Investors, Qualified Institutional Buyers
Financial Planning and Wealth Management 40
Asset Allocation - Equity
India is the largest market for gold in the world Total consumer demand in India stood at US$ 44920
million for 12 months ended Q1 2012 International Currency Why invest in Gold??
Diversification Low Liquidity Risk Hedge against Inflation Good Returns Low Credit Risk Safe Haven Investment
Financial Planning and Wealth Management 41
Asset Allocation – Gold
Avenues of Investment1. Jewellery2. Gold Coins3. Gold Bars4. ETF5. Global Mutual Fund6. Gold Fund of Fund7. Gold Derivatives (Futures) through MCX8. E-Gold9. Gold Accumulation Schemes/Savings for Gold
Scheme10.Gold Deposit Scheme
Financial Planning and Wealth Management 42
Asset Allocation – Gold
Types – Government Securities, Public Sector Bonds, Private Sector Bonds
Varieties – Government Guaranteed Bonds, Zero Coupon Bonds, Treasury Bills, STRIPS, PSU Bonds, Commercial Paper, Debentures, Floating Rate Bonds, Inter Corporate Deposits, Certificate of Deposits
Status of Holding – Investors are Creditors to the Issuer
Market – Debt Market (WDM, RDM, G-secs) Types of Trade – Outright Sale or Purchase, Repo Trade Regulator - RBI
Financial Planning and Wealth Management 43
Asset Allocation – Fixed Income
Certificate of Deposit (CD) Commercial Paper (C.P) Inter Bank Participation Certificates (IBPC) Inter Bank term Money Treasury Bills Bill Rediscounting Call/Notice/Term Money
Financial Planning and Wealth Management 44
Money Market Instruments
Are short term borrowings by Corporates, FIs, Primary Dealers (PDs) from Money Market
CP when issued in physical form are negotiable by endorsement and delivery
Issued subject to min 5 lacs and in multiples of 5 lacs thereafter
Maturity 15 days to 1 year Unsecured and backed by the credit of the issuing
company Any private or public sector companies willing to raise
money through the CP market has to meet the following requirements
Financial Planning and Wealth Management 45
Commercial Papers
Classification of bank deposits Savings Bank Account Current Deposit Account Fixed Deposit Account Recurring Deposit Account
Fixed Deposit interest rates in India vary anywhere between 7.00 % to 9.25%
Monitoring maturity dates Policy Changes by RBI
Financial Planning and Wealth Management 46
Private Banking
Post Office Savings Account Post Office Recurring Deposit Account Post Office Monthly Income Accounts National Savings Certificate (VIII Issue) Kisan Vikas Patra Senior Citizen Saving Scheme (SCSS) Public Provident Fund Scheme Deposit Scheme for Retiring Government
Employees Deposit Scheme for Retiring Employees of Public
Sector CompaniesFinancial Planning and Wealth Management 47
Asset Allocation – Post Office Schemes
Minimum investment per financial year in PPF is Rs 500/- and w.e.f 1.12.2011 the maximum limit has been raised to Rs 1 lakh
Not more than one PPF account in one’s name PPF a/c can be extended for any number of
times after the expiry of its tenure of 15 years.
The extensions will be for the block of 5 years. Interest rate in PPF announced every year in
April. Nomination facility is available in PPF PPF has 15 years lock-in but you can get a loan
and also opt for premature withdrawal after a certain period of time.
Financial Planning and Wealth Management 48
PPF – Public Provident Fund
No HUF or association of person is allowed to open PPF a/c.
Non Resident Indian (NRI) cannot open a new Public provident fund account in India.
The PPF scheme is operated through Post Office and Nationalized banks.
