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An initiative of SEBI & NISM
Financial education for middle income investors
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AgendaImportance of learning about money
What is financial planning SMART goals Understanding net worth Protecting wealth
Concepts of budgeting & saving Investment Some dos and donts
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moneyEnables us to take informed decisions aboutImportance of learning about money
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Overspending Greed and fear Emotion driven Peer advice
Investment, insurance or tax planning?
Money matters: What is wrong?
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WHAT IS FINANCIALPLANNING?
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Review periodically
Implement the plan
Prepare a plan to bridge the gaps
Identify gaps
Identify goals and risk appetite
Gather financial data
The financial planning process
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Regularreview
Financial
freedom
Soundfinancial
plan
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o They are what you want to achieve
o Goals are statements about where we want toend up
What is a Goal?
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o No, Most of our Goals are not achieved Are all goals achieved
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Convert them in to SMART goalsThey need to be clearly definedThe goals seem to be vagueAre these goals clearly defined ?
What prevents you?
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Let us restate /revise your goals
1. __________________2. __________________3. __________________4. __________________5. __________________
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4. Generate Surplus to Invest3. Manage Regular Expenses2. Protect Current Networth
1. Understand Current Networth
Steps to Achieve Goals
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Exercise: Mr. Dipak Shahs family
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LiabilitiesAssets or possessions?Assets
Calculating your net worth
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value of your assetschange every day, depending on theRemember, your net worth can
So, What is your net worth today ?
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assets and liabilitiesNet worth is the difference between yourNet worth is your wealthRemember once again:
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Savings / spendingsChange in liabilitiesChange in value of assetsChange in net worth
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Home Vehicles
Liability
Life Health Liability
Property
Personal risksProtecting your wealth
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Protecting the net worth to ensure that our networth is not eroded
Understanding net worthSteps to Achieve GoalsImportance of Setting Goals
Quick Recap
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BUDGETING
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spenthow money comes in and where it is
Budget enables you to become aware of
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Generating surplus for investments / savings Managing regular and irregular expenses
Importance of budgeting
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MAKING A BUDGET
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expenses.If not, have a serious look at some of theEnsure there is a surplusCheck out of budget expenses
Stick to the budget
Prepare the budgetMantras for success
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INVESTING THEMONEY
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SURPLUS INVESTMENT
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answerdotted line till you get satisfactory
In case of doubt, ask. Do not sign the
Understand the fundamentalsexperts
Do your own homework or hire wise Diversify your investments
Understand the power of compoundingInvestment mantras
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much money you will have at the end of 10years?
which gives you interest at 8% per year, how If you save Rs 1000 a year for 10 years at a bank
Understand power of compounding
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Rs. 14,487
10
accumulatedWealth
No. of years
8%
Rs. 1,000
year)Rate of return (per
Saving per year
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it will be ? If you save similar amount for 20 Years how much
much money you will have at the end of 10years?
which gives you interest at 8% per year, how If you save Rs 1000 a year for 10 years at a bankUnderstand power of compounding
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20
Rs. 14,487
10
accumulatedWealth
No. of years
8%
Rs. 1,000
8%
Rs. 1,000
year)Rate of return (per
Saving per year
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Rs. 45,762
20
Rs. 14,487
10
accumulatedWealth
No. of years
8%
Rs. 1,000
8%
Rs. 1,000
year)Rate of return (per
Saving per year
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and 20 Year investment so much ? Why is the difference between 10 Year investment What do we understand from this ?Understand power of compounding
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How does it impact us?
What is inflation?Remember inflation
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Invest regularlyStart today
Have a goal
Steps to Wealth Creation
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intermediaries. Only invest in regulated options through regulated Know the costs Learn Basics skills of Money Management Do your own research about the product before you buy, Do reference check of the advisors Identify a trusted advisor Do not get carried away by the commission agent promises Do not believe if someone promises high returns.
Be Careful before investing
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All you need is self discipline in yourspending and investing habits
Creating wealth is not difficult.
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THANK YOU!
