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Sample Family Financial Plan
Prepared for
Mr A Mishra & Mrs P Mishra
Advisor: Tanwir Alam
n
The content of this report is for illustrative purposes only n
Copywrite OMNIMax Software Solutions Ltd
Introduction ..........................................................................................................................3
Personal Details ....................................................................................................................4
Anupam and Praveen Family Goals .......................................................................................6
Anupam and Praveen Asset Schedule ...................................................................................7
Anupam and Praveen Annual Wealth Creation ......................................................................8
Retirement Planning............................................................................................................10
Implications for Early Demise Anupam ...............................................................................14
Investment Plan - Sample ...................................................................................................16
Current Situation.................................................................................................................16
Investment Objectives .........................................................................................................17
Asset Allocation - Balanced .................................................................................................18
Portfolio Recommendations................................................................................................20
Market Update at November 2008.......................................................................................24
Vital to take profit................................................................................................................25
Opportunities ......................................................................................................................25
Final Word...........................................................................................................................25
Our Current Portfolio Recommendations ............................................................................26
Cash and Fixed Interest ......................................................................................................26
Investment Timeframe: 10 years plus. Target Return: 5.0% to 8.0%pa. after tax.
(7.5% to 12.0% gross at 33% tax.) ....................................................................................27
Implementation ...................................................................................................................28
Important Points About a Diversified Portfolio....................................................................29
Investment Markets ............................................................................................................29
SIP Investment....................................................................................................................30
Risk Management Module - Life Cover ...............................................................................32
Life Insurance Analysis for Anupam Mishra........................................................................32
Risk Protection Health Insurance .......................................................................................34
Major Medical Analysis for Anupam Mishra........................................................................34
Risk Management - General Insurance ...............................................................................35
Fire and General Analysis for Fire and General ....................................................................35
Disclaimer ...........................................................................................................................36
Sample Family Financial Plan
Introduction
Dear Anupam Mishra & Praveen,
We are pleased to prepare this financial plan for you.
A full financial plan would cover Cash Management, Risk Management, Retirement Planning, Investment Planning and
Estate & Tax Planning. The sections covered in this plan are outlined on the contents page.
The following plan will assess your current situation and make recommendations in line with your objectives based on
the information you have supplied regarding your life situation. Many assumptions have been made. These will have to
be confirmed and modified in the light of actual events. The solutions adopted in this plan need to be regularly reviewed.
We urge you to study these recommendations carefully and will answer any questions you may have. You need to make
important decisions on the urgency and timing of the issues dealt within this plan. The effort you have taken to reach
this point is well worthwhile. We would advise you to regularly review and re-visit you plan in terms of changing
objectives and changes to the lifestyle.
Tanwir Alam
3E Advisors
Sample Family Financial Plan
Personal Details
Client Details
Client Name
1 Mishra Family
(Demo Plan + Insurance Review)
Client Type
Couple
Address
Unit -5
32, Tollenhan Road
London 400075
Ph(hm)
Ph(wk)
Email
[email protected]
Name
PAN
Mr Anupam Mishra
DOB
Tax Rate
01/01/1957
20%
Name
PAN
Mrs Praveen Mishra
DOB
Tax Rate
03/04/1957
0% - No Tax Rate
+91 22 30405060
Holder Details
Associated Party Details
Contact Type
Name
Address
Accountant
Mr Hanish Bansal
Contact Type
Name
Address
Lawyer
Mr Lakshmi Mittal
Contact Type
Name
Address
Daughter
Mrs Ruchi Chawla
Contact Type
Name
Address
Grandchild
Ms Rita Chawla
Contact Type
Name
Address
Sample Family Financial Plan
04/03/1948
DOB
Ph(hm
Ph(wk)
Email
11/12/1951
DOB
Ph(hm)
Ph(wk)
Email
12/12/1980
DOB
03/04/2005
Father
Mr Raj Mishra
Address:
Contact Type
Name:
Address:
DOB
Ph(hm)
Ph(wk)
Email
Ph(hm)
Ph(wk)
Email
Father
Mr Raj Mishra
DOB
Ph(hm)
Ph(wk)
Email
01/04/1925
Anupam and Praveen Family Goals
Please confirm the following list accurately reflects your financial planning objectives.
