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BAJAJ CAPITAL LTD. C.I.M.T

A

PROJECT REPORT

ON

3600 FINANCI

AL

PLANNING AND AWARENESS OF BAJAJ

CAPITAL Ltd. IN LUCKNOW
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(LIFE INSURANCE)

Submitted in fulfillment of Summer Training Program for

M.B.A. (Finance and Marketing)

Session 2009-2011

Submitted to Submitted By

Mr. Vivek Singh Swati Gupta

(Branch Head)

Mr. Dheerendra Kumar

(Area Manager)

Central Institute of Management & Technology

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U.P. Technical University, Lucknow

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ACKNOWLEGDEMENT

I express my deepest sense of gratitude of Mr. for inspiring me to do this

research project. During the whole research work he guided and provided me

the valuable inputs, which helped me in the completion of the project. Despite

his busy schedule he granted me a generous amount of his time with great

interest.

I owe my sincere regards and feel extremely grateful.

A special thank to Sir who constantly monitored my work and preceded support

and guidance the project

I am thankful to all those respondents who spared their valuable time attending

to my questions, which has contributed a great in the completion of the project.

SWATI GUPTA

M.B.A. (F&M.) IIIrd Semester

C.I.M.T. (U.P.T.U.)

2009-2011

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DECLARATION

I hereby declare that the following documented project report titled "360

degree financial planning and awareness of Bajaj Capital in Lucknow" is

an authentic work done by me.

The study was undertaken as a part of the course curriculum of M.B.A.

Full time Programme Central Institute of Management & Technology U.P.

Technical University, Lucknow.

I here by declare that the study has not been submitted to any other

institute/organization for the reference.

SWATI GUPTA

M.B.A. IIIrd Semester

2009-2011

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PREFACE

Investment is the sacrifice of certain present value for the uncertain future

reward. It entails arriving at numerous decisions such as type, mix, amount,

timing, grade etc. of investment and disinvestments. Further, such decisions

making has not only to be continuous but rational too. Broadly speaking, an

investment decision is a trade off between risk and return. All investment

choices are made at points of time in accordance with the personal investment

ends and in contemplation of an uncertain future.

Since investments in securities are revocable, investment ends are transient and

investment environment is fluid, the reliable bases for reasoned expectations

become more and more vague as one conceives of the distant future.

Investors in securities will, therefore, from time to time, reappraise and re-

evaluate their various investment commitments in the light of new information,

changed expectations and ends.

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CONTENTS

1. INTRODUCTION

2. COMPANY PROFILE

3. AIMS AND OBJECTIVE

4. OBJECTIVE OF STUDY

5. RESEARCH METHODOLOGY

6. PROBLEM AND LIMITATION

7. FINDING ANALYSIS AND INTERPETATION

8. SWOT

9. SUGGESTION/RECOMMENDATION

10. CONCLUSION

11. APPENDIX

12. BIBLIOGRAPGHY

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COMPANY PROFILE

Bajaj Capital is one of India’s leading Financial Services companies offering

Free Advice on Investments, Insurance, Tax Saving, Retirement Planning,

Financial Planning, Children’s Future Planning and other services. We also

have a wide range of products and services for Corporates, High Net worth

Individuals, and NRIs… all under one roof.

At Bajaj Capital, we believe in dreaming big. Dreams inspire us to excel. They

ignite hope and kindle in us the passion to stretch our limits. We also believe

that nothing can or should stop us from realising our dreams… and financial

constraints should be the last thing to stop anyone.

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Four decades of excellence

For over four decades, we have been helping people realise their aspirations by

helping them make their wealth grow, and plan their financial lives.

Today, we are a one of the largest financial planning and investment

advisory companies in India, with a strong presence all over the country. We

take pride in serving our customers – both individual and institutional – and are

known for our strong professionalism and work ethics.

Wide range of services

We offer a comprehensive range of services including financial planning and

investment advice, and the entire gamut of financial instruments and

investment products of almost all major companies, both public and private. In

addition, we also provide investment assistance by helping you complete all

the formalities, and help you keep regular track of your investments.

These services and products are delivered through our network of 134 Bajaj

Capital Investment Centres located all over the country.

We are also a SEBI-approved Category I Merchant Banker. We raise

resources for over 1,000 top institutions and corporate houses every year, and

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offer specialised services to Non-Resident Indian (NRIs) and High

Networth Clients.

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What you can expect from us

 Sound, research-based advice

 Unbiased, independent and need-based advice

 Prompt, courteous service

 Honest, ethical dealings

 Accessibility

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Milestones

The History of Bajaj Capital

Bajaj Capital has contributed to the growth of the Indian Capital Market at

every step.

In 1965, we were the first to innovate the Companies Fixed Deposit. Today, we

are playing an active role in the growth of the Indian Mutual Fund industry.

We are also working closely with private insurance companies to deepen India's

insurance market.

Here is a brief gist of our journey throug the years.

1964

Bajaj Capital sets up its first Investment Centre™ in New Delhi to guide

individual investors on where, when and how to invest.

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India's first Mutual Fund, Unit Trust of India (UTI) is incorporated in the same

year.

1965

Bajaj Capital is incorporated as a Company. In the same year, the company

introduces an innovative financial instrument – the Company Fixed Deposit.

EIL Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.)

becomes the first company to raise resources through Company Fixed Deposits.

1966

Bajaj Capital expands its product range to include all UTI schemes and

Government saving schemes in addition to Company Fixed Deposits.

1969

Bajaj Capital manages its first Equity issue (through an associate company) of

Grauer & Wells India Ltd.; right from drafting the prospectus to marketing the

issue.

1975

Bajaj Capital starts offering 'need-based' investment advice to investors, which

would later be known as 'Financial Planning' in the investment world.
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1981

SAIL becomes the first government company to accept deposits, followed by

IOC, BHEL, BPCL, HPCL and others; thus opening the floodgates for growth

of retail investment market in India.

Bajaj Capital plays an active role in all the schemes as 'Principal Brokers'

1986

Public Sector Undertakings (PSUs) begin making public issues of bonds

MTNL, NHPC, IRFC offer a series of Bond Issues. Bajaj Capital is among the

top ranks of resource mobilisers.

1987

SBI leads the launch of Public Sector Mutual Funds in India. Bajaj Capital

plays a significant role in fund mobilisation for all these players.

1991

SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the top
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mobiliser with collections of over US $20 million.

1993

The first private sector Mutual Fund – Kothari Pioneer – is launched, followed

by Birla and Alliance in the following years. Bajaj Capital plays an active role

and is ranked among the top mobilisers for all these schemes.

1995

IDBI and ICICI begin issuing their series of Bonds for retail investors. Bajaj

Capital is the co-manager in all these offerings and consistently ranks among

the top five mobilisers on an all-India basis.

