Divya Garg - PWM End Term Report

FORE SCHOOL OF MANAGEMENT
Personal Wealth
Management
End-Term Report on Financial Planning of Mr.
Kshitij Garg
Submitted To: Prof. Vinay Kumar Dutta
Submitted By:
Divya Garg (221042)
FMG 22 A
This report is based on the personal wealth management for an individual named Kshitij Garg, taking
care of all his financial goals & planning how to achieve all these goals timely without having any
strain on the financial health.
ACKNOWLEDGEMENT
I would like to express my profound gratitude to all those who have been instrumental
in the preparation of my report on Personal Wealth Management.
At the outset, I would like to thank Prof. Vinay Dutta, Faculty at FORE School of
Management for providing me the opportunity to undertake this project & gain insights
about Personal Wealth Management which has proven out to be very beneficial to me in
my future assignments and career ahead.
I express my profound sense of gratitude and veneration to you for your deep insights
and classroom teaching which provided me with valuable qualitative data that have
formed the backbone of this study.
I would also like to thank my client Mr. Kshitij Garg for his continuous co-operation.
Divya Garg | 221042 | FMG 22 A
Personal Wealth Management
Page 1
Contents
ACKNOWLEDGEMENT................................................................................. 1
Executive Summary............................................................................................4
Chapter 1: Introduction..................................................................................... 5
Personal Wealth Management.................................................................................5
Importance of the Study.......................................................................................... 6
Purpose of the study............................................................................................... 6
Objective of the Study............................................................................................. 6
Chapter 2: Literature Review............................................................................7

Chapter 3: Clients Profile............................................................................... 10
Demographic Profile.............................................................................................. 10
Details of Family and Dependent...........................................................................10
Income Details:..................................................................................................... 11
Clients Attitude towards Money............................................................................11
Chapter 4: Financial Details of the Client......................................................12

Personal Balance Sheet as on 31st March, 2014....................................................12
Cash Flow Statement as on 31st March, 2014 (Monthly)........................................13
Ratios.................................................................................................................... 16
Chapter 5: Personal Goal Setting....................................................................20

Short Term Goals (Up to 1 year)............................................................................ 22
Medium Term Goal (2 to 5 Years)...........................................................................22
Long Term Goals (More than 5 Years)....................................................................23
Chapter 6: PLANNING....................................................................................25
Insurance Planning................................................................................................ 25
Investment Planning.............................................................................................. 25
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Tax Planning.......................................................................................................... 26
Retirement Planning.............................................................................................. 27
Limitations of the Study...................................................................................28

ANNEXURE......................................................................................................30
Questionnaire 1: Risk Profiler................................................................................ 30
Questionnaire 2- Identification of Goals................................................................32
Questionnaire 3: Knowing Credit Habits................................................................33
Questionnaire 4- Whats Your Money Attitude.......................................................34
Questionnaire 5: Analysis of Financial Values........................................................35
Page 3
Executive Summary
This is a project which is very closely related to ones personal life & is aimed at
understanding the various aspects related to Personal Financial management. Financial
Planning is important to lead a carefree and independent life. As is often said, money
does not grow through savings alone, but through careful financial planning.
Through this project I have got an understanding of how a financial consultant plans out
course of action for his client based on his life goals & objectives. This report has also
helped me understand the role of a consultant and the importance of communication
skills in this profession. It is important to gain trust of the client as wealth is a very
private matter.
We see how Financial Planning is highly contingent on not just the persons goals but
also his life stage, risk appetite, capabilities and his liabilities. Each of these factors
affects the way we plan to achieve these goals.
Overall, this project takes the case of an individual named Mr. Kshitij Garg & deals with
his personal wealth management, taking into consideration his roles & responsibilities,
and at the same time fulfilling his personal financial goals. Careful financial Planning
can help an individual comfortably achieve all his financial goals without any special cut
back in the lifestyle. Personal Wealth management aims at helping an individual
comfortably achieve all these goals.
I have also gained a deep insight into how an individuals risk taking capability and
priorities in life significantly influence his ability to plan effectively and achieve these
goals.
Page 4
Chapter 1: Introduction
The term wealth management is thrown around plenty, in the boardrooms of
private client firms, in trade and mainstream articles and by financial advisors in front
of clients. From the affluent individuals perspective, wealth management is simply the
science of solving/enhancing his or her financial situation. From the financial advisors
perspective, wealth management is the ability of an advisor or advisory team to deliver a
full range of financial services and products to an affluent client in a consultative way.
Private or Personal wealth management (PWM) is the term generally used to
describe highly customized and sophisticated investment management and financial
planning services delivered to high net worth investors. Generally, this includes advice
on the use of trusts and other estate planning, vehicles, business succession or stock
option planning, and the use of hedging derivatives for large blocks of stock.
Experts in personal wealth management perform an important role for clients who wish
to make the most of their financial assets. Beyond just overseeing investments, handling
individual monetary resources can reach past stocks, mutual funds, and bonds and
administer other issues as well. All in all, personal wealth management constitutes a lot
more than just paying bills and investing in the stock market. Most organizations will
help clients by going over their individual income and assets and create a plan of action
that is uniquely tailored to them. Whether the need is for asset protection or trust
administration, inheritance issues or tax expertise, consulting professionals in the field
can make the difference between financial success and fiscal disappointment.
There are many benefits associated with personal wealth management. By turning these
complex issues over to experts in the financial field, a client is free to handle other life
priorities with reduced stress and less distraction. Seasoned professionals can look at
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the life goals of the client and zero in on the best way to meet those goals. Solid planning
can address current as well as future issues.
Importance of the Study