Short Term Goals (less than 1 year)
To take control of our personal spending
n
Put in place a life plan to cover insurance needs
n
Have a emergency fund
n
Invest lump sum of Rs.15,00,000
n
Medium Term Goals (1 to 5 years)
Purchase a Holiday Home for Rs. 2,000,000 in 5 years
n
Long Term Goals (5 years or more)
Retire at 60 years of age and a foreign tour at Rs. 500,000 per year
n
Buy a Car in 8 Years time for Rs. 500,000
n
House renovation in 11 years time for Rs. 500,000
n
Secure funding for Grandchild higher education
n
You need to understand the time horizon for your goals can effect your investment plans. It is always prudent to cover your short
term needs initially and then set aside funds for investments over the longer term.
Sample Family Financial Plan
Personal Details
What you Own (Assets)
Home
Rs. 20,00,000.00
Other Properties
Rs. 10,00,000.00
Superannuation
Rs. 5,00,000.00
Other Savings
Rs. 15,00,000.00
Value Of Business
Rs. 50,00,000.00
Vehicles
Rs. 2,00,000.00
Other Assets
Rs. 20,000.00
Rs. 1,02,20,000.00
What you Owe (Liabilities)
Mortgage
Rs. 1,00,00,000.00
Personal Loan
Rs. 3,00,000.00
Rs. 1,03,00,000.00
Net Worth
Rs. 80,000.00-
Please note, it is prudent to share Financial Details with your advisor since we offer complete client confidentiality. We value your business and
relationship and would be committed to best service with you. The quality of our advice could get altered incase of inadequacy of data shared by
Sample Family Financial Plan
Anupam and Praveen Annual Wealth Creation
Maintaining good budgeting principles assists in managing your income and outgoings. Discipline in this area will reap significant
rewards in the future.
Effective savings cannot take place until you know what you have to spare. It is not something that you will achieve first time! There
will always be something you have forgotten. The information you have given us must be taken as provisional until the budget has
run for a period. The important thing is that you know what is happening to your hard earned money! You must be in control.
The following table lists the income and expenses that you have supplied:
Income
Combined Salary/Wages (gross)
Rs. 5,00,000.00
Combined Salary/Wages (net)
Rs. 4,00,000.00
Other Income Rent (gross)
Rs. 3,50,000.00
Other Income Rent (net)
Rs. 3,00,000.00
Fixed Expenses
Debt Repayments
80,000.00
Interest Payments
Rs. 5,000.00
Transport
Rs. 50,000.00
Insurance
Rs. 25,000.00
Rent/Bonds
Rs. 20,000.00
Education
Rs. 35,000.00
Utilities
Rs. 40,000.00
Food
Rs. 50,000.00
Clothing
Rs. 15,000.00
Family Support
Rs. 5,000.00
Medical
Rs. 2,500.00
Replacement
Rs. 0.00
Repairs
Rs. 10,000.00
Rs. 3,37,500.00
Discretionary Expenses
Donations
Rs. 0.00
Entertainment
Rs. 0.00
Holidays
Rs. 15,000.00
Newspapers
Rs. 5,000.00
Pets
Rs. 0.00
Rs. 20,000.00
Total Expenses
Rs. 3,57,500.00
Total Surplus
Rs. 3,42,500.00
Sample Family Financial Plan
Income Expenditure Breakdown
Debt (17.65%)
Tax (10.00%)
Spare (40.29%)
Fixed Expenses (29.71%)
Discretionary Expenses (2.35%)
Summary:
Your total combined income is Rs. 8,50,000.00
You have paid tax of Rs. 1,50,000.00.
Your income after tax is Rs. 7,00,000.00.
After fixed expenses of Rs. 3,37,500.00 and discretionary expenditure of Rs. 20,000.00 you are left with Rs. 3,42,500.00 per year.
Your future financial security will depend on how successfully this spare income is used..
Please note while a client has little control over fixed expenses he has a greater degree of control over the discretionary
expenses. We aim to graphically represent where money comes in from and where it is spent. As you empower the client
to take control over spending, it makes clients more responsible for their actions.
Sample Family Financial Plan
Retirement Planning
The above numericals support your needs and goals at various ages and their financial impact on your overall portfolio.
You are currently aged 51, this projection shows the sustainability of drawing income from your savings of Rs. 2,00,000 beginning at
age 60 through until age 85. This projection assumes that you will draw down capital as well as income to meet your total drawings.
We observe based on your goals and aspirations you will be slow to accumulate assets upto age 60 and will then build assets very
quickly during the retirement years to leave behind a good corpus for your family at your terminal age.