Pvt Banks like ICICI bank offers this account. Deposits are exempt from wealth tax. The balance amount in PPF account is not subject
to attachment under any order or decree of court in respect of any debt or liability,
Financial Planning and Wealth Management 49
PPF – Public Provident Fund
Allow a portfolio to improve overall return at the same level of risk
Who should invest? Any investor who wants to take advantage of price movements
A kicker (side card) in the portfolio
Financial Planning and Wealth Management 50
Asset Allocation - Commodities
Commodity market in India clocks a daily average Turnover of Rs 120 – 150 billion (Rs 12,000 – 15,000 crores
Forward Markets Commission Regulates commodity trading
Demand and Supply factor and Inventory drive the commodity market
Financial Planning and Wealth Management 51
Asset Allocation - Commodities
Major Categories of Commodities Traded Industrial Metals Precious Metals: Bullion Agricultural Commodities Energy Commodities
Commodity Spot Market Offers effective method of spot price discovery Processors, end users. exporters, corporate procure
agri produce from here Helps in Futures exchange Promotes grading and standardization in agricultural
produce
Financial Planning and Wealth Management 52
Asset Allocation - Commodities
Commodities are traded in National Spot Exchange (NSEL) NCDEX Spot Exchange (NSPOT)
Commodities Derivative Market A derivative instrument whose value is derived
from the underlying commodity Example: an investor can invest directly in a
steel derivative rather than investing in the shares of Tata Steel
Financial Planning and Wealth Management 53
Asset Allocation - Commodities
Where do I need to go to trade in Commodity Futures? National Commodity and Derivative Exchange
(NCDEX) Multi Commodity Exchange of India Ltd (MCX) National Multi Commodity Exchange of India Ltd
(NMCE) ACE Derivatices and Commodity Exchange (ACE) Indian Commodity Exchange Limited (ICEX)
Financial Planning and Wealth Management 54
Asset Allocation - Commodities
Major categories of commodities one can trade Vegetable Oil Seeds, Oils and Meals Pulses Spices Metals Energy products Vegetables Fibres and Manufactures- Cotton Other – Gaurseed, Guar, Gum and Sugar
Financial Planning and Wealth Management 55
Asset Allocation - Commodities
While trade in international, currencies are national Exchange rate is affected by the suppy and demand
for the country’s currency in the international forex market
Trading in Currency Futures allowed on 3 exchanges Multi Commodity Exchange – Stock Exchange (MCX-
SX) National Stock Exchange (NSE) United Stock Exchange (USE)
Financial Planning and Wealth Management 56
Asset Allocation – Currency
Currency Options are contract that grant the buyer of the option the right and not the obligation to, to buy or sell underlying currency at a specified exchange rate during a specified period of time
USD-INR Option European Call & Put Options
Financial Planning and Wealth Management 57
Asset Allocation – Currency
Financial contracts which derive their value from a spot price called the underlying
Derivative Instruments traded are Futures and Options Derivative Exchange/Segment function as a Self
Regulatory Organization and SEBI Acts as the oversight regulator
Futures contracts, Index Options, Stock options, Stock Futures, Mini Derivative contract on Index, Long tenure Index Option contracts, Volatility Index, Bond Index and Exchange traded Currency Derivatives are permitted by SEBI
Financial Planning and Wealth Management 58
Asset Allocation – Derivatives
Equity Linked Savings Scheme Arbitrage Funds Dynamic Funds Fixed Maturity Plans International Mutual Funds Monthly Income Plans Multi Cap Funds Quant Funds
Financial Planning and Wealth Management 59
Asset Allocation – Mutual Funds
Guidance on Purchase of Property Planning and Budgeting Research Home Loan Safety points in the Home Agreement Home Insurance
Real Estate Investment Includes Agricultural Land Farm Houses Urban Land House Property Commercial Property
Financial Planning and Wealth Management 60
Asset Allocation – Real Estate
Real Estate Investment Options in India Investment in Real Estate Stocks Investment in Property
