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Madhu Sinha
Professor (Academic Head)
International College of Financial Planning
Tata McGraw-Hill Publishing Company Limited
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To
My parents for their blessings
My children—Pratima and Rohan for their encouragement
My readers
Preface
Financial Planning is a relevant and customer centric approach for matching
cash flows to meet an individual’s life goals. Today in most of the developed
countries it is the prevalent approach of investment advisory. In India, quite a
few institutions teach financial planning and wealth management.
Financial planning as a concept took root in the US. Everyone who earns
needs a good financial planner to help him achieve various financial goals.
Previously in India, investors invested most of their surplus money in fixed
income instruments on the advice of insurance/mutual fund advisors, which
was product driven. On the other hand a certified financial planner provides
integrated solutions and value based advice. He provides need based advice by
identifying financial goals of his clients arising at different stages of his life. He
advises on insurance requirement, retirement planning, children’s education
planning, providing for their marriage, buying a home, buying a car, asset
allocation, taxation planning and even estate planning.
This book is a guiding tool for practising professionals who want to advise
their clients on best investments through financial planning route. It will also
help students intending to make their career in this field.
The book starts with introduction and basic concepts related to financial
planning, covering the need and processes. Following chapters cover different
mathematical models and tools such as time value of money, annuity/SIP, net
present value, IRR, calculation of returns, use of financial calculator/excel
sheets, etc. used as an effective mean to determine the desired values. The
different financial goals like children’s education, house, car, tax planning,
providing for life after retirement, estate building, etc. are covered in details in
the ensuing chapters. The various products that are available and right
investment approach to meet these financial goals have been presented. How to
deal with these different financial goals for different individuals have been
elucidated with many case studies. Mutual fund and other investment products
have also been discussed in detail. Retirement planning, the most important and
often neglected financial goal in India has been discussed. Construction,
revision of financial plan has been been comprehensively covered. As
practising professionals are required to follow certain rules and code of ethics as
stipulated by the governing body (FPSB, India), the same is outlined.
viii PREFACE
The book also includes 350 question and answers on time value of money
and numerical problems on retirement planning. Use of financial calculator and
excel has also been demonstrated in a user friendly manner at many places.
I am sure as the readers will probe further into the literature of the book,
they will find new vistas of financial wisdom.
MADHU SINHA
E-mail: [email protected]
[email protected]
Acknowledgements
I would like first to express my sincere thanks to the almighty God who
bestowed upon me thought and wisdom to write this book.
I extend my deepest gratitude to Mr. K. K. Bajaj, Mr. Rajiv Deep Bajaj and
Mr. Sanjiv Bajaj of Bajaj Capital who introduced the concept of financial
planning in India and encouraged me to contribute to disseminating information
on this domain.
I would like to express my thanks to my students.
I would also like to thank NDTV, CNBC, Zee Business, The Indian
Express, The Hindustan Times and their team of professionals who gave me an
opportunity to interact with the investing community.
I am obliged to my teachers and guide Mr. G D Sethi and Dr. Vinod Kumar
for their continued support, Mr. Anish Wig, CEO ICFP for his guidance and
support, Ruchi Nair, Mithilesh and my other colleagues at ICFP.
I am thankful to Mr. Niamatullah, Ms. Ritu Nanda (RNIS) who gave me the
opportunity to gather and disburse knowledge.
I am highly grateful to my husband for his continued support and
inspiration. I express my thanks to my friends, colleagues, family members,
relatives who gave me immense confidence while the book was being written.
International College of Financial Planning (ICFP) provided me the
opportunity to gather knowledge from a set of already experienced financial
executives undergoing CFP programme as well as over 1500 students. The
interaction with the students made me understand real world problems which I
have tried to dissect in the minutest detail in this book.
I am thankful to FPSB India for allowing me to include “Code of Ethics to
be followed by financial planners” as a chapter in my book.
Most of all, I am grateful to my readers who put their faith in me and are
reading this book.
MADHU SINHA