Age and Income Parameters
Retirement Age : 60
n
Retirement Override Age : 60
n
Life Expectancy : 85
n
Income Required : Rs. 2,00,000.00
n
Assets
Current asset valuation Rs. 15,00,000
n
Savings / Expenses Period(s)
Regular Savings - Save Rs. 3,00,000 per year from the age of 55 to 60
n
Overseas Travel - Save Rs. 5,00,000- per year from the age of 60 to 65
n
Postal Savings - Save Rs. 1,00,000 per year from the age of 52 to 57
n
Deposits/Withdrawals
Car Purchase - Withdraw Rs. 5,00,000- at the age of 55
n
House Renovation - Withdraw Rs. 3,50,000- at the age of 58
n
Holiday Home - Withdraw Rs. 20,00,000- at the age of 60
n
Pensions
Work Pension - Receive a pension of Rs. 5,00,000 per year starting at the age of 60
n
The calculations in the life plan cashflow analysis is based on the following assumptions
All inputs reflect today's values and are captured within the analysis, and in turn are adjusted for the impact of inflation
n
Returns are calculated on an annual basis only
n
The exact age of the client establishes the annual cycle
n
This projection has an after tax return of 10.0% and an inflation rate of 6.0% with an override interest rate of 8.0% and
override age of 60.0
Sample Family Financial Plan
Wealth Graph
Age
Savings
Deposit
Pension
Education
Income Require
Portfolio Value
51
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 15,00,000
52
Rs. 1,06,000
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 17,56,000
53
Rs. 1,12,360
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 20,43,960
54
Rs. 1,19,102
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 23,67,458
55
Rs. 5,04,991
Rs. 6,31,238-
Rs. 0
Rs. 0
Rs. 0
Rs. 24,77,956
56
Rs. 5,35,290
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 32,61,041
57
Rs. 5,67,408
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 41,54,553
58
Rs. 4,51,089
Rs. 3,50,000-
Rs. 0
Rs. 0
Rs. 0
Rs. 46,71,098
59
Rs. 4,78,154
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 56,16,362
60
Rs. 3,37,896-
Rs. 20,00,000-
Rs. 8,44,739
Rs. 0
Rs. 3,37,896
Rs. 42,34,619
61
Rs. 8,95,424-
Rs. 0
Rs. 8,95,424
Rs. 0
Rs. 3,58,170
Rs. 42,15,219
62
Rs. 9,49,149-
Rs. 0
Rs. 9,49,149
Rs. 0
Rs. 3,79,660
Rs. 41,72,776
63
Rs. 10,06,098-
Rs. 0
Rs. 10,06,098
Rs. 0
Rs. 4,02,439
Rs. 41,04,159
64
Rs. 10,66,464-
Rs. 0
Rs. 10,66,464
Rs. 0
Rs. 4,26,586
Rs. 40,05,906
65
Rs. 11,30,452-
Rs. 0
Rs. 11,30,452
Rs. 0
Rs. 4,52,181
Rs. 38,74,198
Sample Family Financial Plan
Implications for Early Demise Anupam
You are currently aged 51, this projection shows the sustainability of drawing income from your savings of Rs. 2,00,000 beginning at
age 51 through until age 85. This projection assumes that you will draw down capital as well as income to meet your total drawings.
Praveen, we advice you that you will be out of assets incase of Anupam's demise at the current age, by another 9 years from now.
We advice you appropriate life cover for Anupam and delay the purchase of your holiday home.
Age and Income Parameters
Retirement Age : 51
n
Retirement Override Age : 60
n
Life Expectancy : 85
n
Income Required : Rs. 2,00,000.00
n
Assets
Current asset valuation Rs. 15,00,000
n
Savings / Expenses Period(s)
Regular Savings - Save Rs. 3,00,000 per year from the age of 55 to 60
n
Overseas Travel - Save Rs. 5,00,000- per year from the age of 60 to 65
n
Postal Savings - Save Rs. 1,00,000 per year from the age of 52 to 57
n
Deposits/Withdrawals
Car Purchase - Withdraw Rs. 5,00,000- at the age of 55
n
House Renovation - Withdraw Rs. 3,50,000- at the age of 58
n
Holiday Home - Withdraw Rs. 20,00,000- at the age of 60
n
Pensions
Work Pension - Receive a pension of Rs. 5,00,000 per year starting at the age of 60
n
The calculations in the life plan cashflow analysis is based on the following assumptions
All inputs reflect today's values and are captured within the analysis, and in turn are adjusted for the impact of inflation
n
Returns are calculated on an annual basis only
n
The exact age of the client establishes the annual cycle
n
Sample Family Financial Plan