Financial Planning and Wealth Management 61
Asset Allocation – Real Estate
Durability Heterogeneous High transaction costs Long time delays Both an investment good and consumption
good Immobility
Financial Planning and Wealth Management 62
Unique characteristics of Real Estate
Identifying Your Needs Independent House or Apartment Budget Number of rooms and bathrooms Approximate Area Proximity to work place, school etc Parking availability Water supply, power back up etc Furnished/unfurnished Connectivity Vicinity to market Special amenities such as club house, pools or spas. Available utilities such as cable or DSL, satellite. Sewer, cesspool or septic connections
Financial Planning and Wealth Management 63
Home Buying Tips from Start to Finish
Finance Own funds Loan from Banks/HFCs Funds from your employer Loan against assets Provident Fund Loan
Scouting for property Brokers Newspapers Websites Word of mouth
Financial Planning and Wealth Management 64
Home Buying Tips from Start to Finish
Cost Estimate Purchase Price Stamp duty Registration charges Khata transfer charges Utility Deposits like Water connection deposit, Electricity connection deposit,
etc. Other incidental expenses
Talk to Banks/HFCs
Loan Amount Loan Eligibility Terms and conditions of loan Interest Rate Borrowing costs like processing fee, commitment charges, prepayment
penalty, etc. Loan tenures and EMI Time taken for sanctioning the loan Time taken for disbursing the loan Freebies and corporate offers
Financial Planning and Wealth Management 65
Home Buying Tips from Start to Finish
Short listing Properties• Site or property visit• Speaking to the neighbors or occupants• Clear marketable titles• Credibility of the seller• Quality of the construction• Legal verification• Monthly payouts like maintenance charges, society charges, etc.• Municipal taxes or property taxes
Finalizing the Deal• Negotiate on price and timing of payments ( upfront / installments) Press for price negotiation if there are any modifications /repairs /painting
to be done Do not forget to collect all original property documents from the seller Before paying the seller, make sure he has fulfilled all his commitments and
promises If the transaction involves a broker, withhold some amount of money until
he delivers as promisedFinancial Planning and Wealth Management 66
Home Buying Tips from Start to Finish
Documents required when the property is purchased from a builder An allotment letter from the developer on paying the booking
amount Agreement for Sale
Documents required to be checked if you are buying a resale flat For flats being purchased in a registered co-operative society For flats being purchased in an unregistered society or flats
originally allotted by a Development Authority Check the credentials of your new property
Invitation of Claims Search at the Sub-Registrar's Office Enquiry at Municipal Corporation Enquiry with the Ward office If the owner of the property is deceased
Financial Planning and Wealth Management 67
Home Buying Tips from Start to Finish
Property Documents to be collected from the Seller
In case of a direct purchase from a builder
1. Copy of Agreement for Sale.2. Copy of Registration Receipt. 3. Copies of receipts of payment already made.4. NOC from builders.
In case of direct allotment in a Co-operative Housing Society
1. Allotment letter.2. Share certificate.3. Society registration certificate.4. Copy of sale/lease deed in favour of the society.5. NOC from society
Financial Planning and Wealth Management 68
Home Buying Tips from Start to Finish
In case of direct allotment in a Co-operative Housing Society by Public Agency
1. Allotment letter, Share certificate, Society Registration certificate.2. Lease Agreement.3. Public agency's approved list of members.4. NOC from Public Agency in favour of bank/HFC5. NOC from society.
In case of Public Agency's allotment to individuals
1. Allotment letter from Public Agency.2. Tripartite Agreement between the borrower, Bank/HFC and the
Public Agency in the prescribed format.
In case of resale
1. Copy of all previous vendors' registered documents along with copy of your purchase agreement duly stamped and registered and the registration receipt wherever applicable.
