Private & Confidential

Personal Financial Plan

Prepared For:

Mr. Rohan Mehta

Prepared By:

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Mr. Harsh Roongta

CEO

This is a sample financial plan only and the names are fictitious.

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12th March' 2012

Dear Mr. Rohan, We would like to thank you for choosing our financial planning services. The enclosed plan formalizes our recent discussions on the investment of your available capital, allocation of surplus cash flows and reallocation of some of your existing portfolio. Our objective is to accurately assess your financial needs and to provide quality recommendations and ongoing services in accordance with those needs. The plan is based on the information provided by you on your current circumstances and objectives. Please read the plan carefully to check for accuracy of the information provided. This plan is an important document, in accordance with the best standards of the profession. However, it needs to be regularly reviewed and updated in response to changes in your own circumstances and other factors, such as pension regulation, taxation and market movements. Please feel free to contact us if you have any queries. We look forward to reviewing and implementing these recommendations with you. Yours sincerely, Pankaaj Maalde, CFPCM Head - Financial Planning

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Executive Summary:
The main body of this report describes details of your present situation, your life's objectives and strategy to meet these objectives.
Rohan Mehta Age: 30

Associated As Software Executive at TCS

- Health History: Good

Details of family members:

Name Ms. Neha Mr. Karan Relationship Spouse Son Age 27 1 Financially Dependant Yes Yes

Goals and Objectives:

Retirement Planning: You would like to provide a corpus for your retirement at the age of 60 years. You would like to maintain the same standard of living, which you are living at present.

Child's Education Planning: You would like to provide for the higher education expenses for your son when he reaches the age of 21 years.

Child's Marriage Planning: You would like to provide for marriage of your son when he reaches the age of 26 years.

Dream Vacation: You would also like to plan for a dream vacation with your family after 7 years which will cost you Rs.2.50 lakhs today.

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Income-Expense Statement
As per the information provided by you, the following are the Cash Inflows and outflows for the current year:

Cash Flow Statement

Current
Particulars Net Take Home Salary Total Inflows Household Expenses Loan EMI's Home Loan Insurance Premium Life Insurance Health Insurance Total Outflows Savings Actual Investments Surplus Monthly 50,000 50,000 22,500 13,500 13,500 6,917 6,250 667 42,917 7,083 6,200 883 Annual 600,000 600,000 270,000 162,000 162,000 83,000 75,000 8,000 515,000 85,000 74,400 10,600

Recommended
Monthly 50,000 50,000 22,500 8,300 8,300 3,117 583 2,533 33,917 16,083 11,700 783 Annual 600,000 600,000 270,000 99,600 99,600 37,400 7,000 30,400 407,000 193,000 1,83,600 9,400

Current Cashflow
13%

Recommended Cashflow
30%

14% 46%

Household Expenses Loan EMI's Insurance Prem ium Actual Investm ents

44%

Household Expenses Loan EMI's Insurance Prem ium Actual Investm ents

6% 20%

27%

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Net Worth Statement

Assets
Particulars Personal Assets Residential Property Jewellery Investment Assets Cash & Equivalents Cash in hand Savings Bank Debt & Equivalents Fixed Deposits / Certificate of Deposits PPF EPF Insurance - Surrender Value Equity & Equivalents Direct Equity Equity Oriented Mutual Funds Total Assets Rohan Mehta 53,00,000 50,00,000 3,00,000 8,40,000 40,000 5,000 35,000 5,50,000 1,25,000 2,50,000 1,00,000 75,000 2,50,000 1,00,000 1,50,000 6,140,000

Liabilities
Type Home Loan Total Interest Rate % 12 EMI 13,500 13,500 Outstanding Balance 7,50,000 1,200,000

Net Worth
Total Assets (investment assets) Total Liabilities Your Net Worth 8,40,000 7,50,000 90,000

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Asset Allocation
Investment Avenue Cash & Equivalents Debt & Equivalents Equity & Equivalents Gold & Other Metals Current Allocation 5.00% 63.00% 32.00% 00.00% Recommended Allocation 05.00% 30.00% 60.00% 05.00%

Recommended Asset Allocation

5% 5%

Cash & Equivalents Debt &

30% Equivalents
Equity & Equivalents

60%
Gold & Other Metals

? Equity and debt, both, have an important role to play in your asset allocation.