This projection has an after tax return of 10.0% and an inflation rate of 6.0% with an override interest
rate of 8.0% and override age of 60.0
Wealth Graph
Age
Savings
Deposit
Pensions
Education
Income Required
Portfolio Value
51
Rs. 0
Rs. 0
Rs. 0
Rs. 0
Rs. 2,00,000
Rs. 13,00,000
52
Rs. 1,06,000
Rs. 0
Rs. 0
Rs. 0
Rs. 2,12,000
Rs. 13,24,000
53
Rs. 1,12,360
Rs. 0
Rs. 0
Rs. 0
Rs. 2,24,720
Rs. 13,44,040
54
Rs. 1,19,102
Rs. 0
Rs. 0
Rs. 0
Rs. 2,38,203
Rs. 13,59,342
55
Rs. 5,04,991
Rs. 6,31,238-
Rs. 0
Rs. 0
Rs. 2,52,495
Rs. 11,16,534
56
Rs. 5,35,290
Rs. 0
Rs. 0
Rs. 0
Rs. 2,67,645
Rs. 14,95,832
57
Rs. 5,67,408
Rs. 0
Rs. 0
Rs. 0
Rs. 2,83,704
Rs. 19,29,119
58
Rs. 4,51,089
Rs. 5,26,271-
Rs. 0
Rs. 0
Rs. 3,00,726
Rs. 17,46,123
59
Rs. 4,78,154
Rs. 0
Rs. 0
Rs. 0
Rs. 3,18,770
Rs. 20,80,121
60
Rs. 3,37,896-
Rs. 33,78,958-
Rs. 8,44,739
Rs. 0
Rs. 3,37,896
Rs. 9,63,480-
Sample Family Financial Plan
Investment Plan - Sample
Current Situation
You are seeking investment advice in relation to Rs. 15,00,000.
Investment Objectives
Your investment objectives have been listed as follows:
"Accumulate assets to provide for a comfortable retirement income."
n
"Arrange an investment portfolio to reduce the risk of loss"
n
"Provide an adequate standard of living for your family in the event of your death"
n
"Save more money on a regular basis"
n
The following statements define your investor profile as a Balanced investor:
3E Advisors seeks to manage your portfolio within the criteria set and will seek to give you exposure to Funds that are performing in
the top quartile and to adjust your assets allocation to meet current economic conditions whilst maintaining your Investment Profile.
Most investments are medium to long-term. International Bond Funds are medium to long-term. Bond Funds 1-3 years; shares 5
years; property 5-7 years. Returns will always be dependent on current economic conditions and no absolute guarantee is possible.
At each review you are confirming the strategy adopted as detailed above. If this is no longer appropriate you should notify your
advisor.
Asset Allocation - Balanced
Cash (100.00%)
Sample Family Financial Plan
Cash (8.00%)
Debt (42.00%)
Equity (15.00%)
Property (8.00%)
International Equity (27.00%)
Client Questionnaire
Defensive
Conservative
Balanced
Growth
Aggressive
Cash
12.0%
10.0%
8.0%
3.0%
1.0%
Debt
68.0%
60.0%
42.0%
27.0%
9.0%
Gilt
0.0%
0.0%
0.0%
0.0%
0.0%
Property
6.0%
6.0%
8.0%
11.0%
12.0%
Equity
5.0%
10.0%
15.0%
20.0%
21.0%
International Equity
9.0%
14.0%
27.0%
33.0%
42.0%
Alternative Assets
0.0%
0.0%
0.0%
6.0%
15.0%
Sector
Ideal Percentage
Ideal Amount
Actual Amount
Cash
8.0 %
Rs. 1,20,000
Rs. 1,20,000
Debt
42.0 %
Rs. 6,30,000
Rs. 6,30,000
Gilt
0.0 %
Rs. 0
Rs. 0
Property
8.0 %
Rs. 1,20,000
Rs. 1,20,000
Equity
15.0 %
Rs. 2,25,000
Rs. 2,25,000
International Equity
27.0 %
Rs. 4,05,000
Rs. 4,05,000
Alternative Assets
0.0 %
Rs. 0
Rs. 0
Sample Family Financial Plan
Portfolio Recommendations
Cash
Investment
Amount
HDFC Cash Management Fund - Savings Plan-Daily Dividend Option
Rs. 60,000
Aims at providing reasonable Income along with high liquidity
Entry Load: 0%
Exit Load: 0%
Rs. 60,000
Debt
Investment
Amount
SBI Magnum Monthly Income Plan - Growth
Rs. 1,57,500
FT India Monthly Income Plan-Growth
DSP BlackRock Strategic Bond Fund - Regular Plan - Growth
Rs. 1,57,500
Rs. 1,57,500
Property
Investment
Amount
HDFC Cash Management Fund - Savings Plan-Daily Dividend Option
Rs. 60,000
HSBC Cash Fund - Regular - Growth
Rs. 60,000
Investment
Investment
HDFC Growth Fund - Growth Option
Amount
ICICI Prudential Dynamic Plan-Growth Option
Rs. 56,250
Reliance Equity Fund-Growth Plan-Growth Option
Rs. 56,250
DSP BlackRock Opportunities Fund - Institutional Plan - Growth
Rs. 28,125
ASIAN HOTELS LTD
Rs. 28,125
Fidelity Equity Fund-Growth Option
Rs. 28,125
Rs. 28,125
International Equity
Investment
Amount
Sundaram Global Advantage Fund Growth
Rs. 4,05,000
This is where your economic overview will appear. This can be updated as required and all previous inputs are captured
and used when creating historic documents.