Financial Planning and Wealth Management 69
Home Buying Tips from Start to Finish
Purchase of rentable properties Location Numbers High home prices Low maintenance buildings Ask to see the rental history Owner/Manager out of the country
Financial Planning and Wealth Management 70
Home Buying Tips from Start to Finish
A Buyers/Tenants Checklist Check if Use of Property would amount to Change
of Land Use Check if Non Residential Activity in Residential
Premises Is Permissible Check if the Municipal Guidelines allow Mixed Use Certain Professional Activity permissible in
Residential Areas Check if the Building adheres to the Sanctioned
Plan
Financial Planning and Wealth Management 71
Home Buying Tips from Start to Finish
1. Agreement for Sale of a House2. Agreement for Sale of Mortgaged House3. Agreement To Lease Of Land For Construction Of House4. Agreement for sale of a house when purchase money is to be
paid in installments5. Deed of Conveyance of freehold property6. Deed of Conveyance where consideration is to be paid in
installments7. Deed of Conveyance of Reversion8. Deed of Conveyance Subject to Right of Way9. Deed of Conveyance of an Interest in Property
Financial Planning and Wealth Management 72
List of DocumentsSale and Purchase of House/Building
10. Deed of Conveyance of a Part of the Building11. Sale Deed of Land with Building12. Deed in respect of Leasehold Land13. Deed of a House14. Sale deed by Liquidator in case of Voluntary winding up of a Company15. Sale by Official Liquidator of the company16. Sale of House by an Executor Appointed under Will17. Sale of Property to various Purchasers as Tenants in Commmon18. Sale of Property to various Purchasers in Different Portions19. Statement of Transfer of Immovable Property for Obtaining no-objection
certificate from Appropriate Authority, Income Tax Department Form No 37-I
20. Sale deed
Financial Planning and Wealth Management 73
List of DocumentsSale and Purchase of House/Building
21. Agreement for Sale of Apartment22. Agreement for sale of freehold property23. Agreement for sale of leasehold property24. Agreement for business centre25. Deed of Conveyance subject to mortgage26. Agreement for sale for Purchase of a Plot for
Constructing Flats
Financial Planning and Wealth Management 74
List of DocumentsSale and Purchase of Apartment
27. Development Agreements by Landlords in favour of a Builder
28. Deed of Conveyance of a property exclusive of a flat or floor in the building
29. Agreement to be entered between a Promoter and Purchaser of a Flat
30. Flat ownership Agreement31. Co-ownership Agreement32. Co Sign Agreement
Financial Planning and Wealth Management 75
List of DocumentsSale and Purchase of Apartment
33. Deed of Conveyance by Mortgage34. Deed of Conveyance in favour of Mortgage35. Mortgage deed
Financial Planning and Wealth Management 76
List of DocumentsMortgage
36. Gift Deed37. Gift Of Land Focr Building A Temple38. Gift By Father To His Son Of Land With Mortgage39. Deed Of Gift Of Immovable Property40. Gift Of A House To The Daughter41. Gift Of Property For Specified Purpose42. Gift Of Immovable Property43. Gift Of A Piece Of Land44. Gift Of Property For Hospital45. Gift Of Property To Wife
Financial Planning and Wealth Management 77
List of DocumentsGifts
46. Lease deed47. Lease Deed Of Land48. Lease Of Agricultural Land49. Lease Of A Building For Office50. Deed Of Surrender Of Lease51. Deed Of Renewal Of Lease52. Agreement For Building Lease53. Perpetual Lease Of A Land54. Lease Disguised As Licence55. Sublease Agreement
Financial Planning and Wealth Management 78
List of DocumentsLease
56. Deed of transfer in a co-operative society57. Surrender deed in a Co-operative housing
society58. Agreement for sale of apartment in Co-op.