Wealth management should be given utmost importance because if an individual
doesnt manage the wealth well, one day or the other it will disappear & he/she wont be
able to enjoy it over an extended period of time. So wealth management should be given
as much attention as one gives on earning money. Though people plan for their wealth
management perfectly, there are some common mistakes which people commit and
tend to lose their hard earned money. The mistakes which they commit might look very
simple, but the impact which they create might be complex and huge.
Wealth management is important not only for affluent individuals, but it is even more
important for not so rich individuals because they lack the resources in case something
bad happens. Affluent individuals often need sophisticated advice and strategic
guidance to capitalize on opportunities to preserve, grow and transfer their wealth.
Purpose of the study

Increased level of wealth created by individual and brighter economic prospects for the
future has substantially augmented the demand for sound professional advice on setting
financial goals, aligning financial planning with career planning, investment planning,
retirement planning, tax and estate planning. With the help of this end term project, my
aim is understand and study the strategies for managing wealth on trans-generational
basis of an individual.
To understand the Personal Wealth Management of a Mr. Kshitij Garg,
Manager, Risk & Process in Internal Audit at Deloitte India Pvt. Ltd.
Objective of the Study

1. Demographic profiling of the client
2. To list out the financial goals of the client in SMART format
3. To analyze clients current financials and existing personal investments.
4. To give observations based on personal financial ratio.
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5. To Do Risk profiling and recommendations on retirement, tax, special situations

planning in advance.
Chapter 2: Literature Review

The-teachings-of-warren-buffet
Subramanyam, P. V. (2013, October 1)
The article states on what Warren Buffet says about basic investing, spending, and
savings are so true. Most of us know it, however too many of us do not live it.
1. On Earning:
Do not depend on a single income. Invest and create a second/ third source of
income: This means when you are young your first task should be saving and
investing. By creating a second source of income you are quickly reducing your
dependence on your job. This could help you to set out on your own one day. The
quicker you can do it, the better.
2. On Spending:
If you buy things that you do not need, you may soon have to sell things you need.
It kind of summarizes Gen Xs reaction towards luxuries. As a part of Gen X we
were perhaps criticized for some of our expenses, so it could be a generational
thing even for WB. However, having goals and knowing where you are going, and
not spending just to show off are important lessons for all generations.
3. On Savings:
Do not spend what is left after spending; instead spend after you save/invest:
Also called Pay Yourself First. If you realize that investing in a pension plan or
for your kids education is just helping you to save more later on. It is not a
sacrifice, it is just postponing consumption. So understand, invest and then
spend.
4. On taking Risk:
Never test the depth of the river with both your feet: If you are doing something,
do small. If you are a first gen investor, do not be carried away by equity lovers
like me and put all your money in equity. Do a SIP with a small amount, and test
the waters. Do a SIP of Rs. X (which could be 10% of your take home pay) for 5
years and then step up. And for heaven's sake understand risk of inflation, and
the concept of real returns
5. On Investing:
Page 7
Do not put all eggs in one basket: Immaterial of who you are and how much you
understand, create a portfolio. A full range lunch plate is always better than just
one item. So create a portfolio with bonds, bond funds, PPF, NSC, equity, mutual
funds, and on the risk side medical and term insurance.
6. On Expectation:
Honesty is expensive; do not expect it from cheap people: Not everybody is
honest, nor does everybody want to be honest. Honest advisers are difficult to
find especially in Health and Wealth, be careful.
Financial Planning: From the Bible to the Internet
Redmer, T., & King, J. L. (September, 2012)
The need for biblically based financial planning has been around for many years. The
ancient Babylonians were some of the first civilizations to use a medium of exchange
and also one of the first to vaguely see the need for some type of financial planning.
Some say that only the Inca civilization in Peru successfully existed without some
form of money. In Christs time on earth, as recorded in the Scriptures, money was
used and sometimes abused by those that werent living a Godly life. Though the
Bible doesnt teach or offer a contemporary plan for financial success, it speaks to the
issue of finances in many areas that include tithes and offerings, usury and greed.
This paper offers Christians a history of money that shows where it came from and
how we got to where we are today. This paper also offers various websites found on
the Internet that will educate, inform and promote their successful financial future.
This paper is written in light of Matthew 10:16, I am sending you out like sheep
among wolves. Therefore be as shrewd as snakes and as innocent as doves.
Eight Principles of Strategic Wealth Management.
Lucas, S. E. (January, 2012)
The author has stated the following Eight Principles of Strategic Wealth
Management which he states that are at the heart of what he does every day. They
are:
1. Take charge and do it early.
2. Align family and business interests around wealth-building goals and
strategies.
3. Create a culture of accountability.
4. Capitalize on your family's combined resources.
5. Delegate, empower, and respect independence.
Page 8
6. Diversify but focus.