Sample only Market Update at November 2008
We have seen some dramatic changes in markets over the last quarter including oil prices achieving all time highs and recently
easing substantially, high inflation figures throughout the developed world (in part due to accelerating oil and commodity prices)
and one of the biggest market crashes in history. Reserve Banks and Governments have been working together with billion dollar
stimulus packages and dramatically dropping interest rates by, at times, one percent in a single meeting to help alleviate what
Sample Family Financial Plan
could have been the biggest ‘Banking Armageddon’ in history. Thankfully Governments and Reserve Banks have worked hard and
acted fast to help stimulate economies and markets.
Recent declines are providing some very good buying opportunities, as always with markets, they overextend to the upside but also
to the downside. One fund manager had commented that the buying opportunities currently available are among the best he has
seen since the mid 70’s oil shocks.
There is still a considerable amount of uncertainty in the market with the credit crisis unfolding in the US. Volatility has been
unprecedented with volatility indices showing extreme levels of volatility far in excess to other episodes of investor alarm, such as the
tech wreck, and the significant corporate failures in early 2000. The excessive volatility has also been shown with indices like the
Dow Jones seeing swings in excess of 9% in a single day. Investors were so fearful of markets that the returns for US Government
securities were in negative territory for the first time ever, meaning that investors were paying the Government to use their money
rather than the Government paying investors for the use of it.
This all illustrates that what is currently happening in markets is not based on market fundamentals but based on fear. A famous
quote by Warren Buffet one of the century’s most successful investors is “be fearful when others are greedy and be greedy when
others are fearful”. Mr Buffet has stated recently that he has been selling his bond holdings and buying a large number of stocks for
his personal portfolio. Various fund managers and economic researchers have commented that the current environment will probably
provide the best buying opportunity for the next twenty years.
The expected outlook is that there will continue to be sub-par economic growth in the developed world, balanced by above-trend
growth from the likes of China and India over the next two years. Thankfully with clients having well diversified portfolios the impacts
of issues currently affecting markets have been significantly reduced. Going forward there is certainly bound to be further volatility,
but as the past has taught us, after steep declines markets tend to have a good recovery. Vital to take profit.
Over the last 2 – 3 years we have been careful to withdraw money from the investments in shares and this has worked very well.
Although India is currently in a recession the significant reductions in interest rates and weakness in our currency will help the
recovery effort going forward. We have also been careful to withdraw money from the Shares in the last 2 years. The Sensex ended
down 53% for the last year. Those who failed to take profit will be exposed.
Opportunities
Listed property has not separated itself from the volatility over the last 12 months. Due to our previously high interest rates and the
implosions of some of the leading property trusts investors have become more cautious with the local sector. The decline in interest
rates is seen as a good sign for this sector as it should reduce their mortgage/financing costs. Share valuations are looking very
attractive due to the current environment. Companies, which are still making good profit and are light years ahead from where they
were even 10 years ago, have been punished by investor sentiment. Most companies are currently trading at the prices they had
achieved in the mid 1990’s, which is discounting the growth, which they have enjoyed over the past 10+ years. Circumstances like
these provide further evidence that investors are not trading on fundamentals but on current market sentiment, adding to the
argument that now is the time to buy.
Europe and Asia have not been able to shield themselves from the issues which are infecting the global financial markets seeing
declines as significant as in the US, for example China’s market is 1/3 the size it was at it’s peak in October last year. While there is
good reason to believe that their domestic infrastructure will underpin the good growth in emerging markets, more account needs to
be taken with their links to their slowing trade partners.The emerging market economies are still expected to grow faster than their
developed economy counterparts but at a slower rate than previously expected.
