fp john sharma

8/14/2019 FP John Sharma

1/19

1

Financial Planning For Mr.

John Sharma


2/19

2

Agenda

Profile of Mr. John Sharma

Expenses

Dreams & Goals

Assets

Current & Future Income

Protection

Calculations

ROAD MAP to financial plan

Proposed Investment Plan

Assumptions

Important things to NOTE


3/19

3

Profile:

Age 32 yrs

Dependants Spouse (28 yrs) & Child (4 yrs)


4/19

4

Expenses

* PV of expenses required on retirement Apprx . Rs.60,000/-

House-hold Expenses Monthly

Phone Bills 500Laundry 500

Conveyance 1,500

Food Bill 5,000

Estimated Income Tax 18,000

Consultant Fees 1,500

Electricity Bills 1,000

Holidays 5,000

Subscription 250

Tuition Fees for children education 5,000

Entertainment 2,000

Charity 5,000

Others 2,000

Total House-hold Expenses 47,250

Loan Repayments Monthly

Car Loan Personal Loan Housing Loan Others Total Loan EMIs 0

Regular Investment required Monthly

PF / PPF Other Tax Savings Investments Any other Recurring Investments Insurance Premium 4,167

Total Investments 4,167

Average Total MonthlyExpenses

51,417


5/19

5

Dreams & Requirements in priority

GOALS PV Tenure

Childs Education (1) 1,500,000 15

Childs Marriage (2) 500,000 20

Housing (3) 10,000,000 15

Retirement (per month) (4) 60,000 23


6/19

6

Detailed Investment Report of the family

Sr Client Name DirectEquity

MF Equity MF Debt CompanyFD

RBI Bond Infra.Bonds

Debenture PostalScheme

PPF NSS Bank FD Total(Lacs)

1 Ajay Sharma 0 415,344 0 0 0 40,000 0 0 0 0 0 4.55 2 Mannu Sharma 0 103,098 56,096 0 0 0 0 0 0 0 0 1.59 3 John Sharma HUF 0 253,373 238237 0 0 40,000 0 0 0 0 0 5.32 4 Aakash Sharma 512,164 72,080 0 0 0 80,000 0 115399 0 0 86,122 8.66 5 John Sharma 0 75,246 0 0 0 0 0 0 0 0 0 0.75 6 John Sharma huf 336,324 345,447 227,988 0 0 50,000 0 0 0 138599 17,804 11.16 7 Mrs.John Sharma 0 144445 118,598 0 0 50,000 0 0 0 0 0 3.13 8 Minal Sharma 0 20156 0 0 0 0 0 0 0 0 0 0.20 9 Minoo Sharma 299,143 242,145 929,838 0 1100000 90,000 500000 105495 0 0 162,784 34.29

10 Madam Sharma 38,745 389,853 114,791 200000 0 0 0 0 0 138599 0 8.82Total (Lacs) 11.86 20.61 16.86 2.00 11.00 3.50 5.00 2.21 0 2.77 2.67 78.48

Equity Debt Inheritance

901462 602989 3500000

9,00,000 6,00,000 35,00,000

Summarised


7/19

7

Income & Insurance

Salary 60,000

Rent + Other 30,000

Total Income 90,000

Regular Expenses 51,000

Net Disposable Savings per month 39,000

Est. Growth in Savings 2%

Income (Monthly)

Insurance Protection

Life Insurance 75,00,000

Medi-claim 5,00,000


8/19

8

Future Value of Goals

GOALS PV Tenure (t) FV

Childs Education 1,500,000 15 3,118,392

Childs Marriage 500,000 20 1,326,649

Housing 10,000,000 15 20,789,282

Retirement 17,743,636 23 54,500,000

Assumption: Inflation (r) @ 5%

FV = PV (1+ r) ^ t


9/19

9

Retirement Calculations

Current Expenses to be

planned at the time of

retirement

Returns on retirement

considered at 4%

Post Retirement expenses

growth rate (inflation) @ 5%

Year Start Outstanding Capital Earnings Expenses Net Effect1 54,535,192 2,181,408 2,211,497 -30,089

2 54,505,103 2,180,204 2,255,727 -75,523

3 54,429,580 2,177,183 2,300,842 -123,658

4 54,305,921 2,172,237 2,346,858 -174,622

5 54,131,300 2,165,252 2,393,796 -228,544

31 18,532,141 741,286 4,005,821 -3,264,535

32 15,267,606 610,704 4,085,937 -3,475,233

33 11,792,373 471,695 4,167,656 -3,695,961

34 8,096,412 323,856 4,251,009 -3,927,153

35 4,169,259 166,770 4,336,029 -4,169,259


10/19

10

Lump-sum savings required for each goal

Lump-sum Required 5% 8% 10% 12% 15%

Childs Education 1,500,000 983,047 746,518 569,719 383,233

Childs Marriage 500,000 284,630 197,198 137,529 81,059

Housing 10,000,000 6,553,649 4,976,789 3,798,124 2,554,888

Retirement 17,743,636 9,282,183 6,086,460 4,021,444 2,189,506

Total 29,743,636 17,103,509 12,006,965 8,526,816 5,208,686


11/19

11

Existing Investment Utilised for F goals

Both Goals, Child Education + Housing are maturing in 15 years. Priority also considered

Existing Investments Post-Tax Returns Amount after 15 years

Equity 900,000 15% 7,323,355

Debt 600,000 6% 1,437,935

Inheritance 3,500,000 10% 14,620,369

Total 23,381,659

Childs Educations Need 3,118,392

Balance Remaining 20,263,267

Housing Need 20,789,282

-526,015


12/19

12

Pending Dreams

Goal PV Tenure FV Monthly Savings Returns

Childs Marriage 500,000 20 1,326,649 1,262 12%

Childs Education 1,500,000 15 3,118,392 - -Housing Shortfall 253,022 15 526,015 989 12%

Retirement 17,743,636 23 54,500,000 35,332 12%

Total 2,253,022 37,583

Monthly Savings @ 12% p.a. & 2% growth in savings on a y.o.y basis.