7. Err on the side of simplicity where possible.
8. Develop future family leaders with strong wealth management skills.
Keeping it Simple: Financial Literacy and Rules of Thumb.

Drexler, A., Fischer, G., & Schoar, A. (July, 2011)
This paper determines whether and how financial literacy can be taught and, closely
related, whether there is causal link between improving Financial literacy and
Financial outcomes. It concluded that improved knowledge of financial accounting
indeed has a positive effect on the management practices of individuals and small
businesses.
Financial Life Well-lived: Psychological Benefits of Financial Planning

Irving, K. (volume 6, no. 4, 2013).
As the financial planning industry undergoes a series of reforms aimed at increased
professionalism and improved quality of advice, financial planner training in
Australia and elsewhere has begun to acknowledge the importance of
interdisciplinary knowledge bases in informing both curriculum design and
professional practice (e.g. FPA 2009). This paper underscores the importance of the
process of financial planning by providing a conceptual analysis of the six step
financial planning process using key mechanisms derived from theory and research
in cognate disciplines, such as psychology and well-being. The paper identifies how
these mechanisms may operate to impact client well-being in the financial planning
context. The conceptual mapping of the mechanisms to process elements of financial
planning is a unique contribution to the financial planning literature and offers a
further framework in the armamentarium of researchers interested in pursuing
questions around the value of financial planning. The conceptual framework derived
from the analysis also adds to the growing body of literature aimed at developing an
integrated model of financial planning.
Page 9
Chapter 3: Clients Profile

Demographic Profile
Mr. Kshitij Garg was born in Muzaffarnagar, Uttar Pradesh. After attaining an age of 21
years and completing his graduation, he pursued his MBA from Institute of
Management & Technology, Ghaziabad. He passed out from MBA in July 2007 and is
currently working with Deloitte India Pvt. Ltd in Gurgoan. In 2010, he got married to
Mrs. Reshu Bhardwaj, currently working presently at Central Warehousing Corporation
(CWC). . His Father is working in corporate Bank and his mother is a house wife.
Name
Mr. Kshitij Garg
Sex
Male
Age
29
D.O.B.
10 - 08 1985
Marital Status
Married
Educational
B.Com, M.B.A
Qualification
Profession
Manager at RAS (IA)
Company
Deloitte India Pvt. Ltd.
Location
Gurgoan
Address
65/41, West Punjabi Bagh, New Delhi 110026
E- Mail
kshitij.garg10@gmail.com
Table 1: Demographics Profile of Client
Details of Family and Dependent
Page 10
2: Details of Dependent
and Family
No. of FamilyTable
Members
4
Income
No. of Dependents
Wifes Occupation
Service
No. of Particulars
Children
Monthl
Yearly
1 (3 and
half year old)
Details:
Siblings
One Brother (Doing MBA,
Basic Pay
70000
840000
22 Yrs.) 28000
HRA (40% * Basic Pay)
336000
Mothers Age
49
Medical
1250
15000
Provident
Fund
(12% * Basic pay)
8400
100800
Fathers
Age
53 (Earning)
Nature of family
Conveyance Allowance
Other Allowances
Nuclear Family
8000
9350
96000
112200
125000
1500000
Salary CTC
Clients Attitude towards Money

The degree to which the money controls clients life is 6 which indicate a quite neutral
attitude towards money and his way to deal with life situations.
Though the dark side is that his little casual attitude towards money is putting
hindrance for planning for Childrens Education, Marriage & own Retirement Planning.
He sometimes tends to get nervous with situations where he is short of money and
therefore indicates a need of financial planning to manage his and familys lifestyle in a
better way.
Page 11
Chapter 4: Financial Details of the