1997

Private sector players lead the revival of Mutual Funds in India through Open-

ended Debt schemes. Bajaj Capital consolidates its position as India's largest

retail distributor of Mutual Funds.

1999

Bajaj Capital begins marketing Life and General Insurance products of LIC and

GIC (through associate firms) in anticipation of opening up of the Insurance

Sector. Bajaj Capital achieves the milestone of becoming the top 'Pension

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Scheme' seller in India and launches marketing of GIC's Health Insurance

schemes.

2000

Bajaj Capital implements its vision of being a 'One-stop Financial

Supermarket.' The Company offers all kinds of financial products, including the

entire range of investment and insurance products through its Investment

Centre. Bajaj Capital offers 'full-service merchant banking' including

structuring, management and marketing of Capital issues. Bajaj Capital

reinvents 'Financial Planning' in its international sense and upgrades its entire

team of Investment Experts into Financial Planners.

2002

The company focuses on creating investor awareness for Financial Planning

and need-based investing. To achieve this goal, the company introduced the

International College of Financial Planning. The graduates of this institute

become Certified Financial Planners (CFPs), a coveted professional

qualification.

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2004

Bajaj Capital obtains the All India Insurance Broking Licence. Simultaneously,

a series of wealth creation seminars are launched all over the country, making

Bajaj Capital a household name.

2005

Bajaj Capital launches 360° Financial Planning, a software-based programme

aimed at encouraging scientific and holistic investing.

2007

Bajaj Capital launches Stock Broking and Depository (Demat) Services.

2008

Bajaj Capital launches Just Trade, an online Platform for investing in Equities,

Mutual Funds, IPO's

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MISSION, AIMS & OBJECTIVES

Bajaj Capital's Mission Statement

The focus of our organisation is to be the most useful, reliable and efficient

provider of Financial Services. It is our continuous endeavour to be a

trustworthy advisor to our clients, helping them achieve their financial goals.

Aims

 To serve our clients with utmost dedication and integrity so that we

exceed their expectations and build enduring relationships.

 To offer unparalleled quality of service through complete knowledge of

products, constant innovation in services and use of the latest technology.

 To always give honest and unbiased financial advice and earn our clients'

everlasting trust.

 To serve the community by educating individuals on the merits of

Financial Planning and in turn help shape a financially strong society.

 To create value for all stake holders by ensuring profitable growth.

 To build an amicable environment that accords respect to every

individual and permits their personal growth.

 To utilise the power of teamwork to function as a family and build a

seamless organisation.

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 Why Invest Through Bajaj Capital

 Wide range of products and services

 41 years experience as Investment Advisors and Financial Planners

 More than eight lakh satisfied clients all over India

 Countrywide network of 134 branches

 Over 12,000 NRI clients across the globe

 Personalised wealth management advice

 24 x 7 online accessibility through www.bajajcapital.com

 Strong team of qualified and experienced professionals including CAs,

MBAs, MBEs, CFPs, CSs, Insurance experts, Legal experts and others

 SEBI-Approved Category I Merchant Bankers

 Group Co BCIBL is an IRDA-licensed Direct Insurance Broker

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Who’s at Bajaj Capital

Mr. K.K. Bajaj

Chairman

A visionary par excellence, a pioneer and a leader, Mr K.K. Bajaj has been

instrumental in shaping Bajaj Capital’s emergence as one of India’s largest

Investment Advisory companies.

He is a highly respected figure in the field of institutional and personal finance

and Company FDs. His emphasis on honesty, ethics and values are the guiding

principles of the organisation.

Mr Bajaj is also a prolific writer and has written over 200 articles on diverse

issues such as Personal Finance, Economic Affairs, and Health.

Mr. Rajiv Deep Bajaj Vice Chairman & Managing Director

A qualified Financial Planner, Mr Rajiv Deep Bajaj was the first to introduce

the concept of Financial Planning in India. In fact, he is the Founding Chairman

of the Association of Financial Planners (AFP). He is also amongst the first
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batch of 25 Certified Financial Planners (CFP tm) designation holders in India.

A Post-graduate in Management and holder of an International Certificate for

Financial Advisors from the Chartered Insurance Institute, London, Mr Rajiv

Deep Bajaj has played a pivotal role in expanding Bajaj Capital's reach across

the country. He has recently pursued an Executive MBA in International

Wealth Management under an exchange program between University of

Geneva, Switzerland and Carnegie Mellon University, Pittsburgh, USA.

His youthful energy, dynamic leadership, vision and 16 years strategic

management experience in Banking, Financial Advisory, Insurance Broking

and Financial Planning have strengthened Bajaj Capital.

The Media and Industry honchos have regularly acclaimed Mr. Rajiv Deep

Bajaj for his strengths as a powerful orator and writer. His views on various

Investment Strategy and Financial Planning-related issues are regularly flashed

in some of the leading media entities like The Economic Times, Business

Today, Star TV, CNBC and Aaj Tak. His personal life goal is to spread

‘Financial Education’ amongst the Indian masses in order to increase their

knowledge base and shift their perspective from ‘Saving to Investing’.

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Mr. Sanjiv Bajaj Joint Managing Director

Mr. Sanjiv Bajaj started his career in 1995 as managerial trainee, worked on

various projects which included developments at alternate channel of

distribution like Broker's associations...etc. From here, he moved on to

Investment Advisory services, which included understanding the client's needs,

and by using various tools of financial planning to offer them a solution to meet

his requirements. Mr Sanjiv Bajaj is versatile personality with diverse areas of

interest. He is a Post-graduate in Business Management with specialisation in

Finance, and holds an International Certificate for Financial Advisors from the

Chartered Insurance Institute, London. Thanks to him, Bajaj Capital is today

the largest individual agent for LIC. Mr Sanjiv Bajaj has a keen interest in IT,

and has played a major role in implementing the ERP software and E-

commerce activities in the company Mr. Anil Chopra

CEO & Director Mr. Anil Chopra is the Chief Executive Officer & Director

of Bajaj Capital Limited, He joined the Company in 1984. Mr. Chopra has been

instrumental in expanding the branch network of Bajaj Capital Ltd. all over

India.

A Chartered Accountant and a Certified Financial Planner, Mr Chopra is

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credited with introducing international accounting and HR practices in the

organisation. His most valuable contribution, however, has been in building up

a financially literate society and making Bajaj Capital a strong retail brand. He

is considered an authority, and is widely sought after by the media for quotes on

key developments in the industry.

The Significance of Our Logo

Our logo depicts Lord Ganesha who is the source of all our values and ethics in

business.

 The large ears of Lord Ganesha remind us to hear more. We listen

carefully to our clients to understand their needs.