Society
Financial Planning and Wealth Management 79
List of DocumentsCooperative Society
59. Tenancy Agreement/Rental Agreement60. Tenancy In The Form Of Letter By The
Person Proposing To Take Premises On Rent
Financial Planning and Wealth Management 80
List of DocumentsTenancy
61. Agreement for Transfer of Development Rights62. Package Deal Agreement for Sale of Flats in Bulk to a
Purchaser63. Leave and licence agreement64. Relinquishment Deed65. Family Arrangement66. Deed Of Partition Between Co-Owners67. Deed Of Partition Between Members Of A Joint Hindu
Family 68. General Power of Attorney69. Special Power of Attorney to execute Sale Deed70. Parking Agreement
Financial Planning and Wealth Management 81
List of DocumentsOther Agreements
Financial Planning and Wealth Management 82
List of Applicable Laws in Real Estate
CENTRAL LEGISLATIONS
The Indian Contract Act, 1872 The Majority Act, 1875 The Indian Evidence Act, 1872 The Transfer of Property Act, 1882 The Easement Act, 1882 The limitation Act, 1963 The Indian Stamp Act, 1899 The Registration Act, 1908 The Specific Relief Act, 1963
Financial Planning and Wealth Management 83
List of Applicable Laws in Real Estate
10. The Land Acquisition Act, 189411. The Consumer Protection Act, 1986 12. The Arbitration & Conciliation Act, 1996 13. The Income Tax Act, 196114. The Wealth Tax Act, 195715. The Co-operative Societies Act, 191216. The Multi-State Co-operative Societies Act, 191217. Finance Act in relation to Service Tax18. The Foreign Exchange Management Act, 1999/ Foreign Direct
Investment Guidelines (FDI)19. SEBI norms for Real Estate Mutual Funds20. Competition Act, 2002
Financial Planning and Wealth Management 84
List of Applicable Laws in Real Estate
21. The Land Acquisition, rehabilitation and Resettlement Bill, 2011
22. Special Economic Zone Act, 200523. The Public Premises( Eviction of Unauthorised
Occupants) Act, 197124. The Warehousing ( Development and Regulation) Act,
200725. Indian Succession Act 1925
Private Equity Venture Capital Replacement Capital Buyout Special Situation Risk of investment through PE Role of Stock Market
Financial Planning and Wealth Management 85
Investment Planning – Private Equity
Rare Coins and Paper Currency Stamp Collection Art Antiquities Wine
Financial Planning and Wealth Management 86
Investment Planning – Alternate Investment
Deposit Schemes Investments in Securities and Debt Investment in Mutual Funds Investment in Immovable Assets Investment in Tax saving options
Financial Planning and Wealth Management 87
Investment Options for NRIs
A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.
Financial Planning and Wealth Management 88
FINANCIAL MARKET
Capital Market (Both Stock and Bond Markets)
Commodity Market
Derivative Market
Future Market
Forex Market
Money Market
Insurance Market
Financial Planning and Wealth Management 89
TYPES OF FINANCIAL MARKETS
Financial Planning and Wealth Management 90
Wealth Creator Speculator Hedger Arbitrageur Trader
Financial Planning and Wealth Management 91
Types of Investor
India – Most favored destination for overseas companies
$ 1 trillion economy – Taken 60 yrs Next one trillion will take only 6 years Provides tremendous prosperity amongst
Indians Urgent need for professionals to capture
this rapid growth Huge opportunity for CA’s in this scenario
Financial Planning and Wealth Management 92
India’s Growth Story
Financial Planning and Wealth Management 93
Jargon Of Equity Market
• Security
• Bond
• Stock 1) Common stocks 2) Preferred stocks
• Share
• Mutual funds.
