Guide to Financial Planning for Salaried Employee in Brief

1. Aagam Holdings Private Limited
Financial Learnings
For Salaried Employees
By
Manoj Doshi
Cell: +91 94297 87872
E-mail: doshi.manoj@gmail.com

2. Learning Areas
1) Understanding Liquid Funds
2) Alternative to Bank Fixed Deposits
3) Need for Investment in Equity
4) Power of Compounding in Investment
5) Early Start of Investing
6) Insurance is not a Saving and Investment Tool –
Concept of Term Plan

4. Alternatives to Bank Fixed Deposits
 Fixed Deposits with Housing Finance
Companies of Bank
(Ex. Always HDFC Limited Provides 0.5% higher Rate than
HDFC Bank)
 Fixed Maturity Policy offered by Various
Mutual Funds for Three Years or More due
to Tax Advantage

5. Need for Equity…. to counter Inflation
Investment Options & Returns
ICICI
Year 1 Year 20
BANK FIXED DEPOSITS
EQUITY MUTUAL FUND
Year 1 Year 20
GOLD
Year 1 Year 20
Year 1 Year 20
Rs.21,911/- After Inflation
Rs.67,275/- Before Inflation
Rs.26,533/- After Inflation
Rs.1,63,665/- Before Inflation
Rs.38,697/- After Inflation
Rs.6,415/- Before Inflation
Rs.3,585/- After Inflation
Rs.56,044/- Before Inflation
Rs.10,000
Rs.10,000
Rs.10,000
Rs.10,000

6. Investment Options For Long Term
Cash
Fixed Deposit/PPF/Post/Recurring
Gold
Real Estate
Equity - Equity Mutual Fund

8. Why Equity Mutual Fund?
 Potential to earn relatively high returns
 High liquidity
 Investors can start with amounts as less as Rs. 1000
 Money is handled by professional fund managers
 Risk Diversification – Invest in 30-40 stocks from various
sectors
 Efficient post-tax returns as Long term capital gains (over 1
year) are tax exempt

9. 9
Common reasons for not investing in
Equity
 I don’t have enough money to invest
 I don’t have time as Principal Sir makes me too busy
 I feel Equity Investment is as good as Gambling
 I don’t have the expertise to follow the market
movements and make investments at the right time.
SYSTEMATIC INVESTMENT PLAN
is the only answer to all reasons.

10. What is SIP ?
 SIP is a Fixed investment at fixed intervals for a long time.
 SIP can be compared to a Recurring Deposit type of
investment.
 SIP reduces cost of holding by
– You buy more & more when the market is down
– You buy less when the market is up
– Over time the market fluctuations are averaged
– This leads to HIGHER RETURNS
 Fights Two main Enemies of Equity Investment – Greed &
Fear
 For long-term wealth creation through equity market you
need discipline and long term time horizon which are
inherent features of SIP

11. 11
Condition for SIP Investment
 Look for a long term commitment
 Never Stop Investing when market is down
 SIPs generate returns over a long period of time;
they do not give results immediately. One has to be
patient while investing in SIPs and be prepared to
give it some time to fructify.

12. Why...? (Need for Savings)
 Emergency
(Medical, Layoff, Unnatural Death)
 Other
– To Finance Large Expense
(House, Marriage etc..)
– Comfortable life at retirement
– To Enhance Lifestyle...etc.

13. Where..? Solutions to Need
For Emergency:
Six Months Salary into Liquid Funds
 For Medical- Easy Liquidity Available till money
received from Mediclaim
 In Lay off -routine financial need to be taken care
of till sufficient time
 Term Plan from Income of Above (If required)

14. Child Marriage
Car
Child Education
Dream
House
Retirement
For Other: Investments for Long Terms with Maximum Saving

15. Power of Compounding
Rs. 1000/- per month SIP (Rs. In Lacs)
Age at
Start
25 30 35 40 45 50
Investment
upto Age
of 60
4.20 3.60 3.00 2.40 1.80 1.20
10% 37.96 22.60 13.26 7.59 4.14 2.05
12% 64.31 34.95 18.79 9.89 5.00 2.30
15% 146.77 69.23 32.44 14.97 6.69 2.75

16. Start Investment at Early Age
Ex-1 Ex-2 Ex-3
Saving Start Age
25 30 40
Per Month SIP
5000 5000 15000
Saving till age of 60
35 Years 30 Years 20 Years
Total Instalment 420 360 240
Total Amt. Saved
21,00,000 18,00,000 36,00,000
Maturity Amount
7,33,85,000 3,46,16,000 2,24,58,000
Assumptions : Return assumed @ 15% CAGR

17. Start Saving Early
The longer you save, the more you make
Save in the Right Asset Class
This will dictate how much wealth you create …
Save Regularly
Remember a little every month, month
on month, goes a long way

18. Questions...?
Thank You...