 The weight of the trunk on the mouth symbolises silence. We work

silently, without blowing our own trumpet.

 The long trunk symbolises continuous exploration. We explore all

avenues to provide the best investment opportunities for our clients.

 The heavy posture of Ganesha symbolises stability. We help our clients

to attain financial stability through wise investments.

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 Lord Ganesha is known as the remover of obstacles and bestower of

prosperity. We emulate His example and try our best to help our clients

attain prosperity by proper financial planning.

 Our logo has a yellow background. Yellow is the colour of gold, which

symbolises wealth. According to Vedic lore, it is also the colour

associated with Brihaspati, the guru and counsellor of the Gods. We offer

our clients sage counsel to make their wealth grow.

 The letters are in red. Red is the colour rajas – symbolising power and

incessant activity. It symbolises our aggressive quest for your well-being

and happiness.

 The white streak represents the trunk of Lord Ganesha. White is the

colour of satva guna, and implies our selfless commitment to your life-

long happiness.

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3600 FINANCIAL PLANNING AND

AWARENESS OF BAJAJ CAPITAL

Experience the power of Bajaj Capital's 360

The only thing permanent in life is change. Times change. People change. So

does life. You expect life to be much better tomorrow than it is today.

Tomorrow, you hope to fulfil all your dreams and aspirations. But what

happens if things take an untoward turn? Or, if there is an eventuality? Perhaps

it's time for you to change the way you plan your investments...

Learn more about Bajaj Capital's 360º Financial Planning

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• Why do you need Bajaj Capital's 360° Financial Planning?

• Who needs 360° Financial Planning?

• What is 360° Financial Planning all about?

• How will 360° Financial Planning help me?

• How do I get my personalised 360° Financial Plan created?

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Don’t just dream... Plan!

Financial Planning is becoming increasingly popular in developed countries all

over the world. Now, with a little help from Bajaj Capital, you too can give

yourself the 360° Financial Planning edge! Get your Financial Plan

prepared now Why do you need Bajaj Capital's 360° Financial Planning?

You may have many dreams, needs and desires. For example, you could be

dreaming of:

• Owning a new car Buying a dream house Providing your children with

the best education Planning a grand wedding for your children

• Having a great time after your retirement

But in today's world of skyrocketing costs and increasing inflation, how many

of these dreams can you hope to turn into reality? By planning well, you can

utilise your limited resources to the fullest.

360° Financial Planning helps you see the big picture and invest for specific

long-term and short-term goals well in time.

Who needs 360° Financial Planning?

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Everyone does! Because everyone has a right to dream. And realising dreams is

easier when you work to a plan that's:

• Reliable Realistic

• Proven

Bajaj Capital's 360° Financial Planning Programme could make a difference to

all those who wish to lead a worry-free, financially secure life.

What is 360° Financial Planning all about?

360° Financial Planning is a unique software-based simulation that takes a

holistic view of your life-long financial needs and charts a personalised

investment strategy to help you meet them. Broadly, it involves:

• Identifying your current financial status Listing and prioritising your

goals Creating a sound investment plan to achieve them

• Monitoring the plan to facilitate swift corrective action, if needed

360° Financial Planning is based on the premise that every individual has

certain basic financial needs that are expressed at various stages of life (getting

married, buying assets like homes, vehicles, or providing for your children's

education and wedding). With the help of 360°Financial Planning, you can
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prepare yourself well in time for all these goals.

How will 360° Financial Planning help me?

Instead of investing in an ad-hoc manner, 360° Financial Planning helps you

take a holistic, all-round view. Briefly, 360° Financial Planning comprises:

• Investment Planning: To make your wealth grow

• Cash Flow Planning: To provide for assets and meet the periodic cash

requirements

• Tax Planning: To save on taxes and increase your income

• Insurance Planning: To protect yourself, your family and your assets

• Children's Future Planning: To give your children a financially secure

future

• Retirement Planning: Because retirement is a time to relax, not to get

worried Top

How do I get my personalised 360° Financial Plan created?

Here’s how Financial Plans are prepared:

• The process begins with identifying your needs with the help of the Need

Analysis Form. Our Financial Planners then use the especially-created

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360° Financial Planning software to generate a personalised Snapshot.

The Snapshot gives you a graphic account of all your financial

requirements, at every stage of your future life. Based on the Snapshot,

our experts work out an investment strategy.

• Once implemented, our experts keep regular track of your investments.

A Financial Planning session takes just 15 minutes

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Investment Planning

Everyone needs to save for a rainy day. Once you have

saved enough to take care of emergencies, you should start thinking about

investing and to make your money grow. We can help you plan your

investments so that you can reap adequate benefits and achieve your financial

goals.

Bajaj Capital’s Investment Planning Service includes:

 Risk Profiling

 Asset Allocation and Portfolio Construction

 Creation and Accumulation of Wealth through Systematic Investment

Plans (SIP)

 Regular review of progress and Portfolio Rebalancing

Essentially, Investment Planning involves identifying your financial

goals throughout your life, and prioritising them. Investment Planning is

important because it helps you to derive the maximum benefit from your

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investments.

Your success as an investor depends upon your ability to choose the right

investment options. This, in turn, depends on your requirements, needs

and goals. For most investors, however, the three prime criteria of

evaluating any investment option are liquidity, safety and return.

Investment Planning also helps you to decide upon the right investment

strategy. Besides your individual requirement, your investment strategy

would also depend upon your age, personal circumstances and your risk

appetite. These aspects are typically taken care of during investment

planning.

Investment Planning also helps you to strike a balance between risk and

returns. By prudent planning, it is possible to arrive at an optimal mix of

risk and returns, that suits your particular needs and requirements.

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What Is Cash Flow Planning?

In simple terms, cash flow refers to the inflow and outflow of money. It is a

record of your income and expenses. Though this sounds simple, very few

people actually take the time out to find out what comes in and what goes out of

their hands each month

Cash flow planning refers to the process of identifying the major expenditures

in future (both short-term and long-term) and making planned investments so

that the required amount is accumulated within the required time frame.

Cash flow planning is the first thing that should be done prior to starting an

investment exercise, because only then will you be in a position to know how

your finances look like, and what is it that you can invest without causing a

strain on yourself. It will also enable you to understand if a particular

investment matches with your flow requirement.

So does it involve looking at future cash flows only? Not really. You should

always do a cash flow for yourself as on date, and you will realize that you

could have a potential savings amount within each month of your working life.

This is the amount that you should look at saving for meeting your financial

goals. The best way of doing this is to have a personal budget.

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Why is cash flow planning important?