• Par value vs. Market value
• BULLISH vs. BEARISH
Financial Planning and Wealth Management 94
Functioning of Stock MarketFunctioning of Stock Market
•Stock exchanges•Brokers•Registrars•Depositories and their participants •Securities and Exchange Board of India (SEBI) Financial RegulatorsFinancial Regulators
•SEBI•RBI•Ministry of finance
Major source of finance for trade and industry in India
Important external source for meeting funding requirements
Facilitates Transfer of Capital Provides liquidity Transaction price provides a measure of the
value of the asset
Financial Planning and Wealth Management 95
Importance of Capital Market
Financial Planning and Wealth Management 96
Role of Capital Markets
Mobilization of Savings & acceleration of Capital Formation
Promotion of Industrial Growth Raising of long term Capital Ready & Continuous Markets Proper Channelisation of Funds Provision of a variety of Services
Disseminate information efficiently Quick valuation of financial instruments Provide insurance against market risk or
price risk Enable wider participation Provide operational efficiency through - simplified transaction procedure - lowering settlement timings and - lowering transaction costs
Financial Planning and Wealth Management 97
Functions of Capital Market
Screen based Trading through NSE Capital adequacy norms stipulated Dematerialization of Shares - risks of
fraudulent paper eliminated Entry of Foreign Investors Investor awareness programs Rolling settlements Inter-action between banking and
exchangesFinancial Planning and Wealth Management 98
Capital Market – Reforms
Corporatisation of exchange memberships Banning of Badla / ALBM Introduction of Derivative products - Index
/ Stock Futures & Options Reforms/Changes in the margining system STP - electronic contracts Margin Lending Securities Lending
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Reforms – Post 2000
Equity Analyst Media Tracker As an internal control specialist As an taxation expert As an international Accounting Standards
Convergence specialist As an internal auditor
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Role in Capital Market
Investment advisor Profiling and Positioning of the business Formulating Financial Strategy and efficient
capital structure Due Diligence Portfolio Structuring and management Financial Services Marketing
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Role in Capital Market
Market Analysis Auditor Developing capital market
communications Risk management Investment Banker Fund Manager Equity Trader Research Analyst Valuation
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Role in Capital Market
Investment bankers Underwriters Stock exchanges Registrars Depositories Custodians Portfolio managers Mutual funds Primary Dealers / Satellite Dealers Self regulatory organizations
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Internal Audit of Market Intermediaries
Risk Disclosure Documents Contract Notes Internal Audit Report
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Documentation pertaining to Financial Markets
Arbitration - Alternative dispute resolution mechanism provided by stock exchange
Resolving disputes between trading members and their clients in respect of trades done on the exchange
Every exchange - Panel of Arbitrators Option to Choose Arbitrator –
Investors/Broker In case of disagreement - Exchange shall
decide upon the name of arbitrators.
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Arbitration in Financial Markets
Invest only in Fundamentally Strong Companies Read Carefully Follow Life Cycle Investing Invest in IPO Learn to sell Deal with Registered Intermediaries Let not greed make you an easy prey Do not Over-depend on Comfort factors – IPO
Grading Avoid blind decisions based on audited accounts
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Lessons on Wise Investing
Cheap shares are not necessarily worth buying Corporate Governance Awards – still have a thought Be honest Invest and do not speculate Don’t leverage on the market Beware of
Media Advertisements Fixed guaranteed return schemes Grey market premium Sectoral Frenzies Companies where promoters issues shares and warrants to
themselves
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Lessons on Wise Investing
Keep surplus funds in Fixed Deposits for longer duration especially when the interest rates are likely to fall in future
FDs for smaller denominations come handy for immediate cash requirement
Auto sweeps are a great way for fund availability cum savings
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Lessons on Wise Investing
Investor – One who commits money to investment products with the expectation of financial return
Wealth Creator Speculator Hedger Arbitrageur Trader
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Investor Awareness - Investor
Purpose of investment Investment options Investment objectives Care before making investment Market watch after investing Exit at right time
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Basic Awareness
To Raise Capital To Increase Market Exposure To Increase Valuation To Increase Opportunity for Financing To Increase Opportunity for Strategic
Acquisitions Share Liquidity
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Need for Awareness
Market Risk Industry Risk Regulatory Risk Business Risk
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Types of Risks
Portfolio Managers/Wealth Managers / Investment
Advisors (IA) Regulation
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Chartered Accountants Certified Financial Planners Chartered Financial Analyst Management Graduates with specialization in
FinanceProfessional Opportunity for Chartered Accountants Chartered accountants are best suited for this
role given their financial acumen and knowledge in tax and laws
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Who can become Portfolio Managers?
