FINtastic Women Your Pathway To Be The Household CFO
जय श्री राम FINtastic Women Program International College of Financial Planning
Q1. A Person Wants To Invest Rs.100000. What Do You Suggest Him? FINtastic Women Program International College of Financial Planning
TOPICS COVERED 1. CASHFLOW, BUDGET, ASSETS, LIABILITIES 2. BANKING PRODUCTS 3. INVESTMENT PRODUCTS 4. STOCKS 5. F & O 6. MUTUAL FUNDS SCHEMES FINtastic Women Program International College of Financial Planning
WHY HAVE WE LEARNT ALL THESE? FINtastic Women Program International College of Financial Planning
Goal Requirement Details Goal Priority Goals Current Cost per Total amount Corpus Time Frame annum or total if required at the Required as one time (Rs.) time of the goal on Today 1 SANDEEP'S HIGHER EDU 2020-2023 300000 1,293,038 1,191,496 2 300000 1,496,853 1,102,561 3 MEHUL'S HIGHER EDU 2023-2026 2500000 3,517,751 1,805,163 4 2500000 4,072,237 1,570,023 5 SANDEEP'S MARRIAGE 2023-2027 6,391,988 6 50000 963,296 7 MEHUL'S MARRIAGE 2026-2030 800000 819,756 796,217 8 1500000 1,653,750 1,471,832 9 VACCATION'S TOUR 2020-2060 200000 8,379,334 1,117,790 10 342008.5 342,009 TOTAL NEW CAR 2020-2021 784017 342,009 5,316,045 24,427,082 15,676,431 CONSTRUCTING RENTED ROOM 2020-2022 52,393,796 INTERNATIONAL TOUR 2023-2059 EMERGENCY FUND 2020-2021 POST RETIREMENT 2036-2060 FINtastic Women Program International College of Financial Planning
POWER OF COMPOUNDING • Mr. Amar invests Rs.100000 per month for 30 years in MF which generates 12% p.a. return. • Corpus = ? FINtastic Women Program International College of Financial Planning
FINtastic Women Program International College of Financial Planning
= FV(0.12/12,30*12,-100000,0,1) = RS.35,29,91,377 But Is This Correct Answer ? FINtastic Women Program International College of Financial Planning
= FV(1.12^(1/12)-1,30*12,-100000,0,1 = RS.30,80,97,321 DIFFERENCE = 4.9 CRORE FINtastic Women Program International College of Financial Planning
POWER OF COMPOUNDING 12% p.a. compounding monthly = 1% p.m. 12% p.a. can not be equal to 1% p.m. 12% p.a. = 0.94% p.m. 12% p.a. compounding monthly = 12.68% p.a. 12% p.a. compounding daily= 12.75% p.a FINtastic Women Program International College of Financial Planning
SIMPLE QUESTION 365% p.a. compounding daily = _____% p.a. FINtastic Women Program International College of Financial Planning
UNBELIEVABLE ANSWER 365% p.a. compounding daily = 3678% p.a. FINtastic Women Program International College of Financial Planning
• M/s Payal wants to know if would require Rs. 5 cr after 20 years for post retirement life, how much should be invested in EMF sip….. (12% p.a.) FINtastic Women Program International College of Financial Planning
• M/s Shweta wants to know how much interest should be earned in her investment of Rs.10000 per month to accumulate Rs.50 lacs in time span of 12 years for daughter’s marriage? ( ) FINtastic Women Program International College of Financial Planning
• A bank manager approaches you for investment plan i.e. • Invest Rs.50000 p.a. for 5 years and thereafter for next 5 years no investment and end of 10 years Rs.7.5 lacs will be given. ROI? FINtastic Women Program International College of Financial Planning
M/s Manvi wants to know about a bond which is available at Rs.1150 and generating coupon 7% of face value. It is maturing after 6 years. ( face value Rs.1000) FINtastic Women Program International College of Financial Planning
• M/s Kavita wants to take loan of Rs.20 lakhs for 5 years @ 12% p.a. reducing monthly basis. She wants to know EMI? FINtastic Women Program International College of Financial Planning
M/s Sheetal is very much concerned about her retirement planning, what to do?........ FINtastic Women Program International College of Financial Planning
RATE> rate of interest NPER> number of periods ( years) PMT> regular payment or annuity PV> present value FV> future value TYPE> investing beginning or end ( 0> end, 1> begin) FINtastic Women Program International College of Financial Planning
SIMPLE INTEREST • S.I. = P*R*T 100 FINtastic Women Program International College of Financial Planning
FINtastic Women Program International College of Financial Planning
COMPOUND INTEREST A = P (1+R/100)^N OR FV = PV (1 + i)^N FINtastic Women Program International College of Financial Planning
FUTURE VALUE (GRAPHIC) If you invest Rs.100 today in an account that pays 10% p.a. interest, how much will be in the account at the end of two years? -100 10% 01 2 FINtastic Women Program FV International College of Financial Planning
FUTURE VALUE (FORMULA) FV1 = PV (1+i)n = 100 (1.10)2 =121 FV = future value, a value at some future point in time PV = present value, a value today which is usually designated as time 0 i = rate of interest per compounding period n = number of compounding periods FINtastic Women Program International College of Financial Planning