Cash flow plans are commonly used by business houses. Without a viable cash

flow plan, a company could easily spend more than its revenue, putting it in

peril. Unfortunately, most of us do not realise that a cash flow plan is as

important for people like us as well. The principles that apply to corporate

finance and to our personal lives are largely the same.

There has never been a bigger need than today for families and individuals to

work out cash flow plans. Without proper cash flow planning one could easily

get caught in the debt trap. Of course, it goes without saying that creating a plan

is not enough. One also needs to implement the plan, besides bringing about a

change in the spending habits.

Cash flow plan brings you face-to-face with what you should ideally be saving,

and investing in a systematic and regular manner, and what would it mean to

you to withdraw from your portfolio after a couple of years. It brings down in

numbers what your financial future has in store for you, and gives a crystal

clear view (as much as is possible with inflation and the interest rate scenario).

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Tax Planning - Introduction

Proper tax planning is a basic duty of every person which should be

carried out religiously. Basically, there are three steps in tax planning

exercise. These three steps in tax planning are:

Calculate your taxable income under all heads ie, Income from Salary, House

Property, Business & Profession, Capital Gains and Income from Other

Sources.

Calculate tax payable on gross taxable income for whole financial year

(i.e.,From 1st April to 31st March) using a simple tax rate table, given on next

page.

After you have calculated the amount of your tax liability. You have two

options to choose from:

1. Pay your tax (No tax planning required)

2. Minimize your tax through prudent tax planning.

Most people rightly choose Option 'B'. Here you have to compare the

advantages of several tax saving schemes and depending upon your age, social

liabilities, tax slabs and personal preferences, decide upon a right mix of

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investments, which shall reduce your tax liability to zero or the minimum

possible.

Every citizen has a fundamental right to avail all the tax incentives provided by

the Government. Therefore, through prudent tax planning not only income-tax

liability is reduced but also a better future is ensured due to compulsory savings

in highly safe Government schemes. We sincerely advise all our readers and

clients to plan their investments in such a way, that the post-tax yield is the

highest possible keeping in view the basic parameters of safety and liquidity

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The Need For Insurance Planning

"Insurance is not for the person who passes away, it for those who

survive," goes a popular saying that explains the importance of Insurance

Planning.

It is extremely important that every person, especially the breadwinner, covers

the risks to his life, so that his family's quality of life does not undergo any

drastic change in case of an unfortunate eventuality.

It is extremely important that every person, especially the breadwinner, covers

the risks to his life, so that his family's quality of life does not undergo any

drastic change in case of an unfortunate eventuality.

Insurance Planning is concerned with ensuring adequate coverage against

insurable risks. Calculating the right level of risk cover is a specialised activity,

requiring considerable expertise. Proper Insurance Planning can help you look

at the possibility of getting a wider coverage for the same amount of premium

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or the same level of coverage for the same amount amount of premium or the

same level of coverage for a reduced premium. Hence, the need for proper

insurance planning.

Insurance, simply put, is the cover for the risks that we run during our lives.

Insurance enables us to live our lives to the fullest, without worrying about the

financial impact of events that could hamper it. In other words, insurance

protects us from the contingencies that could affect us.

So what are the risks that we run? To name a few - the risk on our lives that is,

the worries of replacement of the incomes that we contribute to the running of

the household), the risks of medical contingencies (since they have the

capability of depleting our wealth considerably) and risks to assets (since the

replacement of these can have tremendous financial implications). If we can

imagine a situation where our goals are disturbed by acts beyond our control,

we can realise the relevance of insurance in our lives.

Insurance Planning takes into account the risks that surround you and then

provides an adequate coverage against those risks. There is no risk not worth

insuring yourself against, and insurance should first and foremost be looked as a

measure to guard against risks - the risk of your dreams going awry due to

events beyond your control

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Children's Future Planning

Like every parent, you too must be overjoyed to watch your child grow. All parents want

to give the best possible upbringing to their children. This includes good education and

security, in case of any eventuality. Soon, your little bundle of joy will grow up, and it

will be time to provide for his or her higher education and wedding.

The purpose of Children's Future Planning is to create a corpus for foreseeable

expenditures such as those on higher education and wedding, and to provide for an

adequate security cover during their growing years.

Children's Future Planning acquires added importance because children's education and

wedding are high priority life goals, which can neither be postponed nor can there be a

compromise on the amount.

Good education has always been the passport to a secure future. Today, career

opportunities have grown manifold, and there are many professional course that your

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child can aspire for. However, costs of higher education have also increased

exponentially.

Like most parents, you might be saving regularly to ensure a safe tomorrow for your

child. However, savings alone is no longer enough. For ensuring adequate funding of

your child's education, you as a parent, need to do two things:

 Invest appropriate amount systematically and at regular intervals

 Provide for a financial security blanket to cover any eventuality

It is never too early to start saving and investing for your child's future. Especially

in today's context. For example, the cost of a professional degree today is

approximately Rs 2.5 lakhs. If your child is one-year-old today, after 17 years

when he/she goes to college, you may require a sum of Rs 6.3 lakhs, assuming an

annual rate of inflation of 6%.

There are many products which your Financial Planner can use to achieve the above

objectives. For example, he could suggest a Children's Future Plan offered by any good

insurance company, to build a corpus for your child's higher education, and provide for a

security cover in the event of the parent's unfortunate demise.

Children's plans are also available under unit-linked option. Being unit-linked, they offer

access to investments in all kinds of asset classes - equity, debt and cash.

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Retirement Planning

Some like it. Some don’t. But retirement is a reality for every working person.

Most young people today think of retirement as a distant reality.

However, it is important to plan for your post-retirement life if you wish to

retain your financial independence and maintain a comfortable standard of

living even when you are no longer earning. This is extremely important,

because, unlike developed nations, India does not have a social security net.

Retirement Planning acquires added importance because of the fact that though

longevity has increased, the number of working years haven’t.

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Our Retirement Planning Service involves:

 Computing that amount that would be required post-retirement. This is

done after taking inflation and time value of money into account.

 Building your Retirement Corpus using Systematic Investment Plans

(SIPs) and other long-term growth orient products

 Ensuring adequate post-retirement income through safe investments.

The asset allocation and selection of investment vehicles keep changing

as your risk-bearing capacity diminishes.

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Plan for A Worry Free Retirement

In simple words, retirement planning means making sure you will have enough

money to live on after retiring from work. Retirement should be the best period

of your life, when you can literally sit back and relax or enjoy your life by

reaping benefits of what you earn in so many years of hard work. But it is easier

said than done. To achieve a hassle-free retired life, you need to make prudent

investment decisions during your working life, thus putting your hard-earned

money to work for you in future.

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Why is it important?