Client
Personal Balance Sheet as on 31st March, 2014
Balance Sheet
Assets
Amount
Total (Rs.)
1 Liquid Assets
Cash in Hand
440000
Savings a/c Balance @ 4% p.a
1100000
Cash Value of Life Insurance
3500000
5040000
2 Real estate
Investment in Flat
14500000
3 Personal Possessions
Automibile i.e. Car
650000
Household Furniture and appliance
270000
Home Computer
15000
Jewellery
240000
4 Investment Asset
Provident Fund
130900
Page 12
1175000
Deposit in Systematic Mutual Fund @ 9%p.a
220000
Investment in Fixed Deposit @ 9.75% p.a
120000
470900
Total Assets
21185900
Liability
Amount
Total
(Rs.)
1 Current Liablities
Balance on Auto Loan
200000
2 Long Term Liabilities

Home Loan
2500000
Education Loan (Rs. 4 lac @11% p.a.)
660000
Total Liabilities
2460000
Net Worth
18525900
Table 3: Balance Sheet of Mr. Kshitij Garg as on 31st March, 2014
Cash Flow Statement as on 31st March, 2014 (Monthly)
Calculation of Take-Home Salary

Particulars
Monthly (Rs.)
70000
28000
Annually (Rs.)
840000
336000
Medical
Conveyance Allowance
Other Allowances
1250
8000
9350
15000
96000
112200
Basic Pay
HRA
Page 13
Total of Take-Home before

PF and Tax
(-) deductions
PF
Income Tax
Take-home Salary
116600
1399200
8400
8070
100800
96840
100130
1201560
Table 4: Salary Details of Mr. Kshitij Garg as on 31st March, 2014
Cash Flow Statement

Particulars
Amoun
t
Monthly
Annually
125000
1500000
Total Deductions
17100
205200
Interest earned on Savings @ 4% p.a
44000
528000
Earnings from Investment from FD &

MF
11700
140400
Total Income
163600
1963200
Cash Inflows
Salary (Gross)
Less: Deductions
Income Tax
8700
Social Security (EPF/ Gratuity/

Pension Fund)
8400
Cash Outflows
Fixed (Non- Discretionary)
Expense
Page 14
Petrol/Transportation Expense
8000
96000
School Fees
5000
60000
Life Insurance Cover (LIC)
5000
60000
Loan Payments (Auto+home)
36500
438000
Education Loan Interest
12000
144000
Total Fixed Outflows
66500
798000
32000
384000
800
9600
Electricity/ Water
6500
78000
Medical Exp
1250
15000
Telephone
2500
30000
14000
168000
7213.3333
86559.9996
64263.333
3
771159.999
6
130763.33
33
1569160
Variable (Discretionaey)
Expense
Food & Clothing
Personal Care (dry cleaning,
laundary, cosmetics)
Entertainment Expenses
Others
Total Variable Outflows
Total Cash Outflow
Cash Surplus +(or deficit -)
32836.6667 394040.0004
Investments
Monthly Saving for contingencies
(savings deposit)
4000
48000
Investment in Mutual Funds
8000
96000
Page 15
Fixed Deposit
12000
144000
Miscellaneous Payment Tools
5836.6667
70040.0004
Total Investments
32836.666
7
394040.00
04
Total surplus (Cash in Hand)
3000
36000
Table 5: Cash Flow Statement as on 31st March, 2014
Ratios
Six financial ratios were calculated to understand the current financial health of Mr.
Garg & family in a better way and to suggest them the corrective actions keeping the
ideal ratio in mind.
Ratio
Basic Solvency
Liquidity Ratio
Savings Ratio
Debt to Asset
Ratio
Calculations
Cash
Monthly Expenses
1,540,000
130763.3333
11.777
Liquid Assets
Net Worth
5,040,000
18525900
27.21%
Savings
Gross Income
29836.6667
180700
16.51%
Total Liabilities
Total Assets
2660000
Debt to Income
Ratio
Solvency Ratio
Value
21185900
12.56%
Total Take Home

Salary
48500
107900
44.95%
Total Net Worth

Total Assets
18525900
21185900
87.44%
Total Debt
Payment
Table 6: Financial Ratios
Page 16
1. Basic Solvency Ratio: This ratio indicates an individuals ability to meet his or her
monthly expenses in case of an emergency or a catastrophe.
Basic Solvency Ratio=Near Cash/Monthly Expenses
Cash (near cash) includes all liquid assets like savings a/c, Fixed Deposit; cash in
hand and Liquid Funds. Monthly Expenses include mandatory fixed and variable
expenses.
The ideal ratio is 3 but Mr. Garg is having a ratio of 11.77. This means there is too
much of liquid cash or idle cash, which can be invested for better purposes that will
start generating returns.
2. Liquidity Ratio: This ratio helps a person to know his financial liquidity.
Maintaining a certain level of liquidity is essential to ward off any unforeseen
financial hardships. Property can be considered as a good investment avenue but
lack of liquidity is its biggest drawback and while equity is risky; its biggest
advantage is liquidity.
Liquidity Ratio= Liquid Assets/Net worth
Liquid Assets include all cash (near cash assets), equities, Equity Mutual Funds,
Debt funds and other assets which can be redeemed within three to four working
days.
The liquidity ratio is 27.21% which is much more than the ideal value of 15%. This
means that 27.21% per cent of his portfolio comprises of liquid assets which could
be converted into investments for better returns.
3. Savings Ratio: This ratio indicates the amount an individual sets aside as savings
for his future goals.
Savings Ratio = Savings/Gross Income

