A Journey Towards Financial Wellness.pptx

A Journey towards financial wellness

1. Financial Planning FINANCIAL NEEDS IN LIFE

2. WHY WOMEN SHOULD SAVE MORE Nearly 74 Million Single Women Present In India ( Unmarried, Seperated , Divorced or Widowed- Source-2011 Census, Latest Figures Unavailable But Likely to Be Higher 39% Increase In Single Women from 2001 to 2011 ( Source-2011 Census Data ) Gender Pay Disparity of 20% ( Source : Monster Salary Index, 2018 ) Median Gross Hourly Salary is INR 184.8 v/s INR 231 for men ( Source : MSI, 2018 ) India Ranked 108 on the World’s Economic Forum’s Gender Gap Report 2017. 10% income to be saved means almost INR 10000 lesser savings per annum for women Women might work for lesser years as they usually take time off for child care. As a resultant, post-sabbatical salaries are lesser This is also an impediment in retiral fund savings ( EPF , as a direct % of Basic Salaries )

3. WHY WOMEN SHOULD SAVE MORE Higher Life Expectancy : 69.9 years at birth vis-à-vis 66.9 years for men, at birth. At the age of retirement ( 60 ), female life expectancy today is 78.6 years vis-à-vis 77.2 years for men Unfortunately, 27.4% of women depend upon parents or spouses for “ Family Savings” Retirement Corpus, thus needs to be higher for women. Instead of 10% of income, 20-25% of income should be saved Temptation to spend in initial years can prove to be a deterrent in saving in early career stages.

4. 5 PRUDENT STEPS TO BE FOLLOWED SAVE MORE INVEST BETTER SECURE HEALTH INSURANCE AT A VERY EARLY AGE BARGAIN BETTER AT WORKPLACE WORK LONGER ALTERNATIVE CAREER OPTIONS POST RETIREMENT We would now discuss practical examples on all of the above.

5. We have to take many Financial Decisions in our life Good Decisions and Prompt actions can get us “More” for “Less” Which are the prudent savings instruments ? Let us see how we could took good and Prudent financial decisions… Disclaimer : Debt Products Returns are revised regularly by Govt , Equity Products returns are subject to market risk

6. (not exhaustive list) Emergencies Decision : Save 6 Months’ Expenses for any emergencies that might occur anytime in life. The investments need to be made in :- Liquid Mutual Funds Bank Fixed Deposits Bank Recurring Deposits Investment Products Recurring Deposits Fixed Deposits Debt Mutual Funds Public Provident Fund/ Sukanya Samridhi Yojana National Pension system (NPS) Mutual Funds Equities Gold Real Estate Many Options- Each Option Needs To Be Evaluated. Insurance Products Life Insurance Accident Insurance Motor Insurance Health Insurance Theft Insurance Critical Insurance Travel Insurance No Compromise on Sum Assured – TERM PLAN is Recommended, for Sum Assured = Current Net Annual Income * No. Of Years To Retire Loan Products Home Loan Education Loan Car Loan Personal Loan Only Home loan and Education Loan required – EMI to be limited to 25% of Monthly Income Tools for financial Planning Disclaimer : Debt Products Returns are revised regularly by Govt , Equity Products returns are subject to market risk

7. Understanding Investment Products Bank Recurring Deposits Bank Fixed Deposits Liquid Mutual Funds Debt Mutual Funds Gilt Funds Fixed Maturity Plans Corporate Bond Funds EPF and VPF PPF and SSY National Pension System (NPS) Equity / Balanced / Hybrid / Sectoral / Thematic / Index / ETF / Gold ETF Value Funds / Contra Funds Direct Equity Investment Gold Real Estate What Products do we need and how much to invest in each? Disclaimer : Debt Products Returns are revised regularly by Govt , Equity Products returns are subject to market risk

8. Purpose is more important than the Product Successful investors start with the purpose first Disclaimer : Debt Products Returns are revised regularly by Govt , Equity Products returns are subject to market risk

9. Investment Purpose Short Term – Home Renovation, Gadgets , School Fees etc . Mid Term – Car/Bike, International Family Vacation etc. Long Term – Home, Retirement, Children’s Education, Children’s Marriage etc. Invest As Per Purpose

10. Short Term – Less than 1 year Bank Recurring Deposits - Zero Risk : Low Return ? Bank Fixed Deposits – Zero Risk : Low Return ? Liquid Mutual Funds : Low Risk – Comparatively Slightly Higher Returns as compared to Recurring Deposits or Fixed Deposits Disclaimer : Debt Products Returns are revised regularly by Govt , Equity Products returns are subject to market risk