India, unlike other countries, does not have state-sponsored social security for

the retired people. And after several decades when pensions provided many

people with a large chunk of money they needed to live comfortably after they

retired, things are changing. While you may be entitled to a pension, or income

during retirement, in the new economic era, you are increasingly likely to be

responsible for providing for your own needs.

Although the compulsory savings in provident fund through both employee and

employer contributions should offer some cushion, it may not be enough to

support you throughout your retirement. That is why retirement planning is

extreme ly important for every one.

There are many reasons for the working individuals to secure their future

emergence of nuclear families and its attendant insecurity, increasing

uncertainties in personal and professional life, the growing trends of seeking

early retirement and rising health risks are among few important risks. Besides

falling interest rates and the sustained increase in the cost of living make it a

compelling case for individuals to plan their finances to fund their retired life.

Planning for retirement is as important as planning your career and marriage.

Life takes its own course and from the poorest to the wealthiest, no one gets

Page | 46


spared. "Everyone grows older". We get older every day, without realising.

However, we assume that old age is never going to touch us.

The future depends to a great extent on the choices you make today. Right

decisions with the help of proper planning, taken at the right time will assure

smile and success at the time of retirement.

Page | 47


PLAN FOR A WORRY FREE RETIREMENT

In simple words, retirement planning means making sure you will have enough

money to live on after retiring from work. Retirement should be the best period

of your life, when you can literally sit back and relax or enjoy your life by

reaping benefits of what you earn in so many years of hard work. But it is easier

said than done. To achieve a hassle-free retired life, you need to make prudent

investment decisions during your working life, thus putting your hard-earned

money to work for you in future.

Page | 48


Why is it important?

India, unlike other countries, does not have state-sponsored social security for

the retired people. And after several decades when pensions provided many

people with a large chunk of money they needed to live comfortably after they

retired, things are changing. While you may be entitled to a pension, or income

during retirement, in the new economic era, you are increasingly likely to be

responsible for providing for your own needs.

Although the compulsory savings in provident fund through both employee and

employer contributions should offer some cushion, it may not be enough to

support you throughout your retirement. That is why retirement planning is

extreme ly important for every one.

There are many reasons for the working individuals to secure their future

emergence of nuclear families and its attendant insecurity, increasing

uncertainties in personal and professional life, the growing trends of seeking

early retirement and rising health risks are among few important risks. Besides

falling interest rates and the sustained increase in the cost of living make it a

compelling case for individuals to plan their finances to fund their retired life.

Planning for retirement is as important as planning your career and marriage.

Life takes its own course and from the poorest to the wealthiest, no one gets

Page | 49


spared. "Everyone grows older". We get older every day, without realising.

However, we assume that old age is never going to touch us.

The future depends to a great extent on the choices you make today. Right

decisions with the help of proper planning, taken at the right time will assure

smile and success at the time of retirement.

Page | 50


INVESTMENTS

Mutual Funds are among the hottest favourites with all types of investors. Investing in

mutual funds ranks among one of the preferred ways of creating wealth over the long

term. In fact, mutual funds represent the hands-off approach to entering the equity

market. There are a wide variety of mutual funds that are viable investment avenues to

meet a wide variety of financial goals. This section explains the various aspects of

Mutual Funds.

• What are Mutual Funds?
• Why choose Mutual Funds?
• Types of Mutual Funds
• Snapshot of Mutual Fund Schemes
• Choosing the Right Mutual Fund Scheme
• How to calculate the growth of your Mutual Funds

Investments?
• Points to Remember
• Glossary

What are Mutual Funds ?

A Mutual Fund is a trust that pools together the savings of a number of investors who

share a common financial goal. The fund manager invests this pool of money in securities

-- ranging from shares and debentures to money market instruments or in a mixture of

equity and debt, depending upon the objectives of the scheme.

Page | 51


Why choose Mutual Funds ?

Investing in Mutual Funds offers several benefits:

• Professional expertise: Fund managers are professionals who track the market on

an on-going basis. With their mix of professional qualification and market

knowledge, they are better placed than the average investor to understand the

markets

• Diversification: Since a Mutual Fund scheme invests in number of stocks and/or

debentures, the associated risks are greatly reduced.

• Relatively less expensive: When compared to direct investments in the capital

market, Mutual Funds cost less. This is due to savings in brokerage costs, demat

costs, depository costs etc.

• Liquidity: Investments in Mutual Funds are completely liquid and can be

redeemed at their Net Assets Value-related price on any working day.

• Transparency: You will always have access to up-to-date information on the

value of your investment in addition to the complete portfolio of investments, the

proportion allocated to different assets and the fund manager’s investment strategy.

• Flexibility: Through features such as Systematic Investment Plans, Systematic

Withdrawal Plans and Dividend Investment Plans, you can systematically invest or

withdraw funds according to your needs and convenience.

Page | 52


• SEBI regulated market: All Mutual Funds are registered with SEBI and function

within the provisions and regulations that protect the interests of investors. AMFI

is the supervisory body of the Mutual Funds industry.

Page | 53


Types of Funds

There are a wide variety of Mutual Fund schemes that cater to your needs, whatever your

age, financial position, risk tolerance and return expectation. Whether as the foundation

of your investment program or as a supplement, Mutual Fund schemes can help you meet

your financial goals. The different types of Mutual Funds are as follows:

Diversified Equity Mutual Fund Scheme

A mutual fund scheme that achieves the benefits of diversification by investing in the

stocks of companies across a large number of sectors. As a result, it minimizes the risk of

exposure to a single company or sector.

Sectoral Equity Mutual Fund Scheme

A mutual fund scheme which focuses on investments in the equity of companies across a

limited number of sectors -- usually one to three.

Index Funds

These funds invest in the stocks of companies, which comprise major indices such as the

BSE Sensex or the S&P CNX Nifty in the same weightage as the respective indice.

Equity Linked Tax Saving Schemes (ELSS)

Mutual Fund schemes investing predominantly in equity, and offering tax deduction to

investors under section 80 C of the Income Tax Act. Currently rebate u/s 80C can be

Page | 54


availed up to a maximum investment of Rs 1,00,000. A lock-in of 3 years is mandatory.

Monthly Income Plan Scheme

A mutual fund scheme which aims at providing regular income (not necessarily monthly,

don't get misled by the name) to the unitholder, usually by way of dividend, with

investments predominantly in debt securities (upto 95%) of corporates and the

government, to ensure regularity of returns, and having a smaller component of equity

investments (5% to 15%)to ensure higher return.

Income schemes

Debt oriented schemes investing in fixed income securities such as bonds, corporate

debentures, Government securities and money market instruments.

Floating-Rate Debt Fund

A fund comprising of bonds for which the interest rate is adjusted periodically according

to a predetermined formula, usually linked to an index.

Gilt Funds - These funds invest exclusively in government securities.

