Personal finanace management personal.ppt

Finance

1. Management of Personal Finance &
Financial Independence
Ajay Deep Wadhwa

2. Personal Finance
•Personal finance is the process of planning
and managing personal financial activities
such as income generation, spending, saving,
investing and protection.
•The process of managing one’s personal
finances can be summarized in a budget
 or
financial plan.

3. Management of personal Finance
•Detail Your Financial Goals
•Flesh Out Your Plan
•Make and Stick to a Budget
•Pay Off Debt
•Don’t Be Afraid to Ask for Advice

4. Financial independence
•Financial independence is the moment when
your investments start paying more than your
expenses.
•Once that happens, you’re “free.”
•Financial independence is all about two
things:
Cutting Cost &
Earning More

5. Financial requirements after retirement
For self and wife –
-Food & Edible items 10000.00
-Medicines and tests 10000.00
-Others 10000.00
Total Monthly requirement 30000.00
-Education of children 10000.00
TMR (Exceptional cases) 40000.00
A retired Coal Indian must have a monthly income
of Rs.30000.00 presently with Rs. 3000.00 to
Rs.5000.00 annual increase.

6. •Usually a retired CIL executive will get around
Rs. 1 crore at the time of retirement.
•He/she needs Rs. 5,00,000.00 which is 5% of
Rs. 1 crore
•Earning 5% per annum is not a very difficult
task.
•Financial discipline is required.

7. Some tips
•Never give your money to children till you and /
or your spouse is alive
•Do not invest your retirement benefits in share
market
•Never invest in schemes promising unusual high
returns
•Do not use Credit Cards etc
•Do not invest in Insurance Policies
•Reinvest the surplus monthly income immeditely

8. Investment options after
retirement

9. Senior Citizens' Saving Scheme
•The scheme is available only to senior citizens or early retirees.
•SCSS can be availed from a post office or a bank by anyone above 60.
•Early retirees can invest in SCSS, provided they do so within one month of receiving
their retirement funds.
•SCSS has a five-year tenure, which can be further extended by three years once the
scheme matures.
 
•Currently, the interest rate in SCSS is 8.6 per cent per annum, payable quarterly and
fully taxable.
• The rates are set each quarter and linked to the G-sec rates with a spread of 100 basis
points.
•Once invested, the rates remain fixed for the entire tenure.
•Currently, SCSS offers the highest post-tax returns among all comparable fixed
income taxable products.
•The upper investment limit is Rs 15 lakh and one may open more than one account.
•The capital invested and the interest payout, which is assured, has sovereign
guarantee.
•What's more, investment in SCSS is eligible for tax benefits under Section 80C
•The scheme also allows premature withdrawals.
 

10. Post Office Monthly Income Scheme
•POMIS is a five-year investment with a maximum
cap of Rs 9 lakh under joint ownership and Rs 4.5
lakh under single ownership.
•The interest rate is set each quarter and is
currently at 7.8 per cent per annum, payable
monthly.
•The investment in POMIS doesn't qualify for any
tax benefit and the interest is fully taxable.
 

11. Bank FD
•A bank fixed deposits (FD) is another popular choice with the
retirees.
•The safety and fixed returns go well with the retirees, and the ease
of operation makes it a reliable avenue.
•However, interest rate over the last few years has been falling.
Currently, it stands at around 7.25 per cent per annum for tenures
ranging from 1-10 years.
•Senior citizens get an extra 0.25-0.5 per cent per annum, depending
on the bank. Few banks offer around 7.75 per cent to seniors on
deposits with longer tenure.
 
•the five-year tax saving bank FD could be a better option. The
investment made here qualifies for Section 80C tax benefit.
 

12. Mutual Funds
•When one retires and there is a likelihood of the non-
earning period extending for another two decades or
more, then investing a portion of the retirement funds
in equity-backed products assumes importance.
•Retirement income (through interest, dividends, etc.)
will be subject to inflation even during the retired
years. Studies have shown that equities deliver higher
inflation-adjusted returns than other assets.
 

13. Portfolio of a retired CIL person
•Senior Citizens' Saving Scheme 15,00,000.00
•POMIS 9,00,000.00
•Cash at Bank 6,00,000.00
•MFs 25,00,000.00
•Bank FDs 45,00,000.00
Total 100,00,000.00

14. Income (provisional)
•Senior Citizens' Saving Scheme 1,14,000.00
•POMIS 40,500.00
•Cash at Bank 40,000.00
•Pension 45,000.00
•Bank FDs 3,25,000.00
Total 5,64,500.00
MF Returns may be reinvested for future. MF
Gives 12 to 15% per annum in long run.

15. Thanks a lot.