Savings include any form of savings like Fixed Deposits, Liquid Funds, Mutual
Funds, Equities, Debt, Bonds, PPF, Post Office Small Saving Schemes and others
where the individual saves on a regular basis.
Page 17
Mr. Garg savings Ratio is 16.51% per cent. This is marginally above the ideal
minimum savings of 10 per cent meaning that sufficient income is invested for
meeting future obligations.
4. Debt to Asset Ratio: This ratio helps a person to understand whether he is over
borrowed or is in a comfortable position, i.e., if he faces any solvency problems. This
ratio should always be used when one is planning to take a new loan. If an individual
is over borrowed, it is best to avoid getting into something new. Instead the person
should wait until he has finished paying off his previous loan amount.
Debt to Asset ratio= Total Liabilities/ Total Assets
Mr. Garg debt to asset ratio is close to 12.56% per cent. This is very good as the
ideal ratio is considered to be less than 50%. That is your total debts should not
increase more than 50 per cent of your total assets. So the low leveraged personal
balance sheet shows a remarkable position as the assets invested in are also those
which can appreciate and give higher returns.
5. Debt to income ratio: It is the percentage of consumer's income that goes towards
payment of debts. This ratio is calculated by dividing total annual debt payments by
total annual take home salary.
Debt to income ratio = Total debt payments / Total take home salary
The ideal Debt to Income ratio should not exceed 45%. That is your total annual
debt payments should not exceed more than 45 per cent of your total annual take
home salary. However, Mr. Garg debt to income ratio is 44.95% which is optimal.
6. Solvency Ratio: Long term solvency ratio compares an individual's net worth
against total assets accumulated by him/her. This ratio indicates the ability of an
individual to repay all his/her existing debts using existing assets in case of
unforeseen events.
Solvency Ratio = Total Net Worth/ Total Assets
Page 18
The ideal ratio should be minimum 50%. Mr. Gargs solvency ratio is extremely
good as its 87.44%, which clearly indicates his strong ability to service her debts.
Page 19
Chapter 5: Personal Goal Setting

Goal setting is a very powerful technique that can yield strong returns in all areas of
your life.
Benefits of personal goal setting:
Clear and focused direction giving a sense of security and purpose.

Maximum use of time.
Enthusiasm is high for what you want.
Moving steadily towards and achieving the results you really want and ultimate
success.
Boosted self-esteem, confidence and belief in your ability to make things happen
and feel in control
1. Think about the "big

picture."
5. Create some short-term

goals.
2. Break the "big picture" down

into smaller and more specific
goals.
6. Set priorities.
Page 20
3. Use the SMART method to

create actionable goals.
7. Keep incremental goals

small
4. Make each goal a positive

statement
8. Keep track of your

progress
SMART Goals identified on the basis of Questionnaires & Interaction
Page 21
Short Term Goals (Up to 1 year)
Specific:
Measurable:
Attainable:
Realistic:
Goal No.1: Paying off Car loan

Paying off the car loan completely
Need to repay a sum of Rs. 200000 (present value)
Repaying Rs.18150 each month(time=12 months)
Mr. Garg is Earning and bank has provided him with
Time Bound:
subsidized loan.
Free of this loan by the end of Mrach, 2015
Specific:
Measurable:
Attainable:
Realistic:
Time Bound:
High
Priority
Goal No.2: Plasma LED for House

Collecting Corpus for LED TV
To Build a corpus of 1 Lakh
It can be attained by regular savings of Rs 8500-9000 per
month
Mr. Garg is Earning and has good savings.
By Year 2014
Medium
Priority
Medium Term Goal (2 to 5 Years)
Specific:
Measurable:
Attainable:
Goal No.3: Payoff Brothers Education Loan

Paying off Brothers Education Loan
High
To Build a corpus of 6.60 Lakh
Priority
Keeping aside savings Rs 14,700 every month in Fixed
Realistic:
Deposit account @ 9% p.a.

Mr. Garg is Earning & His brother will start earning next
Time Bound:
year.
By Year 2017
Specific:
Measurable:
Attainable:
Goal No.4: International Holiday with family.

