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 : I t 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