Balanced Funds

The aim of balanced funds is to provide both growth and regular income as such schemes

invest both in equities and fixed income securities in the proportion indicated in their

offer documents. They generally invest 40-60% in equity and debt instruments.

Fund of Funds

Page | 55


A Fund of Funds (FoF) is a mutual fund scheme that invests in other mutual fund

schemes. Just as fund invests in stocks or bonds on your behalf, a FoF invests in other

mutual fund schemes.

Mutual
Investment Who should Investment
Fund Objective Risk
Portfolio invest horizon
Type
Those who
Treasury Bills,
Liquidity + park their
Certificate of
Moderate funds in
Money Deposits,
Income + Negligible current 2 days - 3 weeks
Market Commercial
Reservation of accounts or
Papers, Call
Capital short-term
Money
bank deposits
Call Money,
Short-
Commercial
term
Papers, Those with
Funds
Liquidity +
Little Interest Treasury Bills, surplus 3 weeks -
(Floating -
Moderate
Rate CDs, Short- short-term 3 months
short-
Income
term funds
term)
Government

securities.
Bond Regular Income Credit Risk & Predominantly Salaried & More than 9 - 12

Funds Interest Rate Debentures, conservative months

Page | 56


Government
(Floating -
securities,
Risk investors
Long-
Corporate
term)
Bonds
Salaried &
Security & Interest Rate Government
Gilt Funds conservative 12 months & more
Income Risk securities
investors
Aggressive
Long-term
Equity investors with
Capital High Risk Stocks 3 years plus
Funds long term out
Appreciation
look.
To generate

returns that are Portfolio
NAV varies
Index commensurate indices like Aggressive
with index 3 years plus
Funds with returns of BSE, NIFTY investors.
performance
respective etc

indices
Balanced ratio

Capital of equity and

Balanced Growth & Market Risk debt funds to Moderate &
2 years plus
Funds Regular Income and Interest ensure igher Aggressive

Rate Risk returns at lower

risk

How to choose the right Mutual Fund scheme

Page | 57


Once you are comfortable with the basics, the next step is to understand your investment

choices, and draw up your investment plan relevant to your requirements. Choosing your

investment mix depends on factors such as your risk appetite, time horizon of your

investment, your investment objectives, age, etc.

What should be kept in mind before investing in Mutual Funds ?

Mutual Fund investment decisions require consistent effort on the part of the investor.

Before investing in Mutual Funds, the following steps must be given due weightage to

decide on the right type of scheme:

1. Identifying the Investment Objective

2. Selecting the right Scheme Category

3. Selecting the right Mutual Fund

4. Evaluating the Portfolio

A) Identifying the Investment Objective

Your financial goals will vary, based on your age, lifestyle, financial independence,

family commitments, level of income and expenses, among many other factors.

Therefore, the first step is to assess you needs. Begin by asking yourself these simple

Page | 58


questions:

Why do I want to invest?

The probable answers could be:

• "I need a regular income"

• "I need to buy a house/finance a wedding"

• "I need to educate my children," or

•A combination of all the above

How much risk am I willing to take?

The risk-taking capacity of individuals vary depending on various factors. Based on their

risk bearing capacity, investors can be classified as:

• Very conservative

• Conservative

• Moderate

• Aggressive

• Very Aggressive

To ascertain your risk appetite, try out our Risk Thermometer.

What are my cash flow requirements?

Page | 59


For example, you may require:

•A regular Cash Flow

•A lumpsum after a fixed period of time for some specific need in the future

• Or, you may have no need for cash, but you may want to create fixed assets for

the future

B) Selecting the scheme category

The next step is to select a scheme category that matches your investment objectives:

• For Capital Appreciation go for equity sectoral funds, equity diversified funds or

balanced funds.

• For Regular Income and Stability you should opt for income funds/MIPs

• For Short-Term Parking of Funds go for liquid funds, floating rate funds, short-

term funds.

• For Growth and Tax Savings go for Equity-Linked Savings Schemes.

Investment Investment
Ideal Instruments
Objective horizon
Short-term
1- 6 months Liquid/Short-term plans
Investment
Capital Diversified Equity/ Balanced
Over 3 years
Appreciation Funds

Page | 60


Monthly Income Plans /
Regular Income Flexible
Income Funds
Equity-Linked Saving
Tax Saving 3 yrs lock-in
Schemes (ELSS)

C) Selecting the right Mutual fund

Once you have a clear strategy in mind, you now have to choose which Mutual fund and

scheme you want to invest in. The offer document of the scheme tells you its objectives

and provides supplementary details like the track record of other schemes managed by

the same Fund Manager. Some important factors to evaluate before choosing a particular

Mutual Fund are:

The track record of performance over that last few years in relation to the appropriate

yardstick and similar funds in the same category.

How well the Mutual Fund is organized to provide efficient, prompt and personalized

service.

The degree of transparency as reflected in frequency and quality of their

communications.

D) Evaluation of portfolio

Evaluation of equity fund involve analysis of risk and return, volatility, expense ratio,

fund manager’s style of investment, portfolio diversification, fund manager’s experience.

Page | 61


Good equity fund should provide consistent returns over a period of time. Also expense

ratio should be within the prescribed limits. These days fund house charge around 2.50%

as management fees.

Evaluation of bond funds involve it's assets allocation analysis, return's consistency, it’s

rating profile, maturity profile, and it’s performance over a period of time. The bond fund

with ideal mix of corporate debt and gilt fund should be selected.

Page | 62


How to calculate the growth of your Mutual Fund investments ?

Let's assume that Mr. Gupta has purchased Mutual Fund units worth Rs. 10,000 at an

NAV of Rs. 10 per unit on February 1. The Entry Load on the Mutual Fund was 2%. On

September 15, he sold all the units at an NAV of Rs 20. The exit load was 0.5%.

His growth/ returns is calculated as under:

1. Calculation of Applicable NAV and No. of units purchased:

(a) Amount of Investment = Rs. 10,000

(b) Market NAV = Rs. 10

(c) Entry Load = 2% = Rs. 0.20

(d) Applicable NAV (Purchase Price) = (b) + (c) = Rs. 10.20

(e) Actual Units Purchased = (a) / (d) = 980.392 units

2. Calculation of NAV at the time of Sale

(a) NAV at the time of Sale = Rs 20

(b) Exit Load = 0.5% or Rs.0.10

(c) Applicable NAV = (a) – (b) = Rs. 19.90

3. Returns/Growth on Mutual Funds

Page | 63


(a) Applicable NAV at the time of Redemption = Rs. 19.90

(b) Applicable NAV at the time of Purchase = Rs. 10.20

(c) Growth/ Returns on Investment = {(a) – (b)/(b) * 100} = 95.30%

Points to Remember

• Do not speculate: Always evaluate risk-taking capacity.