Collecting Corpus for World Tour
To Build a corpus of 10 Lakh
He can save 10% of his monthly Income for this purpose. He
should not take Personal Loan to go on International
Holiday with family.
Low Priority
Page 22
Realistic:
Time Bound:
Mr. Garg is Earning and has ample Net worth.

By Summers 2018
Long Term Goals (More than 5 Years)
Specific:
Measurable:
Goal No.5: Planning for Sons higher education

To build a corpus for sons higher education
Need to save a sum of Rs. 15,00,000 (future value) for the
Attainable:
same
Saving Rs 14,700 /- per month in SIP and then convert this
Realistic:
Time Bound:
annual sum to Fixed Deposit account @ 9% p.a.

Same as above
Will be able to accumulate the sum by 2025
Specific:
High
Priority
Goal No.6: Building corpus for retirement

To build a corpus for retirement planning to continue the
Measurable:
Attainable:
same lifestyle after retirement

To accumulate Rs. 500,00,000 (FV) for the same
Will continue to contribute a sum of Rs. 8400/- per month
Realistic:
Time Bound:
towards gratuity and provident fund

Same as above.
By Year 2035
Page 23
Medium Priority
Chapter 6: PLANNING
Insurance Planning
He has taken a Life Insurance Cover (Future Plus) Rs.200, 000 which has present value
of Rs. 3500000. The Insurance Plan will mature in year 2020.
Insurance policies suggested to Mr. Kshitij Garg
There should be a term life policy for Mr Garg to the extent of 15 times his annual
income. The ICICI term policy can be taken for the same as it can be taken online
and thus it will be less expensive.

A family health cover is recommended to the Mr.Garg which can cover a medical
expense of upto Rs 5 lac. It is recommended to take a family floater policy instead of
individual medical insurance cover.

Mr. Garg doesnt have any home insurance cover. It is suggested to the family to get
an insurance cover for Home of Rs 25, 00,000 (Premium Rs 2550 per annum) and
Home Content Insurance against theft & burglary of Rs 2, 50,000 (Premium of Rs
500 per annum).

The client also needs other non-life insurance covers such as accidental insurance
along with other contracts of indemnity to indemnify against the loss of their prized
possessions like home, vehicle etc.
Investment Planning
Investment means putting your money in an investment alternative with the
expectations of getting an expected return on the amount invested. Investment always
involves a risk-return trade-off. Hence, before suggesting any type of asset class for
investment to the client, it is necessary to understand his risk appetite.
Analyzing the Risk Appetite of Mr. Kshitij Garg

He is service class person in age group of 20-30 years. There may be chance of job loss
or job switch. He believes that with his experience and expertise will bring him out of
any uncertainty. In the worst case he might not bring home a salary for maximum 2-3
months. He has enough past savings to thrive on.
Page 24
His Current Investments:

Investment in Mutual Fund
Investment in Fixed Deposit
2,20,000
1,20,000
Mr. Kshitij Garg seems to be quiet risk averse as majority of his investments are in a
fixed return assets i.e. Fixed Deposit schemes and Mutual Fund. Therefore, he can
invest in Equity to seek higher returns as he doesnt seem to have any major obligations.
He is suggested to diversify his product and investment portfolio by including both high
risks high return and low risk low return investments.
Tax Planning
Mr. Kshitij Garg are in higher tax bracket of 20 % so tax planning for them is very
necessary as till now they are paying approximately Rs 104400 as their annual tax.
Application in Case of Mr. Kshitij Garg:
He is getting tax deductions on Employee Provident Fund, Life insurance Premiums,
Bank Fixed deposits.
Interest payments on Home Loan of up to Rs 150,000 pa are entitled for reduction
under Section 24. Mr. Kshitij is liable to pay an Interest on Home loan which is
partially on loan. Therefore, he can claim tax deductions under HRA
At Present Mr. Verma has no medical insurance, but he should plan for his family
medical insurance to claim deduction of upto Rs 15,000 pa under section 80D of
Income Tax Act.
At Present Mr. Verma does not make any contributions towards Charity. By doing
donations to particular funds/institutions, Tax advantages under Section 80G will be
available to Mr. Garg.
His focus should be towards investing into tax efficient investments after the
retirement.
Retirement Planning
Mr. Kshitij Garg plans to have a corpus of Rs. 5 crores by the time he retires at the
age of 60. He expects his career to experience a steady rise through the ranks of the
company, and a rise in salary along with that. Mr. & Mrs. Garg are in service where their
Page 25
gratuity and provident fund account is being credited every month by their employer
which is one most important aspect in saving for retirement.
Thus, the suggestion for Mr. Kshitij is to put a portion of some of his income (which is
expected to rise substantially in the next 15 years) to retirement fund. The Plan suitable
for Mr. Garg is LIC Jeevan Nidhi.
Page 26
Limitations of the Study
The most important limitation of this study is the authencity in the information
provided by the client. Also future cannot be accurately predicted so there would
always be some element of uncertainty in the projections.
The study couldnt test about the 100% accurate wealth management and financial
planning as the client may skip some information and he might not want to share
100% correct information.
Also this study is very individualistic in nature as it is applicable to only one

individual. It cannot be extended to any other individual.
Page 27
References
Drexler, A., Fischer, G., & Schoar, A. (July, 2011). Keeping it Simple: Financial
Literacy and Rules of Thumb. 36.
Irving, K. (volume 6, no. 4, 2013). The Financial Life Well-lived: Psychological

