Download PowerPoint Presentation - SEBI Investor Awareness

Financial Literacy
for
Middle income Investors
Goals
List 5 Goals that you have set for yourselves (if you have not
set any goals, what would you like to set as goals)
1. ____________________
2. ____________________
3. ____________________
4. ____________________
5. ____________________
How can we achieve these Goals ?
• Let's go back to the goals
• What is a Goal?
o Goals are statements about where we want to end up
• Are all goals achieved
o No, Most of our Goals are not achieved
• How can we make sure Goals are achieved
o Set SMART Goals
 Specific
 Measurable
 Achievable
 Realistic
 Time Bound
 Some examples
Now, do you want to restate/revise your
goals
Having understood how to set goals, do you want restate/revise
the 5 Goals you have mentioned earlier
1. __________________
2. __________________
3. __________________
4. __________________
5. __________________
Let's look at how to achieve
goals that we have set for
ourselves
Steps to Achieve Goals
1. Understand Current Networth
2. Protect Current Networth
3. Manage Regular Expenses
4. Generate Surplus to Invest
What is your current networth ?
Networth = Assets - Liabilities
Assets : All those you own
Liabilities : All those you owe
1. List down all those things you own
2. List down all those things you owe
Calculating your Networth
Assets :
It is not easy to calculate your assets (Not all you own are useful for you)
•
•
Things that you require for your day to day living cannot be included in Assets like,
o Television
o Home where you are staying (You will need a house, whatever happens)
o Fridge etc
o These are called life style assets,
You should include only income generating Assets
o List all the income generating assets
 Yourself (Salary you earn)
 Deposits in Bank
 Gold etc
Liabilities
It is however easy to calculate what you owe
o Pending Bills
o Credit Card Loan
o Personal Loan
o Home Loan
So, What is your networth
today ?
Remember, your networth can
change every day, depending
on the value of your assets
What are the chances that your
networth can Change ?
List 5 incidences that can reduce your networth
1.
2.
3.
4.
5.
______________
______________
______________
______________
______________
List 5 Incidences that can incresae your networth
1.
2.
3.
4.
5.
________________
________________
________________
________________
________________
How to ensure that your networth is not
reduced ?
• Protect yourself (Your Monthly salary is one of the biggest
asset to your family, ensure that your income is always
available to your family, by protecting your life - Take an
Insurance cover
o For Life
o For Health
 so that in case of any unfortunate happening, Income
still be made available to family)
• Protect your other income generating Assets
o Home- Home Insurance
Quick Recap
•
•
•
•
Importance of Setting Goals
Steps to Achieve Goals
Understanding networth
Protecting the networth to ensure that our networth is not
eroded
Next,
• Managing Regular expenses
• Generating Surplus for Investments/Savings
How long do you plan to work
?
5 years, 10 years, 15 Years, 20
Years?
What happens if you stop working ?
• Do you have pensions plan?
• How much pension you will need ?
o Rs 20,000 a month,Rs 30,000 a month, ...
• How long you will need pension ?
o for 10 Years, for 20 Years, for 30 Years
• Will your spouse also need pension ?
o What will your spouse do alone, does she have separate
plan
• What are you planning to do for your daughter's marriage
• What you planning to do for your children's higher education
Is it possible to manage all
those expenses
Yes, provided if you plan well in
advance.
How much in advance ?
You have to start today, right now.
Understand power of compounding
• If you save Rs 10 a day for 10 Years at a bank which gives
you 8% interest how much money you will have at the end of
10 years?
• If you save similar amount for 20 Years how much it will be ?
• What do we understand from this ?
• Why is the difference between 10 Year investment and 20
Year investment so much ?
So you must have a target for
Saving, however small it may
be
Start from today
Where to invest
Please consult a trusted financial advisor (or your banker)
before doing any investements
• Safe Investment options
o PPF
o Bank Deposits
o NSC/KVP
• Medium Risk Investments
o Company Deposits
o Mutual Fund Deposits
• High Risk Investments
o Investments in Stock Markets
Be Careful before investing
• Financial Products like insurance, equity and other
innovative schemes which claim to guarantee more than
15% return are difficult to understand by you and me
• Most of these products are sold by commission agents who
are trying to maximise their earnings
• Identify a trusted advisor, who will be able to provide
guidance, who is not interested in earning commissions
• Do reference check of the advisors before you engage with
them
• Make your own research about the product before you buy,
• Learn Basics skills of Money Management
• Ask all details about the charges, There are lot of hidden
charges when you buy financial products. Do comparison of
the charges yourselves
How to increase surplus for
savings
Budget
It is easier said than done
• Make a budget for your family immediately
o Rent/Loan Repayment
o Travel
o Food
o Entertainment
o Education
o Misc
• Ensure that you stick to your budget
o There will always be temptation to exceed your budget
o Think twice, thrice before you make expenses which are
not in the budget
• Budget should always produce surplus for you (Rework
Budget to create generous surplus)
Creating wealth is not difficult,
All you need is self discipline in
your spending and take the
right advise while Investing