Just 10% for financial security

Just for Future Financial Security10%

•Consider the case of a person starting to work from the age of 25, with an annual salary of Rs. 3,00,000 and continues to work till age 60.

•Let’s assume that his salary increases at the rate of 10% each year.

•By the time he retires at age 60, he would have totally earned through his salaries, an amount of Rs. 8,97,38,042 (Approx. 9 crore rupees).

But majority of people like him would not have saved even 20% of that amount when they retired !!!

Now consider a situation when he saves a meager 10% of his salary every year until he retires and the funds are growing at annual rate of 10%.

He would have still saved a mind boggling amount of Rs. 89,73,804 (Eighty Nine Lakhs Seventy Three Thousand Eight Hundred and Four rupees). Sounds easy, but not many achieve it, the reason being, most amongst us, don’t commit to long term savings

Total earning from age 23 to age 60: Rs. 3,07,23,241The 10 % savings of his salary growing at a 10% growth rate: Rs.94,36,073

Age (in Yrs.) SalarySavings @10% of

Salary23 75000 750024 82500 825025 90750 907526 99825 998330 146153 1461535 235382 2353840 379085 3790945 610520 6105250 983249 9832555 1583533 15835360 2550296 255030

Illustrating this further…

‘What is financial planning and why do I need it?’

Basically to suit your individual circumstances in your life.To help you:

• Raise your family to the finest standards

• Educate your children in the best institutions

• Fulfill your business ambitions and

• Plan for your Retirement.

Personal financial planning will help you to achieve your dreams

and goals. Now we shall go through a series of charts and

diagrams indicating the events in your life.

International Statistics say this 3%

7%

26%

64%

Wealthy

Dead

Financially independent

Dependant on children, relatives & charity

NOBODYNOBODY PLANS TO FAIL, BUT MANY FAIL TO PLAN.PLANS TO FAIL, BUT MANY FAIL TO PLAN.

25 35 45 55 65

There are Five categories of people

POOR

RICH

COMFORTABLE

STRUGGLING

WEALTHY

The Four Areas

Personal Financial planning will form four distinct and specific parts .Each part will relate to different aspects of our lives.

1.Family and Income protection

2.Old age independence

3.Children’s well being and advancement

4.Life time aspirations

Anything and everything that we work for, live for and dream about will fall in either of these four categories.

Worries ???• Almost 90% of our worries, fears and sense of insecurity arises

from financial matters!

• We are neither worried of the past nor the present .

• All our worries are about the future and if we had the answer to the questions of future we would enjoy a better peace of mind.

• It is this peace of mind that we shall try and achieve.

Eventualities

• The three possible Events-

- Living too long

- Dying too soon

- Illness

Living too long

• With increasing life span, statistics have shown that one third of our lives is spent in retirement.(i.e. we earn only for one third of our lives)

• The biggest job of financing that a person is ever called upon to do is financing old age.Do you have a plan for financing yours?

• Planning for this Eventuality is of utmost importance.

START EARLY IN LIFE!

Living too long-II

All that we would want is old age independence.

Independence is nothing but freedom.

How do we get this freedom?

Dying too soon

• Aren’t our family’s current welfare and future sense of security, that all will be fine tomorrow, our No.1 priority?

• Regardless of whether we are there or not, our families should continue living in the same life style they are use to, when were around.

• Death, brings along with it an emotional loss,but an emotional loss along with a financial loss could prove disastrous.

Illness

• 80%

• 20%

• 80% of the people die either of a heart attack, stroke or cancer

• 20% of the people don’t reach age 65

These are absolute hard facts

Illness• If you were to get critically ill or hurt, there are

four sources of income for your family

– Dip into your savings – Friends and relatives– Charity– Insurance

WHICH DO YOU PREFER?

Illness

•With advances in medical sciences, more people are going to survive a critical illness, but then life is never the same again. Maybe you could never get back to work and in that event, where does the income come from?There are only two ways to make money-

- Your ability to work- Money at work for you

If the first one fails, then the second should take charge.Life insurance is not always money after death, but it is also provision during life!

Life Insurance

•It costs less to buy than not to buy.•Eventually, somebody has to pay for it-

YOU or YOUR FAMILY!If you die, the bank pays what you have saved;the insurance company pays what you meant to save.

THE POWER OF SAVING EARLY

Rajesh started contributing Rs 15000 per annum to his plan at age 25. He stopped contributing at age 35, but left the money in the plan until he was 65.

Ajith, at age 35, began contributing Rs 15000 per annum to his plan the same year. He continued to contribute through age 65.

Both earned an annual effective rate of 10%*.

Rajesh AjithStarting Age 25 35Ending Age 35 65

Total Contribution Rs. 1,50,000 Rs. 4,50,000Years Contributed 10 yrs. 30 yrs.Value @ Age 65 Rs. 45,88,626 Rs. 27,14,137

What a difference!

What made this possible?

Even though Ajith contributed for 30 yrs, Rajesh’s plan was worth Rs 18,74,475 more than Ajith's because he started earlier. In fact Ajith contributed Rs 3,00,000 more to his plan but the difference is that Rajesh’s money had more time to grow i.e. 40 years as against 30 years.

This is the Power of Compounding and

Starting Early in Life.