Personal Wealth Management Strategies

Financial Wellness and Personal Wealth Creation Strategies

Cognizant TechnologiesNov 21 2006

Financial Wellness

Contents

What is financial wellness?

Why financial wellness?

Role and Outlook towards financial wellness

Wealth Creation – The Road Map

What is Financial Wellness

Freedom from excess baggage in your life

Realizing your Dreams

Making Money work for you

Why Financial Wellness

Work Life Balance

Clarity of thought and purpose towards life

Passion to achieve standards of excellence

Role and Outlook towards Financial Wellness

Productivity Levels rises

Brings down stress levels

Quality time with the family

Stimulus to develop and paint a bigger canvas of life.

The Personal Balance Sheet

Income

Work for firm

Expense

Work for Gov

Asset Liability

Work for Bank

Source: Rich Dad Poor Dad

Is this your picture?

The Asset and Liabilities Concept

Income

Expense

Asset Liability

Source : Rich Dad Poor Dad

Is this your picture?..

Transform your Personal Balance Sheet

Income

Expense

Asset Liability

Source : Rich Dad Poor Dad

Life Cycle of Wealth Creation

Who we are

What can we do for you

Contact Points

Contents

Personal Wealth Creation Strategies – The Road Map

Life Cycle of Wealth Creation and Management

Early Stage20s-30s

Savings Tax Planning


Route toWealth creation

Mid Stage30s-45s

Financial PlanTax Plan

WealthAccumulation

Later Stage-I45s-60s

Wealth ManagementIncome Generation

Make moneyWork for you

Later Stage-II70s +

Wealth PreservationEstate PlanningMultiplier

Effect for Gen Next


Life Cycle Pattern of Individual Investor

All individuals have a finite period to save for their investment goals

Life Cycle Pattern of Individual Investor

Source: DSP ML

Investments and the Impact of Inflation

Inflation at 5%

Value of Money over Time

Investments and the Impact of Inflation

Performance of various Asset ClassesPerformance of Various Asset Classes

Source: DSP ML

House Hold Savings Profile

ESOPS and equity are excellent tools to create and manage wealth

House Hold Savings Profile

Source: CSO- 2003-04

Asset Allocation – The Key to Wealth Creation

Determ inants of Portfolio Perform ance

91%

5%2%2%

Asset Allocation

Security Selection

Market Timing

Other Factors

A study done based on the pioneering work by the author of Modern PortfolioTheory- Dr Harry Markotwitz

Asset Allocation – The Key to Wealth Creation

for25 years

Market Timing does not matter over the long term

Investing in BSE Sensex for 25 years

Source : ICRA

Asset Allocation – Thumb Rule

Stocks/Bonds Ratio

The bond portfolio would be equal to one’s age

Asset Allocation – Thumb Rule

The Power of Compounding


43

89

190

Assumed Annualised Returns

Fina

l Cor

pus

in L

akhs

Debt Instrument

BSE Sensex Scenario A

BSE Sensex Scenario B

10% 15% 20%

Monthly Investment of Rs.5000 from Jan 01, 1984-Dec 31,2004, 21 Year Period Total Investment of Rs. 12,60,000 for 21 years


Life Cycle of Wealth Creation – Product Matrix

Products and Returns Matrix

3.5 6.25 8 9 5.5

222932

40

78

35

1613

0

10

20

30

40

50

60

70

80

90

Risk

Ret

urns

in %

Savings Account

Bank F.D.s

Time Deposits

Recurring Deposits

NSC

PPF

POMIS

Senior Citizens Savings

RBI Bonds

Cash Funds^

Long Term Floaters^

Balanced Funds^

Equity Diversified Funds^

Sectoral Funds^

Tax Funds^

Bharat Forge -Stocks*

Real Estate*

Gold#

Alternative Investments

^ Since Inception * 1 Year Period # 4 year period

Life Cycle of Wealth Creation – Product Matrix

Life Cycle of Wealth Creation – Early Stage -20s-30s

Savings and Tax Planning

PPF ELSS Equity DiversifiedFunds

ESOPs

Nest Egg forRetirement

Wealth CreationAccelerator

Tax Saving Option Building Wealth throughSIP route

Early Stage Investments with the dual combination of Systematic Investments and Power of Compounding are the best route to Wealth Creation.

Life cycle of Wealth Creation-Early Stage -20-30s

Life Cycle of Wealth Creation – Mid Stage -30s-45s

Filling the integrated client profile form Current portfolio

reviewed

Understanding the investor profile

Construction of Wealth Management Plan

Asset allocationGoals are listed – corpus for each

determined

Cash Flows P.A reviewed- 36 Months

CF’s drawn

Risk appetite assessed Based on time period set for each goal

Execution

Monitoring and Performance Evaluation

Security Selection

Mid Stage brings with it the prudence and responsibility to accumulate wealth

Life Cycle of Wealth Creation – Mid Stage - 30-45

Life Cycle of Wealth Creation – Later Stage I -45s-60s

Later Stage is all about Wealth Management and Income Generationthrough re-balancing of portfolio and goals.

It is advisable to work on Estate Planning as one nears this stage

Life Cycle of Wealth Creation – Later Stage I - 45-60

Life Cycle of Wealth Creation – Later Stage II - 70s+

Wealth Preservation

Income Generation

Estate Planning

Wealth Passed on to Generation/s

Taking it forward from the earlier stage, the Asset Allocation of theWealth Management Portfolio should focus on:

Life Cycle of Wealth Creation – Later Stage II – 65+

Note on Insurance

Life Insurance is all about covering Risk.

Low Cost Term Insurance is an ideal product till wealth is created

Younger the age, Lower the Premium

Medical Insurance is equally important to cover the family.

Insurance Perspective

Retirement Planning - OverviewRetirement Planning-Overview

Source : DSP ML

Child’s Education - OverviewChild's Education Planner-Overview

Source :DSP ML

Child’s Marriage - OverviewChild's Marriage Planner-Overview

Source : DSP ML

The India Equity StoryThe India Equity Story

Source : Goldman Sachs BRIC Report

The India Equity Story..

Favorable Demographics


Source : Templeton AMC


Increasing Affluence, leading to more consumption

Domestic consumption driving the economy


Source : Templeton AMC

The India Equity Story..The India Equity Story..

Source : CLSA, HSBC


India tops the returns table for the last 3 years period


Source : MSCI Data

Who we areWho we are

Re-Launched on August 15 2006

Advise and Manage Personal Wealth Portfolios for select clients.

To empower corporate employees through 'Financial Wellness' Programs


Advice and Facilitate on Tax Saving/Investment Options – 20s-30s audience

‘Customized Road Map’ Model for Wealth Creation – 30s-45s audience

Wealth Management and Income Generation – 45s-60s audience

Step by step guide to wealth creation/management across all age groups

ESOP Managed Accounts

Insurance Recommendations - Life and Non-Life


The Last Word

“Research indicates that financial stress affects workers at all income levels. When employers partner with an EAP provider that offers financial counseling resources, employees can be more

productive and better able to focus on work as they take steps to improve their financial situation”.

• For further information pleae contact at 91-9820366899, 91-022-26166844

• [email protected]

Thank You!

Personal Wealth Management Strategies

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