Equity can provide superior inflation adjusted returns over the long term and debt protects your capital while growing.
? Self-occupied residential property and Personal Jewelry are not treated as your

investment assets.
? Gold Investment works as a hedge against inflation and provides safety in bad

economic and political conditions.

? Real estate investment provides you a fixed income, potential for capital

appreciation and also helps in diversification of your portfolio. However, it is highly capital intensive and most illiquid asset class.
? It is advisable to review and rebalance your investment portfolio periodically.

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Contingency Fund
Current Monthly Expenses Contingency Period (Months) Contingency Funding (Required) 37,700 6 226,200

Contingency Funding
240,000

226,200

13,800 Contingency Funding (Required) Available Resources Excess

Current Contingency Funds Investment Assets Utilized Cash in hand Savings Bank Fixed Deposit Insurance Surrender Value Total Current Value 5,000 35000 125000 75000 240000

? You should keep aside at least 6 months expenses to be used only in

emergencies such as job loss.

? Invest in liquid funds or savings cum fixed deposit accounts. ? Maintain discipline. Do not use except incase of emergencies.

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Loan Planning
Particulars Loan Outstanding EMI Rate of Interest Savings in EMI Current Rs. 7,50,000 Rs. 13,500 12.00% Rs. 5,200 Recommended Rs. 7,50,000 Rs. 8,300 10.50%

? Transfer the loan to another lender at prevailing rate i.e. 10.50% ? No pre-payment charges are payable on Floating rate loans.

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Life Insurance
Adequate Life insurance is a must to make sure your familys life style is not affected if you die early. Insurance Need Analysis: Looking at your present age, income, life style and life goals and also taking into consideration your assets and liabilities, your life insurance need is calculated as under:

Insurance Need Analysis

7,915,052 7,150,052

765,000

Total Life Insurance Required

Total Assets

Insurance Cover Required

Analysis of current Policies and Recommendations:

? You have bought two traditional plans from LIC and are paying Rs.75,000 p.a. for a

risk cover of Rs.10 lakhs.

? Taking into account various factors like present surrender value, maturity value and

premiums to be paid till maturity we advise you to surrender these policies as IRR of these plans will not beat inflation.
? Your wife is a homemaker and does not require life insurance. ? Buy Avia I-life Plan, an online term plan of Rs.75 lakhs for a term of 30 years,

which will cost you Rs.7,000 p.a.

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General Insurance
This section covers analysis of your current General Insurance policies, Need Analysis of the Client and our recommendations. Needs Analysis Health Insurance (Mediclaim):
A serious illness could be catastrophic to your financial well being therefore, it is imperative you have adequate medical insurance coverage. Current New India Assurance Sum Assured Premium Type Members 3 Lakhs 8000 Floater Self+Spouse+Child Recommended Apollo Easy Health Standard 3 Lakhs 10200 Individual Self+Spouse+Child (Separate Policies) Apollo Optima Plus 5Lakhs 3200 Individual Self+Spouse+Child (Separate Policies)

? Your family floater health insurance is bought from New India Assurance Co. Ltd.

has room rent sub-limit of 1% of sum assured. For impact of sub limit in room rent please read this article, http://india.apnapaisa.com/blog/health-insurance/watchout-room-rent-sub-limit-can-really-limit-your-health-insurance-claims/
? Disability Insurance pays a lump sum in the event of suffering from a debilitating

disease such as cancer, stroke, organ failure or disability arising from an accident.
? You should take an accident insurance policy covering disability for Rs.50 lakhs

and a critical illness policy for Rs. 30 lakhs for yourself. Both these policies put together will cost you around Rs. 17,000 per year.

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Investment Planning
Analysis of Current Investment:
Direct Equity Investment:
? Direct investment in equity is not advised, as it requires

depth research.
? Invest money in good mutual fund schemes. ? Sell your equity investments and reinvest in Mutual Fund

schemes as recommended.