11. Medium Term : 1 year – 5 years 5 –Year Tax-Saver Bank Fixed Deposits Corporate Bond Funds Debt Funds Gilt Funds Fixed Maturity Plans Disclaimer : Debt Products Returns are revised regularly by Govt , Equity Products returns are subject to market risk

12. Suitable for Long-Term Needs EPF & VPF PPF & SSY NPS Equity Mutual Funds / Balanced / Hybrid Mutual Funds ( As Per Age And Risk Appetite ) Sectoral / Thematic Funds Index Funds / ETF / Golf Exchange Traded Funds Value Funds / Contra Funds Direct Equity Investments Gold and Other Metals Real Estate Disclaimer : Debt Products Returns are revised regularly by Govt , Equity Products returns are subject to market risk

13. Long Term Monthly income after retirement

14. Destination: Financial Success The journey will be easier with a “road map.” A Financial Plan YOUR FINANCIAL JOURNEY Invest Before You Spend In Case You Spend First, There Would Be Nothing Left to Invest or Save.

15. TIME VALUE OF MONEY

16. Wealth Creation LONG-TERM HORIZON

17. The sooner you start, makes a difference Name Amount invested (per month) Assumed Rate of return (per year) Period of investment (years) Final value Manisha Rs. 5,000 12% 30 Rs. 174.75 lacs Bhawna Rs. 5,000 12% 25 Rs. 93.94 lacs Priyanka Rs. 5,000 12% 20 Rs. 49.46 lacs For illustration purpose LONG-TERM HORIZON Investment Instrument Assumed to be yielding 12% per annum returns, no assurances or guarantees.

18. Name Amount invested (per month) Rate of return (per year) Period of investment (years) Final value Manisha Rs. 5,000 12% 30 Rs. 174.75 lacs Bhawna Rs. 5,000 12% 25 Rs. 93.94 lacs Priyanka Rs. 5,000 12% 20 Rs. 49.46 lacs Manisha : After First Pay Cheque For illustration purpose The sooner you start, makes a difference EARLY START Investment Instrument Assumed to be yielding 12% per annum returns, no assurances or guarantees.

19. Name Amount invested (per month) Rate of return (per year) Period of investment (years) Final value Manisha Rs. 5,000 12% 30 Rs. 174.75 lacs Bhawna Rs. 5,000 12% 25 Rs. 93.94 lacs Priyanka Rs. 5,000 12% 20 Rs. 49.46 lacs Bhawna : After getting married For illustration purpose The sooner you start, makes a difference EARLY START Investment Instrument Assumed to be yielding 12% per annum returns, no assurances or guarantees.

20. Name Amount invested (per month) Rate of return (per year) Period of investment (years) Final value Manisha Rs. 5,000 12% 30 Rs. 174.75 lacs Bhawna Rs. 5,000 12% 25 Rs. 93.94 lacs Priyanka Rs. 5,000 12% 20 Rs. 49.46 lacs Priyanka : After First Child For illustration purpose The sooner you start, makes a difference EARLY START Investment Instrument Assumed to be yielding 12% per annum returns, no assurances or guarantees

21. You also need money to fight an invisible evil “I” INFLATION INFLATION AND HOW TO COUNTER

22. Rs. 172304 will be required to match lifestyle at Rs. 30000 today For illustration purpose INFLATION AND HOW TO COUNTER Above Figures are assumed annual figures for inflation

23. * Calculating as per the annual Health care inflation 10.7% Rs. 1.53 Crores Rs. 55.3 lacs Rs. 20.0 lacs Rs. 1.15 Crores Rs. 41.5 lacs Rs. 15.0 lacs Rs. 23 lacs Rs. 8.3 lacs Rs. 3.0 lacs Rs.7.64 lacs Rs. 2.77 lacs Rs. 1.0 lac Year 2020 Year 2010 Year 2000 For illustration purpose INFLATION AND HOW TO COUNTER COST OF MINOR OR MAJOR SURGERIES : HEALTHCARE IN INDIA Source : KPMG Research, Jan 2018

24. YEAR 2010 YEAR 2020 MBA MBBS Engineer MBA MBBS Engineer MBA MBBS Engineer YEAR 2000 2.5 LACS 4.5 LACS 1.5 LACS 6.5 LACS 12 LACS 4 LACS 12.5 LACS 24 LACS 8 LACS For illustration purpose INFLATION AND HOW TO COUNTER COST OF PROFESSIONAL EDUCATION IN INDIA Source : KPMG Research, Jan 2018 * Calculating as per the annual Education inflation 5.9%