On January 21, 2013 SEBI issued The (Investment Advisors) Regulation 2013
These regulations shall come into force on the 90th day from the date of notification i.e April 20, 2013.
Regulating the activity of Investment Advice Investment Advice – Advice on Investment Products
and Financial Planning Regulation exempts number of intermediaries and
intermediation activities from Registration Consultation on hedging and cash management
services likely to be covered
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Investment Advisors Regulation in India
Registration with SEBI as Investment Advisor (IA)
Subject to fulfillment of certain basic Criteria Minimum educational qualification Affiliation with National Institute of Securities
Market
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Investment Advisors (IA) Registration
Regulation imposes responsibility on IAs Fiduciary responsibility towards client Record keeping Suitability Appropriateness Code of Conduct Disclosures of conflict of interests Segregation of Activities other than investment advisory Payment of Commission
Stock Brokers and Merchant bankers (exempted from IA registration) Are required to comply with provisions relating to
Manner in which clients are to be boarded Investment advice is to be rendered
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Regulation of Investment Advisors
Any member of ICAI, ICSI, ICWAI, Actuarial Society of India or any other professional body as may be specified by the
Board, who provides investment advice to their clients, incidental to his professional service.
Any stock broker or sub-broker registered under SEBI (Stock Broker and Sub-Broker) Regulations, 1992,
Portfolio manager registered under SEBI (Portfolio Managers) Regulations, 1993 or
Merchant banker registered under SEBI (Merchant Bankers) Regulations, 1992, who provides any investment advice to its clients incidental to their primary activity.
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Exemptions
Any fund manager, by whatever name called of a mutual fund, alternative investment fund or any other intermediary or entity registered with the Board;
Any person who provides investment advice exclusively to clients based out of India. Any representative and partner of an investment adviser which is registered under these regulations
Any other person as may be specified by the Board.
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Exemptions
Every applicant shall pay non-refundable application fees of five thousand rupees (Rs. 5,000) along with the application for grant or renewal of certificate of registration.
Applicants which are individuals and firms shall pay a sum of ten thousand rupees (Rs. 10,000) as registration/ renewal fee at the time of grant or renewal of certificate by the Board.
A body corporate shall pay a sum of one lakh rupees (Rs. 1,00,000) as registration/ renewal fee
at the time of grant or renewal of certificate by the Board.
The above fees shall be paid by the applicant within fifteen days (15 days) from the date of receipt of intimation from the Board by a demand draft (DD) in favor of 'Securities and Exchange Board of India' payable at Mumbai or at respective regional or local office.
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Registration Fees
The Applicant for grant of registration as an Investment Adviser under SEBI (Investment Advisers) Regulations, 2013 should make an application to SEBI in Form A
the applicant will receive a reply from SEBI within one month.
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Registration Procedure
In Case of Body Corporates: Net worth of not less than twenty five lakh rupees (Rs. 25, 00,000) “Net Worth" means the aggregate value of paid
up share capital plus free reserves (excluding reserves created out of revaluation) reduced by the aggregate value of accumulated losses, deferred expenditure not written off, including miscellaneous expenses not written off, and capital adequacy requirement for other services offered by the advisers in accordance with the applicable rules and regulations.
In Case of Individuals / Partnership firms: Net tangible assets of value not less than one lakh rupees (Rs. 1, 00,000)
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Capital requirement
Existing investment advisers shall comply with the capital adequacy requirement within one year from the date of commencement of these regulations.
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What about existing investment advisers?
Period of Validity of the Certificate is five years (5 years) from the date of issue.
Renewal of Certificate: Three months before the expiry of the period of validity of the certificate, the Investment adviser may, if he so desires, make an application in FORM-A for grant of renewal of certificate of registration. The renewal application also dealt in the same manner as if investment advisor is applying for the first time.
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Period of Validity
Questions???
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Thank You!!!
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