Final Word
Most forecasts seem to agree that there will be continued volatility throughout 2008 and into the early stages of 2009. There are still
worries about the US economy and the credit crunch and this is likely to have an impact on returns and volatility going forward.
Diversification and limiting exposure to any-one investment is looking to be the best course of action in these volatile times.
The recent declines in most markets means that share prices in all parts of the world are actually quite cheap currently, and so the
Sample Family Financial Plan
coming year will present buying opportunities for the brave.
Governments have been doing everything in their power to support economies including significantly reducing cash rates, providing
stimulus packages for individuals, providing rescue packages and funding lines to major institutions and providing capital guarantees
for banks and other financial institutions. This is a significant turnaround from past periods of unease, which provides much needed
support and confidence about markets and economies going forward.
As always, we maintain a long term view: We recommend securing profits from areas that have seen strong growth, buying in times
of weakness and we recommend trying to ignore volatility (such as we are seeing now) as that is part and parcel of the long term
journey.
Our Current Portfolio Recommendations
Cash and Fixed Interest
Cash: Liquidity ranges from On Call to 90days. Target Return: 3.5% to 4.5%pa. after tax. (5.2% to 6.7% gross at 33% tax.) The
significant decline in our Official Cash Rate has meant a significant decline in cash returns. Further easing in monetary policy is
expected so this will inevitably have a significant impact on cash returns through to mid 2009
Fixed Interest: Investment Timeframe 1 - 5 years as required. Target Return: 4.0% to 5.0%pa. After tax. (6% to 7.5% gross at 33%
tax) over this timeframe. As with cash returns fixed interest returns have been dropping significantly due to the easing in monetary
policy and the introduction of the Guarantee Scheme from the Government.
Property: As stated above there are some significant opportunities for investment in this area, both with onshore and offshore trusts.
We currently use a mixture of listed property investments and unlisted property funds. The main differences between the two are that
the listed funds are more volatile but also more liquid and the unlisted funds are less volatile but have less liquidity. Most property
funds are currently significantly discounted to NAV, which makes them very attractive in the current market conditions. The
introduction of the PIE regime also makes these property funds more tax efficient and more profitable.
Investment Timeframe: 7 years plus.
Target Return: 5.0 to 7.0%pa. after tax (7.5% to 10.5% gross at 33% tax) over this timeframe.
Onshore Equity (Australia and New Zealand): Whilst Indiahas a wide economic baseand it is the place where most clients spend
their rupees and there is no exchange rate risk. There a number of funds which also provide an effective tax position as well.
Investment Timeframe: 10 years plus. Target Return: 5.0% to 8.0%pa. after tax. (7.5% to 12.0% gross at 33% tax.)
International Equities: We prefer to work with absolute return managers where possible. The strategy they employ can reduce
volatility and improve returns for example one of the managers we use have declined 10% in the last year not the 38% decline seen
in the wider offshore market. We also use some capital protected funds, which give exposure to the upside international shares but
also limits the negative side. The international funds give significant diversification over different economies and asset types. One
fund may have exposure to 300 shares and this avoids the risk of just holding one company. The currency has been against
investors over the last couple of years but has in recent times cushioned investors from the large declines offshore.
Investment Timeframe: 10 years plus. Target Return: 5.0% to 9.0%pa. After tax (7.5% to 13.4% gross at 33% tax) over this
timeframe.
Specialty Funds/Absolute Return Strategies: We have used these funds extensively in the past with very good results. These funds
have provided excellent returns in the past and have had a low correlation to current market conditions. These funds aim to provide
a higher return than fixed interest without the volatility of shares. The use of these funds has provided significant protection from the
declining markets over the past year with some funds providing returns in excess of 10%.
Investment Timeframe: 5 to 11 years.
Target Return: 5.0% to 12%pa. after tax (9.0% to 20.9% gross at 33% tax.) over this timeframe.