25. . Rs. 1.34 crores Rs. 51.9 lacs Rs. 20.0 lacs Rs. 67.3 lacs Rs. 25.9 lacs Rs. 10.0 lacs Rs. 33.6 lacs Rs. 13.0 lacs Rs. 5.0 lacs Rs. 13.5 lacs Rs. 5.2 lacs Rs. 2.0 lacs Year 2020 Year 2010 Year 2000 * At an average marriage annual inflation of 10% p.a . For illustration purpose INFLATION AND HOW TO COUNTER MARRIAGE EXPENSES IN INDIA Source : KPMG Research, Jan 2018

26. Most of us have only one source of income; one inheritance. We need to ensure that what flows into our hands does not flow out so easily

27. How much Pension? PENSION REQUIRED FOR COUPLES RETIRING 20 YEARS FROM NOW : Average Above INR 1 LAKH MONTHLY

28. Rule of 72 Most Important Money Formula 72 --------- = No of years taken to double money Return E.G if Return is 8% - Money will double in 9 years

29. Power of Compounding 20 17 100000 2025 200000 20 33 400000 20 41 800000 20 17 100000 20 23 200000 2029 400000 2035 800000 2041 1600000 Return on Investment – 9% Years taken to double – 8 years What happens to Rs.1 lakh investment In 24 years Return on Investment – 12% Years taken to double – 6 years What happens to Rs 1 lakh investment In 24 years The example provided above is only for illustration purpose, it does not represent any real investment products. The purpose of this illustration is to highlight the fact that even a small difference in Interest can make an impact

30. Selecting Investment Products Short Term (Less than 1 year) Bank FD’s & RD’s Liquid Mutual Funds Medium Term (1-5 Years) Debt Mutual Funds Fixed Maturity Plans Long Term (5years+) Equity / Balanced Mutual Funds Index / Balanced / Sectoral Funds NPS PPF/SSY EPF / VPF

31. 5 Actions for Financially Happy family Save for 6 months expenses in case of any financial emergencies that may occur anytime. Current Net Annual Income* No. of Years To Retire= Minimum Life Insurance Sum Assured in TERM PLANS is recommended. Save as much tax as possible through deductions provided under the Income Tax Act, 1961. Do not prepay home loan, but keep home loan EMI to 25% of Family Monthly Income Invest in 4 buckets – Short term (Keep 6 months income in this bucket), Mid Term Bucket (Planned Expenses for 5 years), Long Term (Anything available after meeting short term and mid term, for Children’s Education, Children’s Marriage, Retirement, Home etc.), Emergencies ( 6 months expenses to be saved for any exigency or emergency ) Simple Financial Plan

32. Good Physical Wellness requires 20 Min Exercise and Right Diet FINANCIAL WELLNESS REQUIRES DISCIPLINE IN REGULAR SAVINGS OR INVESTMENTS. DISCIPLINE IN INVESTING

33. Emotions Lack of Self Control Procrastination – Farther the goal, more the procrastination Loss Aversion – Rs.10 loss gives more pain than pleasure from Rs.100 gain

34. Risk Tolerance Risk Capacity Risk requirement How much Risk you PREFER to take (Psychology) How much Risk you can AFFORD to take (Financial) How much Risk you NEED to take (Financial) RISK AND RETURNS

35. RISK TOLERANCE

36. This is what Asset Allocation is all about! You need to choose a mix that suits your needs and risk taking capacity For illustration purpose A MIX IS ESSENTIAL ! Asset Allocation shown above is indicative and for explanation purpose, not a rule

37. MUTUAL FUND Pool their money Fund Managers Investment Strategy Risk Assessment Deployment of funds Potential Returns to investors INVESTORS COMPLETE TRANSPARENCY THE INVESTMENT PROCESS

38. Liquidity, except in case of ELSS Convenience Risk Diversification Flexibility Transparency Regulated Tax benefits Plus Most open ended funds redeem within 1 working day. Easy to invest and easy to redeem Diversified portfolio leads to risk control Most Funds allowing switching between funds. From debt to equity etc. Disclosure of Portfolio NAV declared daily Mutual Funds are regulated by SEBI. Tax benefits Capital Gains Tax-free Dividends MF’S OFFER……..