Benefits of Financial Planning. Australasian Accounting, Business and Finance
Journal, 60.
Lucas, S. E. (January, 2012). Eight Principles of Strategic Wealth Management.

Knowledge at Wharton School Publishing.
Prince, R. A. (2014, 5 16). What Is Wealth Management? Retrieved 11 28, 2014, from
Forbes: http://www.forbes.com/sites/russalanprince/2014/05/16/what-is-wealthmanagement/
Redmer, T., & King, J. L. (September, 2012). Financial Planning: From the Bible to
the Internet.
Subramanyam, P. V. (2013, October 1). the-teachings-of-warren-buffet. Retrieved

November 28, 2014, from Yahoo! Finance India:
https://in.finance.yahoo.com/news/the-teachings-of-warren-buffet.html
Why Set Goals? (n.d.). Retrieved 12 1, 2014, from Goal Maker:

http://www.goalmaker.com/whyset.html
Dun & Bradstreet; Wealth Management; Tata McGraw-Hill, 2009 Edition
Page 28
ANNEXURE
Questionnaire 1: Risk Profiler
1) Your Age is under the bracket of:
a. Under 25
b. 25 35
c. 35 50
d. 51 65
e. Over 65
2) What is you working status?

a. I have a job
b. I am a businessman
c. I am retired
d. I am presently without a job
3) How long have you been working?

a. Less than a year
b. Since 2 3 years
c. Since 3 5 years
d. More than 5 years
4) How many dependents do you have?

a. 0
b. 1 2
c. 3 4
d. Above 4
5) Do you own your home?
Page 29
a. Yes
b. No
6) What is your savings as a percentage of your annual earnings?

a. Under 10%
b. 10% - 25 %
c. 25% - 40%
d. 40% - 50%
e. Above 50%
7) What is your present investment pattern?

a. Only in fixed income such as bank deposits, PPF, etc
b. Mainly in fixed income and a portion in mutual funds
c. Mainly in equity direct equity
d. Gold and Art Collectibles
e. Real Estate
8) Are you satisfied with the returns you are getting on your existing investments?
a. Unsatisfied too low
b. Somewhat satisfied
c. Satisfied
d. Satisfied but too high for comfort
9) What is the situation of your wealth build-up?

a. No wealth built up
b. Very little wealth built up
c. Build up is satisfactory
d. Build up is very satisfactory
Page 30
10) What is your approach in making final decisions?

f. Make a quick decision based on information received
g. Make a decision after validating information received
h. Make a decision after validating information received and
collecting additional information
i. Usually make a decision after tremendous pondering and speaking to almost
all the people I know
Questionnaire 2- Identification of Goals
1=most important || 9= least important

Financial Concerns
6
8
1
To minimize income taxes.

To be able to retire comfortably.
To have adequate funds to cover both routine living expenses &
foreseeable future needs, including education expenses of my children.

7
To increase the assets going to my heirs by using various estate planning
5
techniques.
To accumulate sufficient assets to enable me to increase my standard of
living, purchase a vacation home etc.

To have sufficient funds & insurance coverage in the event of serious
illness.
To develop an investment program that will provide hedge against
inflation
9
To accumulate a sizeable estate to pass on to my heirs.
3
To enable my family maintain their standard of living in the event of my
death.
Page 31
Questionnaire 3: Knowing Credit Habits

This questionnaire is to know about your credit habits. Please fill to the best of your
knowledge
1. I pay my bills when they are due
a) Always
b) Almost always
c) Sometimes
2. After paying my regular bills each month, I have money left from my income
a) Yes
b) Sometimes
c) Never
3. I know how much I owe on my credit cards each month before I receive my bills
a) Yes
b) Sometimes
c) Never
4. When I get behind in my payments, I ignore the past due notices

a) Never or not applicable
b) Sometimes
c) Always
5. When I need more money for my regular living expenses, I take out a loan or use my
credit card or overdraft or saving account
a) Never
b) Sometimes
c) Often
6. I pay more than the minimum balance due on my credit card account
a) Always
b) Sometimes
c) Never
7. To pay off my current credit and charge card accounts it would take me.
a) 4 months or less
b) 5-8 months c) Over 8 months d)Not Applicable
8. My consumer loans (including car loan, but not home loan payment) and credit card
bills each month always average more than 20% of my take-home pay.
a) No
b) Sometimes
c) Always
Page 32
9. If I had serious credit problems, I would contact my creditors to explain the problem
a)
Yes
b) Probably
c) No
Questionnaire 4- Whats Your Money Attitude

Answer all the questions given below, circling yes or no, depending in how you feel
about the statements:
I need more money than I can use.
Yes
No
It bothers me when I discover I could have gotten the same thing

for less somewhere less.
I behave as if money were the ultimate symbol of success.
Yes
No
Yes
No
I show signs of nervousness when I do not have enough money.