• Do not chase returns: Because what goes up must come down.

• Do not put all eggs in one basket: Diversification reduces the risk.

• Do not stop working on Mutual Funds: Continuous evaluation of funds is a

must.

• Do not time the market: Every time is good for investments.

• Mutual Funds are subject to market risks and there is no assurance that the fund

objective will be achieved.

• NAVs fluctuate depending on forces affecting the Capital market.

• Past performance may or may not be sustained in the future.

Assets Management Company: A highly regulated organization that pools money from

many people into portfolio structured to achieve certain objectives. Typically an AMC

manages several funds –open ended/ close ended across several categories- growth,

income, balanced.

Balanced Fund: A hybrid portfolio of stocks and bonds.

Page | 64


Close Ended Fund: They neither issue nor redeem fresh units to investors. Some closed

ended funds can be bought or sold over the stock exchange if the fund is listed. Else,

investor have to wait till redemption date to exit. Most listed close ended funds trade at

discount to the NAV.

Open Ended Fund: A diversified and professionally managed scheme, it issues fresh

units to incoming investors at NAV plus any applicable sales charge, and it redeems

shares at NAV from sellers, less any redemption fees.

Entry/ Exit Load: A charge paid when an investor buys/sells a fund. There could be a

load at the time of entry or exit, but rarely at both times.

Expense Ratio : The annual expenses of the funds, including the management fee,

administrative cost, divided by the fund under management.

Growth/Equity Fund: A fund holding stocks with good or improving profit prospects.

The primary emphasis is on appreciation.

Liquidity: The ease with which an investment can be bought or sold. A person should be

able to buy or sell a liquid asset quickly with virtually no adverse price impact.

Net Assets Value : A price or value of one unit of a fund. It is calculated by summing the

current market values of all securities held by the fund, adding the cash and any accrued

Page | 65


income, then subtracting liabilities and dividing the result by the number of units

outstanding.

Interest Rate Risk: The risk borne by fixed-interest securities, and by borrowers with

floating rate loans, when interest rates fluctuate. When interest rates rise, the market

value of fixed-interest securities declines and vice versa.

Credit Risk: Credit risk involves the loss arising due to a customer’s or counterparty’s

inability or unwillingness to meet commitments in relation to lending, trading, hedging,

settlement and other financial transactions.

Capital Market Risk : Capital Market Risk is the risk arising due to changes in the

Stock Market conditions.

Page | 66


INTRODUCTION

Investment options

1. Insurance

2. PPF- Public provident fund

3. NSC- National Saving Certificate

4. Post Office Saving schemes

5. Mutual fund

6. Bank Saving Schemes

7. Securities

8. Real Estate

Page | 67


RESEARCH OBJECTIVE

This research was undertaken with the following scope of work:

• To know the current strategy of investment.

• To know why salaried employees do investment {need of investment}.

• To know when they invest.

• To know where they prefer to invest.

• To identify the whether they are aware about the Tax structure.

• To give suggestion related to their investment strategy.

Page | 68


DEFINITIONS OF INVESTMENT

• Investing: the act of investing; laying out money or capital in an

enterprise with the expectation of profit

• Money that is invested with an expectation of profit

• The use of money for the purpose of making more money, to gain income

or increase capital, or both.

• The use of money through various vehicles, or an individual's time and

effort, to make more income or increase capital, or both. The term

"investment" infers that the safety of principal is important. On the other

hand, speculation connotes that risking principal is acceptable

• Anything of value purchased to provide capital appreciation and/or

income. Examples include stocks, bonds, mutual funds, unit investment

trusts, certificates of deposit, money market funds and collectibles.

Investments may also include artwork, antiques and real estate.

But why do we save and then invest our savings somewhere?

The answer seems to be too simple. We save to earn more money.

We always invest for a specific purpose. For instance, we invest in life

insurance to save on taxes. We put money into recurring deposits to, say, part-

finance the down payment for a house. We invest for our children’s education,
Page | 69


for their imminent weddings. We also invest to take care of our own needs after

retirement.

Page | 70


Motives for investment may vary, but there are some common desires. people

want investments to give some return.

• Safety

• Liquidity

• Returns

We have to use these criteria to assess our investment needs.

For instance, if people want to put away money for retirement, safety will be

the most important criterion. A safe investment avenue that gives people a

decent annual return will be good enough for people. What about the money

their father sent people for the down payment on their car? People haven’t even

decided on the model! People’ll probably keep the money in their savings bank

account so that people can withdraw it quickly.

At different stages of life their needs for financial security and plans for the

future are likely to change. Here is a simple introduction to common financial

needs as they relate to different lifestyles and life stages.

Protection

Page | 71


Families with peopling, dependent children need adequate protection against

losing their primary wage earner's income if and when premature and

unexpected death occurs.

Page | 72


1. Emergency Fund

Life insurance provides an additional consideration by providing an emergency

fund to provide money for survivors. It buys the time so essential and necessary

that is needed to adjust to the death of a parent or spouse.

1. Education

Yet another priority need for peopling families is building adequate funds for

higher education costs. The need for highly specialized education is greater than

ever before.

Every year, the cost of education rises beyond estimated limits.

Page | 73


2. Retirement

Peopling families should also plan for retirement in the long run. Investment

and pension plans are not adequate to fund the retirement needs at times. Once a

family attains a specific standard of living, it is very hard to adjust to a reduced

standard during the retirement years.

Systematic savings over a working lifetime is the key towards supplementing

other retirement programmes. The old rule of saving 10 percent of the annual

income still holds true for single income peopling families. Peopling families

with modest incomes must commence with at least a 10 percent guideline if

they cannot make a total commitment immediately.

3. Disability

A single income peopling family would be in an extremely perilous situation if

there would be a loss of income owing to a disability. In case an income

provider is unable to work, the economic consequences could be severe for the

family. Not only does the family have to maintain the established standard of

living, it also has to shoulder the additional burden of a disabled member within

itself. Disability is the major need that is to be addressed and protection against

this loss is a priority.

Page | 74


Tax Planning

Generally speaking, after a decade of their marriage their family would be

complete. People should look at tax planning in a more serious manner. It is

time to plan for some investments and funds in the names of minor children and

to take some insurance policy in the name of minor children for their education

and marriage purposes. This should be a long-term policy with a small amount

of premium payment year after year

The needs of mature adults tend to emphasis on their successors as well as their

elders. These generally include:

• Providing funds for higher specialized studies for their children.

• Assisting their children with payments on their new homes.

• Loaning or granting money by way of gifts to other needy family

members or relatives.

• Ensuring health care and attention for their aged and dependent parents.

• Planning for a dependent who might have specific needs.