The “Rule-of-72” Quick! How long does it take to double Rs.5,000 at a compound rate of 12% per year (approx.)? Approx. Years to Double = 72 / i% 72 / 12% = 6 Years [Actual Time is 6.12 Years] FINtastic Women Program International College of Financial Planning
FUTURE VALUE Q1. Mr. X invests Rs.25000 in a deposit paying interest at 10% per annum compounding yearly. What will he get on maturity after 10 years? FINtastic Women Program International College of Financial Planning
Q.2 Nisha deposit Rs.100/- in a bank at 10% p.a. interest compounding half yearly. How much deposit will grow after 1 years? FINtastic Women Program International College of Financial Planning
PRESENT VALUE • Since FV = PV(1 + i)n. PV = FV / (1+i)n. FINtastic Women Program International College of Financial Planning
PRESENT VALUE (GRAPHIC) Assume that you need to have exactly Rs.40,000 saved 10 years from now. How much must you deposit today in an account that pays 6% interest, compounded annually, so that you reach your goal of Rs. 40,000? 05 10 6% Rs.40,000 PV0 International College of Financial Planning FINtastic Women Program
PRESENT VALUE SOLUTION Calculation based on general formula: PV0 = FVn / (1+i)n PV0 = Rs.40,000/(1.06)^10 FINtastic Women Program International College of Financial Planning
CALCULATION OF TIME PERIOD (N) FINtastic Women Program International College of Financial Planning
Time/Period (N) Q.1 Manisha invested Rs.100 today in debt mutual fund and expecting rate of return 7% p.a. how many years she will wait for to receive Rs.300? FINtastic Women Program International College of Financial Planning
INTEREST RATE M/s Nitika can invest Rs.100 today for world tour which she plans to go after 5 years from now, she would require Rs.190. You need to tell her what rate of interest she should earn on her investment? FINtastic Women Program International College of Financial Planning
ANNUITIES A series of payments made at successive periods ( intervals ) of time is called an annuity. FINtastic Women Program International College of Financial Planning
EX. International College of Financial Planning EMIs RD INSURANCE PREMIUM PROVIDENT FUND CONT SIP FINtastic Women Program
I want to invest Rs.1000 p.a. for 3 years, roi 7% p.a. 0 1 2 3 7% Rs.1,000 Rs.1,000 Rs.1,070 Rs.1,000 Rs.1,145 Rs.1,225 Rs.3,440 =FVA3 FINtastic Women Program International College of Financial Planning
FVA3 = Rs1,000(1.07)3 + Rs.1,000(1.07)2 + Rs.1,000(1.07)1 = Rs. 3,440/- FINtastic Women Program International College of Financial Planning
2. FV = [PMT((1+R)^N-1))/R]*(1+R) FINtastic Women Program International College of Financial Planning
1. M/s Sonali invests Rs.100 p.a. in a mutual fund scheme which generates 10% p.a. return for her retirement. She wants to know how much she will have after 20 years? FINtastic Women Program International College of Financial Planning
• Q2. M/s Stuti wants to accumulate Rs.1000 in a span of 15 years for retirement goal, how much should be invested every year in equity mutual fund which generates 12% p.a. return? FINtastic Women Program International College of Financial Planning
• Q3. M/s Shweta wants to accumulate Rs.5 cr in a span of 20 years for retirement goal, how much should be invested every month in equity mutual fund which generates 12% p.a. compounding monthly return? FINtastic Women Program International College of Financial Planning
• Q4. M/s Renu ji invests Rs.1000 today and will increase 10% every year, how much corpus she will have at the end of 20 years if ROI 12% p.a.
NOMINAL RATE EFFECTIVE RATE • 10% p.a. comp half-yearly = 10.25% p.a. • 15% p.a. comp qtly = ___% p.a. • 24% p.a. comp half yearly = ___% p.a. • 365% p.a. comp daily = ___% p.a. FINtastic Women Program International College of Financial Planning
TEST CUM REVISION • 1. saving Rs.100 p.a. for 20 years, roi 12% p.a. calculate fv • 2. investing Rs.200 per month for 10 years roi 15% p.a comp monthly, cal fv • 3 I would require Rs. 1 lakh after 30 years , how much should be invested every months if roi 10% p.a. comp monthly • Convert • 12% p.a. comp daily = ……% p.a. • 26% p.a. comp monthly = ……% p.a. • 50% p.a. comp qtyly = ……% p.a.
ROLE OF INFLATION • M/s Shivani aged 30, wants to retire at age 60, her life expectancy is 80. • What should be asked? FINtastic Women Program International College of Financial Planning
• Inflation = 5% p.a. • Standard of Living = 3% p.a. • Mr. X’s current age = 30 • Current House Hold Expenses = 6 lacs p.a. • HHE at Retirement age 60 = Rs.___p.a. FINtastic Women Program International College of Financial Planning
•Rs.60 lacs p.a. FINtastic Women Program International College of Financial Planning
• Corpus required at age 60 to survive till age 80 considering inflation = Rs.________ • (ROI 8% p.a.) FINtastic Women Program International College of Financial Planning
•Rs.9.3 crore FINtastic Women Program International College of Financial Planning
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