Mutual Fund Investment: Recommendation:

S.No. Name of the Scheme 1 2. BIRLA MID - CAP FUND - DIVIDEND DSP BLACKROCK Small & MID cap Fund - Regular Plan - Growth ICICI Prudential Infrastructure Fund - Growth 50,000 Current Value 70,000 Recommendation Redeem & Switch to DSP BR Top 100 Equity Fund Redeem & Switch to DSP BR Top 100 Equity Fund Redeem & Switch to DSP BR Top 100 Equity Fund Karans Education Allocated to Goal Karans Education

3.

30,000

Karans Education

? Instead of investing in sectoral or thematic funds, invest in well-diversified funds, which

invest in stocks of many sectors, which give good diversification across sectors. Hence, we recommend switching as above.
? We suggest

you to keep all your Mutual Fund units under Growth option and in recommended Mutual Fund Portfolio. existing investments have been allocated towards your all major goals.

? All your

? Equity schemes of mutual fund invest around 90-100% in shares of listed

companies and the balance 0-10% in highly rated debt instruments.

? Balanced mutual fund schemes invest around 70-80% in shares of listed

companies and the balance 20-30% in highly rated debt instruments. They provide an ideal mix of safety (debt instruments) and growth (equity).
? We suggest you to have a periodical review process to monitor your portfolio and

rebalance your portfolio as per your asset allocation.

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Retirement Planning
You would like to provide a corpus for your retirement at the age of 60 years. You would like to maintain the same standard of living, which you are living at present.
Retirement Analysis
72,349,647

330,000 Current Annual Expenses

3,320,677 Annual expenses at Retirement Age Corpus required for Retirement

Investment Assets Utilized P.P.F E.P.F. Total Investment Utilized

Current Value 2,50,000 1,00,000 3,50,000

Term 30 30

Expected Rate of Return 8% 8%

Future Value 25,15,000 1,19,71,000 1,44,86,000

? We have allocated your present E.P.F. and P.P.F. to this goal. ? You are advised to start a fresh investment of Rs.9,900 in ratio of 90% in

equity fund and 10% in debt.

? Invest Rs. 8,900 in HDFC TOP 200. Invest balance Rs.1,000 in either PPF or

in SBI Gold Fund.

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Education Planning
You would like to plan for your son's higher education and would like to provide a sum of Rs. 4.50 lakhs in present value for this goal.
Education Planning
2,400,000

650,000

Current Value

Future Value

Need analysis & funding:

Particulars Current Age Goal Age (Graduation) Years For Goal Expected Rate of Return Inflation Current Value Future Value Required Lump sum Funding Karan 1 18 17 Yrs 14.30% 8% 6,50,000 24,00,000 2,48,000

Assets to be used for Karan's Education corpus

Investment Assets Utilized Direct Equity Sale Proceeds Equity Mutual Fund Total Current Value 1,00,000 1,50,000 Term 17 17 Expected Rate of Return 14.30% 14.30% Future Value 9,70,000 14,55,000

24,25,000

? Sell your existing equity shares and transfer to Franklin India Blue Chip Fund.
? Sell your

existing equity mutual funds, and shift to DSP BR Top 100 Equity Fund.

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Marriage Planning
You would like to plan for your son's marriage at the age of 26 years and provide a sum of Rs. 7.50 lakhs in present value for this goal

Marriage Planning
5,100,000

750,000

Current Value

Future Value

Need analysis & funding:

Particulars Current Age Marriage Age Years till goal Expected Rate of Return Current Value Future Value Required Monthly Funding Karan 1 26 25 14.30% 7,50,000 51,00,000 1,800

? Start fresh SIP of Rs.1,800 per month in the ratio of 90:10 in ICICI Pru

Dynamic Fund and SBI Gold Fund respectively. Such allocation of equity and gold is assumed to give return of 14.30% per annum.