Sample Family Financial Plan
Implementation
1. Please mention your bank account :
Your HDFC Cash Management Fund - Savings Plan-Daily Dividend Option will be the cash account for your portfolio:
Acct Name: Mr A Mishra & Mrs P Mishra
Bank: HDFC Mutual Fund
Acct No: TBN
This account will be used for any transactions you make within existing investment s structure also
2. Please sign the following forms:
Form Name
DSP BlackRock Mutual Fund Application Form
Fidelity Mutual Fund Application Form
Franklin Templeton Mutual Fund Application Form
HDFC Mutual Fund Application Form
HSBC Mutual Fund Application Form
ICICI Prudential Mutual Fund Application Form
National Stock Exchange Application Form
Reliance Mutual Fund Application Form
SBI Mutual Fund Application Form
Sundaram Mutual Fund Application Form
Unitech Real Estate Fund Application Form
Note: Please provide a certified copy of the PAN Card and the KYC forms of all holders
3. Funds Transfer:
Place all funds in the HDFC Cash Management Fund - Savings Plan-Daily Dividend Option Sign funds
transfer authority for the following amounts:
Provider
Amount
DSP BlackRock Mutual Fund
Rs. 1,85,625
Fidelity Mutual Fund
Rs. 28,125
Franklin Templeton Mutual Fund
Rs. 1,57,500
HDFC Mutual Fund
Rs. 1,16,250
HSBC Mutual Fund
Rs. 60,000
ICICI Prudential Mutual Fund
Rs. 56,250
National Stock Exchange
Rs. 28,125
Reliance Mutual Fund
Rs. 28,125
SBI Mutual Fund
Rs. 3,15,000
Sundaram Mutual Fund
Rs. 4,05,000
Unitech Real Estate Fund
Rs. 1,20,000
Sample Family Financial Plan
Important Points About a Diversified Portfolio
The Benefits of a Diversified Portfolio
Each of the investment funds is diversified within itself with many underlying assets. There is diversification over many market
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sectors and asset types as well as geographical locations.
There is diversification by investments style. Each of the fund managers has a variation of an investment approach.
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Investments, where possible, are selected on qualitative and quantitative criteria. Independent economic research has been
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applied to the asset allocation.
The performance of each fund is monitored to ensure competitive returns for the current economic conditions.
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Investment Markets
The investment markets are cyclical in nature. This means that sometimes investments will go down in value for a period of time.
However, the markets will also recover and go on to give good returns, as they have on every occasion in the past. It is for this
reason that an investment portfolio must be viewed over a timeframe in excess of 5 years. If capitalism fails, so do the banks!
Maintaining a long-term strategy through short-term disruptions is the key to successful investing. This will sometimes test your
nerve!
SIP Investment
SIP Investment Saving regularly is one of the most powerful disciplines within a personal financial plan. The amount saved needs to
be increased each year by the amount of inflation.
The compounding of returns over the years is your "best friend".
Regular saving provides the opportunity to "rupee cost average" which is without doubt one of the smartest strategies employed by
investors around the world.
Unlike bank deposits or mortgage funds growth investments do not go up in a straight line but can return several time more,
overtime. Saving regularly into these investments can work to the investors' advantage when the markets go up and when they go
down!
3E Advisors has selected the following solution for you to rupee cost average into.
Both funds are the best performers in their category and we recommend use invest in either of them over a longer term and
look at a horizon of at least 3-5 years.
Investment
Amount
Birla Sun Life Tax Plan Dividend Option
Rs. 5,000.00
HDFC TaxSaver-Dividend Plan
Rs. 5,000.00
Note: Please also provide a copy of your PAN card and a scanned copy of the KYC Form for each investor.
Sample Family Financial Plan
Risk Management Module - Life Cover
Risk Management identifies those circumstances that could compromise your path to reaching your personal objectives and goals.
Analysis of this is traditionally broken down into the following areas:
Life Cover
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Income Protection
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Critical Care
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Health Cover
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General Risk Cover (Fire and Theft)
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Either you can cover these circumstances from your own resources or you can pay an insurance company to cover all or part of the
risk. If you failed to insure your home and it was destroyed by fire then you would have to use other assets to replace it e.g. your
retirement fund, or, in a worst-case scenario, you could owe the mortgage company for a house you do not have!
Life Insurance Analysis for Anupam Mishra
Investment
Amount
Final Expenses
Rs. 30,000.00
Administration
Rs. 2,500.00
Repay Mortgage
Rs. 10,00,000.00
Other Loans
Rs. 1,00,000.00
Education Needs
Rs. 15,00,000.00
Other Cash Needs
Rs. 0.00
Capital required to supply income of Rs. 3,00,000.00 for 15 year(s)
Rs. 22,81,823.85
for your survivors if invested with a 10.00 % return
Total Estate Assets Required
Rs. 50,98,326.03
Funds available to meet estate needs
Existing Life Benefits:
Rs. 50,000.00
Superannuation Benefits:
Rs. 0.00
Saleable Assets:
Rs. 1,00,000.00
Other Funds:
Rs. 0.00
Total Funds Available from Estate
Rs. 1,50,000.00
Your current estate assets would be Rs. 49,48,326.03 less than the amount needed to meet the requirements you have given.
We bring out the real need for insurance and in exact amount.