• Guaranteeing loans and financial obligations for their children.

Page | 75


• Building a savings fund to provide additional income during retirement.

Marriage and Education Costs

The cost of marriage and higher education for children forms a major expense

during the mature adult's life cycle. The costs of living increase year after year.

And to meet these rising costs requires sacrifice and considerable effort on the

part of most families.

The cost of higher education is also rising. More and more students are opting

to go abroad to seek specialization in their chosen vocation. Foreign universities

are also offering a wide range of specialized courses on Indian This makes a

college education highly desirable. Yet, as the costs go on mounting, it makes

planning all the more essential to make the education a reality.

Page | 76


Children's First Home

Since costs of housing have to be met with a large percentage from our

incomes, newly married couples are finding it harder than ever before to pay the

minimum down payment or even acquire the necessary resources to qualify for

housing finance. Needless to say, these peopling couples need their parents'

help for providing the necessary funds.

When a peopling couple applies for a loan, they should purchase dual-life

insurance policies, naming their parents as beneficiaries. If by chance, the

couple expires before the housing loan is paid off, the proceeds of the policy

can easily suffice in meeting the repayment installments.

In case the couple lives happily ever after, the cash value in the policies can be

used to pay off the remainders of the loan after a while. The tax advantages

offered are extremely advantageous for the peopling couple and their parents.

Many other financial options are available, but the flexibility offered by life

insurance policies is unmatched by any of them.

Gifts and Loans

Adults in their mature years are usually confronted with financial demands from

generations proceeding as well as succeeding them.

Page | 77


Providing funds for children, elderly parents, or relatives, either as a loan or an

outright gift, may create a change in the financial planning considerations.

Page | 78


Caring for Dependent Parents

Not many people anticipate that as their children mature and gain

independence, they might be confronted by new dependents - their own parents.

Since these people are responsible for their children as well as their elderly

parents, they subsequently get 'sandwiched' between the expenses of both the

generations’.

.A family 'sandwiched' between the pressures of two generations is subjected to

a lot of emotional and financial strain. Difficulties arise from balancing the

needs of parents and shouldering their children's responsibility besides

concentrating on personal financial goals. The only solution lies in planning in

advance for the risks covered. People who anticipate and prepare for the worst

can afford to make choices later on in life.

Long Term Care

Long term care insurance is yet another major planning consideration. Medical

assurance policies are not always adequate. They can never meet the

catastrophic costs of a major illness or a chronic disability. Not many people

can afford the large expenses of nursing homes with their current income.

Page | 79


If matured adult parents are unable to afford this coverage, it makes sense for

their children to share the premium expenditure. This is a sensible precaution to

be exercised against any potentially high costs that might occur later. When the

time period for future health planning is over, the options available for the

elderly are fewer and extremely unattractive.

If a parent's health goes from bad to worse and they become completely

dependent on external help, the medical costs may be higher than the income

level of the family, regardless of how willing they might be.

Dependents with Special Needs

Just like elderly parents, children who are physically or mentally handicapped

require special consideration and are a source of major and expensive concern.

A provision for their needs must be considered and plans made as early as

possible. Needless to say, the dependency period never ends with these

dependents.

Providing necessary care for dependents having special needs can be extremely

strenuous, both emotionally and financially. At times, people who are caring for

the disabled sacrifice their own health and financial security at the expense of

the other members of the family. The emotional pull generated can create a

terse atmosphere within the household.

Page | 80


Parents of a dependent with special needs wish to see that these expenses are

taken care of on a long-term and guaranteed basis. With timely and proper

planning, such expenses can be met easily regardless of what happens to the

provider of support.

Page | 81


Tax Planning

Once their children are grown up and settled in life, most of their responsibility

towards them is over. It is now time to relax. Now people should plan their

investment strategies in such a manner that the income in their family group is

distributed from the point of view of tax planning, not merely in their name and

that of their spouse but in the names of their son, their daughter-in-law and their

grand children. People should also now start focusing on the investment

decisions which will have a long-term repercussion relating to their succession.

Thus, it is recommended to people that they should prepare their Will and adopt

tax planning relating to the wills and achieve ultimate tax saving for family

members who are going to be a part of their succession plan.

Adulthood -The Middle Years 51 – 55

Middle years are the stage in the life cycle identified and characterized as a

period of acquisition and establishment. People at this phase of life, assume

more responsibility and often take on new career opportunities.

Middle-aged people are constantly making commitments, acquiring assets

and incurring additional debts as well. This phase in the human life cycle

Page | 82


develops the individual's long-term and ongoing relationships more than the

others.

Page | 83


Challenging Concerns

People, in their middle years are assuming greater responsibilities as well as

acquiring newer assets and possessions. Growth means change wrought

together with new challenges and added concerns.

People have to consequently face a lot of problems and considerations

during this stage of their life cycle. They may be trying to achieve their aims

in life, their aspirations and dreams ranging from a proper balance between

their careers and family life to a continual movement up the career ladder.

They will also seek proper protection of their income levels in event of a

disability, or a loss of job or a career change and even premature unexpected

death. They may also be considering investing in better residential facilities

with realistic provisions made for their retirement needs and financial

security. Budgetary changes may also be implemented along with long-term

savings and investment plans. They might also be updating their wills and

bequests.

Since different people use different approaches in meeting their mid-life

crises and challenges, they are highly prone to make financial mistakes and

errors of judgment. A miscalculation at this stage can affect an individual's

financial standing for the rest of his life.

Page | 84


The most common mistake made by individuals during their middle age

periods is probably procrastination or delay in the commencement of

programs for future needs. The benefits of compounded interest are lost

forever owing to this single greatest failure. Another mistake people tend to

commit is making inadequate estimates or judgments regarding the amount

of protection needed for their future.

The other common errors on people's part are concurrent to the fact that

people tend to overuse and at times, even abuse their credit limits. They

blindly accept investment strategies or plans newly introduced in the market.

Also they fail to provide for pending major purchases or replacement of

large-sized utilitarian items.

They also tend to neglect in protecting or covering their property assets

while continue to rely on their employment-sponsored benefits. At times,

people forget that inflation will catch up with them and make inadequate

provisions for their retirement.

Page | 85


Hopes and Dreams

An individual seeking to fulfill their aspirations should base his game plan

with specific objectives estimated on his resources and working capacity. As

long as the individual maintains the following perspectives in mind, his

chances of success are assured:

• Clearly defined goals and objectives.

• Controlled spending with the budget.

• Planned savings and investment program.

• Adequate funds for children's higher education.

• Protection against property losses.

• Sufficient income against disability.

• Emergency fund.

• Financial independence and a comfortably secure retirement.

• General well being and peace of mind.

Page | 86

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