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Dream Vacation
You would also like to go for dream vacation with your family in 2019 i.e. after 7 years and would like to spend Rs.2.50 lakhs in present terms. Current Value Inflation Current Age Goal required at age Future Value Investment Rate of Return Monthly Investment Required 2,50,000 10% 30 37 4,87,000 12.90% 3,600

Recommendation
? Start a fresh SIP of Rs. 3,600 per month in HDFC Prudence Fund.

Estate Planning
? We strongly recommend making a Will

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Asset Re-allocation
Investment Assets Cash in Hand Savings Bank Fixed Deposits PPF EPF Insurance - Surrender Value Direct Equity Equity/Balanced Mutual Fund Total Assets Existing Assets 5,000/35,000/1,25,000/2,50,000/1,00,000/75,000/1,00,000/1,50,000/2,50,000/1,00,000/75,000/1,00,000/1,50,000/Retirement Contingency Fund 5,000/35,000/1,25,000/Childrens Education

8,40,000/-

3,50,000/-

2,40,000/-

2,50,000/-

Plan Assumptions
Plan Assumptions Retirement Age Life Expectancy Inflation Rate Portfolio Returns Liquid Funds Portfolio Returns Debt Portfolio Returns Equity Funds Portfolio Returns Balanced Funds Portfolio Returns - Gold & Jewelry All returns are assumed as net of Indian Income tax. None of the returns are guaranteed. Self 60. 80 08.00% 05.00% 08.00% 15.00% 12.90% 08.00% Spouse N.A. 80

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Summary of Recommendations
Contingency Planning
Liquid Fund/ Savings cum FD Rs.2.26 Lakhs Start ASAP

Life Insurance
Buy Aviva I-Life Plan Surrender LIC policies Rs.75 Lakhs ASAP After buying online policy

Health Insurance
Self Self Family Family Buy Bajaj Allianz Critical Illness Buy Apollo Personal Accident Buy Apollo Easy Health Standard Plan - Individual Buy Apollo Optima Plus - Individual Rs. 30 Lakhs Rs. 50 Lakhs Rs. 3 Lakhs Rs. 5 Lakhs

Other Goals
Sr. No. 1. Goals / Plans Retirement Planning Education Planning Target Amt SIP of Rs. 8,900 Rs.1,000/ month 2. Remark / suggestions HDFC Top 200 Fund PPF Sell equity shares and reinvest in Franklin India Blue Chip Sell existing Mutual Fund and reinvest in DSP BR Top 100 Equity Fund 3. 4. Marriage Planning Vacation Planning SIP of Rs.1,800 SIP of Rs.3,600 ICICI Pru Dynamic Plan & SBI Gold Fund in 90:10 ratio. HDFC Prudence Fund Status

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Some good practices of financial planning

1. Build a contingency fund of 3 to 6 months of your household expenses along with EMI and insurance premiums. This money will help you in critical cases where the income of the family stops due to any reasons. If you make provision for such a contingency fund, then you will not have to liquidate your long-term savings at that given point of time. This money should be kept in your sweep in sweep out account of your bank to earn higher interest rates. Always keep your insurance and investment separate. You should always take a term insurance policy to have enough cover on your life. Also you should have enough mediclaim policies to take care of expenses arising out of hospitalizations. Set goals that are measurable and realistic don't set goals that are too big, it may affect your financial planning badly. While making a financial plan for yourself, you should keep the assumptions on the return on investments realistic. For example during some years, equities had given returns of more than 40% per annum. But while planning for your goal, you should not assume your investments to grow at 40% per annum. Prioritize your goals you should always list down all your goals on a piece of paper and then prioritize all of them. Once prioritizing is done, you should start planning for goal number 1 and then move down on the list of priority. Each and every asset and investment should be mapped to one particular goal and should not be touched otherwise In case of any emergency, the person should use the contingency fund and should not think of liquidating any asset that is kept for any long-term goals. Invest systematically invest through SIPs and don't try to time the market. Keep on investing every month rather than keeping it in your savings bank account. Never stop an ongoing SIP when the markets are low. Make sure that the recommendations provided to you by your financial planner are executed properly and without any delays. Also you should keep the planner posted with any developments like change in income, any major health issues within family that may affect your financial planning. Sit down once every year to review and revisit all your goals. Also reprioritize them in case needed. The best time to do so is the month before your birthday or wedding anniversary. Put automatic payments (ECS) on all insurance premium and SIP. You bank account will be automatically debited and you will never forget to issue a cheque. Provide your mobile number to the insurance companies and mutual fund houses. They send reminders to maintain the required balance in your account a few days before the ECS is due.
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Some good practices of financial planning