We need to take into account the liablities and obligations of the person incase he/she was to die now.
We suggest a term plan for Rs 50 Lakhs for ABC Insurance Company
Any insurance quotation that is presented will still be “subject to underwriting” and existing conditions may influence the premium
and coverage.
Never cancel any existing insurance cover until new cover is in place and fully confirmed.
Sample Family Financial Plan
Risk Protection – Health Insurance
There are many different types of health insurance available. We recommend policies that have the ability to pay 100% of the costs.
Policies that only cover 80% can leave you with a significant liability after major surgery.
It is possible to reduce the cost of health insurance in the following ways:
1. The policyholder can choose to pay an initial excess on any claim
2. Some policies reduce charges by not covering doctor's visits and prescription charges. The above strategies are a way of q
“self-underwriting” and reducing cost and are another way of making an emergency cash fund work hard for you. For most people
this is the most cost effective solution.
Major Medical Analysis for Anupam Mishra
You have indicated that you do currently have existing Medical Insurance cover.
Since you already have a Medical Cover of Rs 300000/- with an existing insurance company we suggest you continue the same
policy and renew the policy from time to time
Any insurance quotation that is presented will still be “subject to underwriting” and existing conditions may influence the
premium and coverage. Never cancel any existing insurance cover until new cover is in place and fully confirmed.
Risk Management - General Insurance
It is important to review your general insurances regularly to ensure that you are getting the best value for money and that you are
still insured appropriately. There are some important variations in the cover offered by different companies especially with respect to
natural disasters and major events. You advisor will be able to offer confirmation or guidance about the issues you need to be aware
of in this area.
As a rule, you will usually save money by having several policies grouped together with one insurer. This can also save on
policy fees.
Fire and General Analysis for Fire and General
You have the following Insurances:
Owner
Type
Description
Item Value
Anupam
Dwelling
House
Praveen
Contents
Anupam
Vehicle
Insured Value
Annual Premium
Provider
Rs. 10,00,000.00 Rs. 10,00,000.00
Rs. 8,000.00
abc Insurance Co
Jewellery
Rs. 5,00,000.00
Rs. 50,000.00
Rs. 2,500.00
AIS Insurance
Toyota Corrolla
Rs. 90,000.00
Rs. 90,000.00
Rs. 3,500.00
FIT Motor Insurance
Please note that never take your personal assets from granted and keep them protected from Fire, Floods and Earthquakes. Also,
take into account the risk for burglary and theft which always surrounds you.
Any insurance quotation that is presented will still be “subject to underwriting” and existing conditions may influence the premium and
coverage. Never cancel any existing insurance cover until new cover is in place and fully confirmed.
Sample Family Financial Plan
Disclaimer
Dear Mr A Mishra & Mrs P Mishra,
The recommended products and strategies in this Implementation Plan are to be read in conjunction with the 3E Advisors Financial
Plan (and its disclaimer) prepared specially for you. These recommendations given here flow out of an analysis of your Investment
Profile and your goals and objectives as presented to us.
In addition, it is important to be aware of the following:
All market linked investment returns will reflect the performance of the underlying assets of the products you have chosen and will
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go up and down with the value of the products assets.
With all international investments you are exposed to the added risk of currency fluctuations.
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Most Investments are medium to long term and the minimum investment term must be considered before making an investment
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(Fixed Interest Trusts 1-3 years; Shares 5 years; Property 5-7 years.
Any report product information goods services or advice ("advice") given to you has been prepared from the information supplied
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to us from you. Any decisions made by you in reliance upon or in relation to such advice are to be made by you and not by
3E Advisors. You are therefore exclusively responsible for all acts and decisions in making any decisions in reliance on any advice
or materials supplied to us by you.
Any calculated projections or any predictions given by us to you are not guaranteed and are merely an expression of opinion
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only and are not intended for other than illustration purposes only.
Whilst every care has been exercised and the advice and the statements made are based on information believed to be accurate
that no liability is accepted by 3E Advisors, or its employees or officers or outside suppliers of information for any error or omission
contained herein. It is strongly recommended that this qualification be borne in mind when making any decisions in reliance upon any
of the advice contained herein. You are exclusively responsible for all such decisions. Further, our responsibility in connection with
any materials or advice given by us to you is supplied to you alone and neither we nor our employees either directly or indirectly
accept any responsibility howsoever arising on any grounds whatsoever to any other party.
Nothing in the above disclaimer shall be read as limiting the rights and remedies available to persons under Indian Law
Tanwir Alam
3E Advisors
Sample Family Financial Plan