I dream I will one day be famous rich.
Yes
Yes
No
No
I find it difficult to part with money for any reason.
Yes
No
I worry that I will not have enough money to live comfortably

when I retire.
Money controls the things that I dont do in my life.
Yes
No
Yes
No
When I was a child, money seemed to be the most important

thing in my life.
I argue or complain about the cost of things.
Yes
No
Yes
No
Count the number of yes answers to find out the degree to which money controls your life.
=6
Questionnaire 5: Analysis of Financial Values

If you had an extra Rs. 1.5 lac, on which one of the two items (in each row) would
you spend your money? You must make one choice in each pair.
Option 2
S.no
Option 1
Page 33
.
Investments/Retirement
1
Housing (Dream Home)
Education: Self/Others
Retirement Savings/Investment
Hobbies/Sports
Savings
Vacation/Travel
Hobbies/Sports
Charitable Giving/Religious
Activity
Personal
Vacation/Travel
Appearance/Grooming/Clothes
Social Activities/Eating
Charitable Giving/Religious Activity
Social Activities/Eating Out
Housing (Dream House)
10
Hobbies/Sports
11
Personal
Out
Car
Retirement
Savings/Investments
Car
Page 34
12
13
Activity
Retirement Savings/Investment
Social Activities/Eating out
Hobbies/Sports
Personal
14
Appearance/Grooming/Clothe Vacation/Travel
s
15
16
Hobbies/Sports
Car
Retirement
Social Activities/Eating Out
Savings/Investments
17
Housing ( Dream House)
Vacation/Travel
18
Education : Self/Others
Car
19
Vacation/Travel
20
Activities
Personal
Page 35

Divya Garg - PWM End Term Report

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FORE SCHOOL OF MANAGEMENT

Submitted To: Prof. Vinay Kumar Dutta

Divya Garg | 221042 | FMG 22 A

Personal Wealth Management

Chapter 2: Literature Review............................................................................7

Chapter 4: Financial Details of the Client......................................................12

Chapter 5: Personal Goal Setting....................................................................20

Personal Wealth Management

Limitations of the Study...................................................................................28

Personal Wealth Management

Personal Wealth Management

Importance of the Study

Purpose of the study

Objective of the Study

Personal Wealth Management

5. To Do Risk profiling and recommendations on retirement, tax, special situations

Chapter 2: Literature Review

6. Diversify but focus.

Keeping it Simple: Financial Literacy and Rules of Thumb.

Financial Life Well-lived: Psychological Benefits of Financial Planning

Personal Wealth Management

Chapter 3: Clients Profile

Mr. Kshitij Garg

Manager at RAS (IA)

Deloitte India Pvt. Ltd.

65/41, West Punjabi Bagh, New Delhi 110026

Details of Family and Dependent

Personal Wealth Management

Clients Attitude towards Money

Personal Wealth Management

Chapter 4: Financial Details of the

Savings a/c Balance @ 4% p.a

Cash Value of Life Insurance

Household Furniture and appliance

Deposit in Systematic Mutual Fund @ 9%p.a

Investment in Fixed Deposit @ 9.75% p.a

2 Long Term Liabilities

Education Loan (Rs. 4 lac @11% p.a.)

Table 3: Balance Sheet of Mr. Kshitij Garg as on 31st March, 2014

Cash Flow Statement as on 31st March, 2014 (Monthly)

Calculation of Take-Home Salary

Personal Wealth Management

Total of Take-Home before

Table 4: Salary Details of Mr. Kshitij Garg as on 31st March, 2014

Cash Flow Statement

Interest earned on Savings @ 4% p.a

Earnings from Investment from FD &

Social Security (EPF/ Gratuity/

Life Insurance Cover (LIC)

Loan Payments (Auto+home)

Education Loan Interest

Total Fixed Outflows

Investment in Mutual Funds

Personal Wealth Management

Miscellaneous Payment Tools

Total surplus (Cash in Hand)

Table 5: Cash Flow Statement as on 31st March, 2014

Total Take Home

Total Net Worth

Table 6: Financial Ratios

Personal Wealth Management

Savings Ratio = Savings/Gross Income

Personal Wealth Management