Continue...
10. Start moving your assets from risky assets like equities or alternative investments to debt instruments systematically when your goal is around 2-3 years away this will ensure that in case the equity markets falls just before your goals are arriving, your corpus would be protected to a very great extent. 11. Invest in direct equities only if you have enough knowledge and expertise to do so. Don't invest on tips from your friends and relatives. Also don't try to go long when you think the markets are low and short when you think the markets are highest. Markets have surprised us many times with their bulls and bears. Never borrow to invest in stock markets. 12. Keep all your insurance and investment documents at one place and inform your spouse, parents and kids about the same in case of any emergency, they can trace them easily. Many a times, when a person gets admitted, then the family members have no clue about the mediclaim card that needs to be shown to the hospital. Also sometimes, family members sit down to hunt for a LIC policy which has matured and the maturity amount will be given to the insured only when the insurance policy is provided to the insurance company. 13. Don't delay, investments or payment of your credit card bills/loan EMIs both of them can affect your financial future badly. If you delay in starting your investments on time, then you will lose the opportunity to create enough corpuses for your future goals. In case you delay in making payments for your credit card bills and loan EMIs then you will land up lowering your CIBIL score and risk your chances of getting a loan in future. 14. Get your CIBIL report of Rs. 450 annually and go through it to check if there are any of the information mentioned there are not true. In case any of the information mentioned there are not correct, you should report the same to CIBIL and get the same rectified at the earliest to avoid any complications in future. 15. Provide your mobile number to all the bank accounts and credit cards any transactions that is done on your debit card or your credit card is reported to your mobile number. In case any transaction is suspicious, you can report the same to the bank immediately and they will look in to the same. 16. You should make sure that you have put nominations for all your investments. These can anything like a bank FD to mutual funds or direct equity. You should also prepare a will to plan for your estate since nominations are not sufficient to make sure that there is no dispute about the assets in the event of the death of the owner.

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Disclaimer
Any financial plan made by us is based on information detailed by the information provided by the client in the data gathering sheet and the personal discussions with the client. A copy of the data gathering sheet is available on request. The information contained in the financial plan must be read carefully. In case any relevant information is overlooked or misinterpreted, then we request the client to contact us before proceeding with the implementation of the plan. The financial plan is completely based on the information supplied to us by the client, which we assume to be correct. No responsibility can be accepted if the information provided to us is incorrect or inaccurate. This plan is prepared solely for the use of the client to whom it is addressed. This financial plan is a forward-looking document where we have assumed certain return on investments on various investment classes and inflation. These forwardlooking statements involve, and are subject to known and unknown risks, uncertainties and other factors, which could cause actual results, performance or achievements to differ from the future results, performance or achievements expressed or implied by such forward-looking statements. All these forward-looking statements attributable to ApnaPaisa herein are expressly qualified in their entirety by the above-mentioned cautionary statement. ApnaPaisa does not accept any direct or indirect liability for any results, performance or achievements that differ from results, performance or achievements implied by such forward-looking statements. We do not promise that the investments you make based on this plan will be profitable. Investments are always subject to various market, currency, and economic, political and business risks. We will not be liable for any losses that may be caused directly or indirectly by such investment decisions. This financial plan is based on the current situation and goals, which will change with the passage of time. Any material change in the financial situation of the client will necessarily render the contents of the plan out of date. Material changes refer to change in income/salary levels, assets acquired, liabilities incurred, change in number of dependents, health condition, or the passage of time of more than 12 months or the effect of inflation or deflation. We strongly recommend that a) You review this plan periodically to ensure that your plans actual performance is consistent in meeting your goals, and b) You update your plan annually to ensure that your plan is updated for your changing situation and goals.

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Thank you

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