This arrangement is sufficient to fulfill the requirements / needs of John

John is saving more than the required amount which is good

Even if the saving would have been insufficient, a higher equity allocation

could be easily suggested in new savings and/or the existing savings


13/19

13

Protection required

* To satisfy all the dreams in John Sharmas absence

Family Support is assuming that the

family would not suffer to meet the

regular HH expenses from today tillnext 40 years in Johns absence

Goals PV

Childs Education 1,500,000

Childs Marriage 500,000

Housing -

Family Support (Expenses) 16,020,000

Total 18,020,000

Less: Existing Investments 1,500,000

Less: Inheritance Expected 3,500,000

Less: Insurance Covered 7,500,000

Additional Insurance Required 5,520,000

An additional policy / rider of Rs.75

lacs is suggested to John


14/19

14

Insurance

Year 1 Year 5 Year 10 Year 15Disposable Savings 39,000 42,215 46,609 51,460

Additional Insurance Premium reqd 27,000 27,000 27,000 27,000

Net Disposable Savings (Yearly) 441,000 479,578 532,303 590,516

Risk Cover Required 18,020,000 21,903,423 27,954,934 35,678,367

Existing Inv Existing Equity - 9 Lacs 1,035,000 1,810,221 3,641,002 7,323,355

Existing Debt - 6 Lacs 636,000 802,935 1,074,509 1,437,935

Inheritance - 35 Lacs 3,850,000 5,636,785 9,078,099 14,620,369

New Savings / Investments 467,460 3,083,682 8,858,059 19,409,736

5,988,460 11,333,624 22,651,669 42,791,395Risk Cover Required 12,031,540 10,569,799 5,303,266 -7,113,027

Risk Covered Available 7,500,000 7,500,000 7,500,000 7,500,000

Additional Insurance Cover Needed 4,531,540 3,069,799 -2,196,734 -14,613,027

Additional Cover Taken 7,500,000 7,500,000 7,500,000 7,500,000

Net Insurance Cover 2,968,460 4,430,201 9,696,734 22,113,027


15/19

15

Investment planning

Rs.1 lac of investments in tax saving schemes

New Savings is 39,000*12 (for 1st year)

Investment Investment Equity Debt Returns

New Savings / Investments 468,000 66.67% 33.33% 12.00%

312,000 156,000

Exiting Investments - Equity 900,000 100.00% 0.00% 15.00%

Mutual Fund Debt 600,000 0.00% 100.00% 6.00%

Inheritance 3,500,000 44.50% 55.50% 10.00%

1,557,500 1,942,500


16/19

16

Cash Flows

Year End >>> Year 1 Year 5 Year 10 Year 15 Year 20 Year 23

Net Disposable Savings 39,000 42,215 46,609 51,460 56,816 60,293

Additional Insurance Premium reqd 27,000 27,000 27,000 27,000 Yearly Disposable Savings 441,000 479,578 532,303 590,516 681,788 723,518

Investments

Existing Equity - 9 Lacs 1,035,000 1,810,221 3,641,002 7,323,355Existing Debt - 6 Lacs 636,000 802,935 1,074,509 1,437,935Inheritance - 35 Lacs 3,850,000 5,636,785 9,078,099 14,620,369New Savings / Investments (12%) 467,460 3,083,682 8,858,059 19,409,736 37,674,502 55,463,691

Net worth 5,988,460 11,333,624 22,651,669 42,791,395 37,674,502 55,463,691

Dream Realisation Childs Education 3,118,392Housing 20,789,282Childs Marriage 1,326,649Retirement Net Worth Balance of Dreams 5,988,460 11,333,624 22,651,669 18,883,721 36,347,853 55,463,691


17/19

17

Assumptions

Inflation considered @ 5%, if returns falls down the inflation should alsofall & hence the impact would be nullified

Returns on Income are even

Business Income & Capital not considered

Cash Flows of existing Life Insurance Policies not considered

Return of 12% on new savings decided based on Johns risk profiling & it

satisfies his needs


18/19

18

Important things required in FP

A clear idea on calculation

PV & FV

Retirement Calculation

Computation of monthly/HY/yearly savings for a required capital

Make 2 to 3 plans and try selecting the ideal one

In the event of deficits either prolong the goals OR reduce the dream amounts

Priorities Goals & plan accordingly

Monitoring the entire financial plan once in six months or a year

Reviewing Financial Plans

Fixed frequency of six months to a year

Whenever there is a substantial change in your own condition, e.g., loss of

job, major expense, sudden wealth, etc.


19/19

19

Thank you

fp john sharma

Documents