39. Equity Schemes Hybrid Schemes Debt Schemes Usually for Long Term Medium - Long Term Mostly short – medium term How do I differentiate amongst schemes?

40. Money market funds Gilt funds Debt funds Balanced funds Equity funds Fund Type Risk Level Types of Funds and Risk Level LOWER LOW MEDIUM HIGH HIGHER

41. The Systematic Investment Plan ( SIP ) Way

42. Affordable MUTUAL FUNDS MUTUAL FUNDS ARE AFFORDABLE

43. Disciplined MUTUAL FUND INVESTMENTS CAN BE DONE IN A REGULAR AND DISCIPLINED MANNER MUTUAL FUNDS

44. Convenient MUTUAL FUNDS MUTUAL FUNDS ARE CONVENIENT IN TERMS OF “ EASE OF INVESTING “

45. Average out the cost of buying May Money Spent Price Quantity Bought Kashmir Rs . 600/- Rs . 600/ dozen 1 dozen Ratnagiri Rs . 600/- Rs . 300 / dozen 2 dozens Bangalore Rs. 600/- Rs .1200 / dozen ½ dozen Kolkata Rs . 600/- Rs. 150 / dozen 4 dozens Total Rs. 2400/- 7.5 dozens The average price of 1 dozen Mangoes is now is Rs. 320/-. If you had bought it at the beginning only in Kashmir, it would have cost you Rs. 600/- Similarly, SIP ensures Rupee Cost Averaging, averaging out the NAV on purchase with different NAV’s received as per market price on that day, for each month. Also investing in multiple mutual funds could give you an even higher advantage due to diversification. For illustration purpose Mutual Funds are subject to market risk

46. How to invest in Mutual Funds Step 1 Identify your investment needs 1. What are my investment objectives and needs? 2. How much risk am I willing to take? 3. What are my cash flow requirements? Step 2 Choose the right mutual fund as per your Risk Profiler Select the right Mix Conservative, Moderate, or Aggressive Mix. Select a Mutual Fund as per your Risk Profile and Targeted Goal. Step 3 Select the ideal mix of schemes Investing in just 1 scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals. SIP is the way, “One SIP for One Goal”

47. The Key to Successful Investing! S tart Early I nvest Regularly P lan Smartly Invest for the Long Term MANTRAS….. Remember these Mantras...

48. Understanding Tax Benefits HRA : Keep Actual Rent closer to 40 % of Basic Salary : Sec 10 ( 13 A ) [ Non-Metros ] Standard Allowance : W.e.f. 1.4.2019, salaried employees are allowed a standard deduction of INR 50000 per annum LTA : Claim it as reimbursement : Sec 10 ( 5 ) with Rule 2B 80 C : EPF/Home Loan Principal/Tax Saving Mutual funds are the best options for this Section, Tax Saving Limit of INR 150000 80CCD 1(b ) : NPS – Do not skip if your salary is more than 5 lakhs p.a , Tax-Saving Limit of INR 50000 Atal Pension Yojana is also a good tool 80CCD 2(b) : NPS Through Monthly Salary Deduction By Employer, Tax-Saving Limit is Minimum of INR 150000 or 10% of Basic Salary 80D : Mediclaim / Health Insurance 80 E : Unlimited Education Loan interest Sec 24 1 ( b) : Home Loan Interest : 3.50 Lakhs benefit can be availed : loans availed after 31.3.19 Sec 80G : Donations upto 100000 in a financial year Sec 80TTA : Save tax on upto 10000 Savings A/c Interest every year Sec 80DD / 80U : Save tax on dependent’s or self’s disability, upto 75000 / 125000 Sec 80EE : Upto INR 55000 Tax-Saving for First-Time Property Buyers . Sec 57 ( ii a ) : Upto INR 15000, or 1/3 rd of Family Pension Received, Whichever is Lesser HUF : Save Additional Tax by formation of Hindu Undivided Family

49. Disclaimer The information provided in this presentation is solely for creating awareness and educating investors / potential investors about Mutual Fund Schemes and for their general understanding and should not be construed as investment advice. Any calculations made are approximations, meant as guidelines only, which you must confirm before relying on them. The document does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information / data herein alone are not sufficient and should not be used for the development or implementation of an investment strategy. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in future. Neither the sponsoring AMC nor MENTORING MATTERS,nor any person connected with them, accepts any liability arising from the use of this document. The recipient(s) before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone by fully responsible / liable for any decision taken on the basis of information contained herein. MUTUAL FUNDS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. MENTORING MATTERS An Investor Education Initiative

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