Personal financial Planning is one of the most demanded areas by individuals.

What is more important to the "average person' than personal financial planning and money management? This course is an excellent guide and includes all the major topics on personal finance. Personal financial planning for Accountants has text discussion and numerous examples. To clarify and supplement the discussion in each chapter, we will make use of charts, tables, illustrations, exhibits, and checklists. This course teaches you all the major areas in personal financial planningplanning your personal finances, managing your personal finances, making your purchase decisions, insuring your resources, investing your financial resources, and controlling your financial future. Professional designations--notably, CFP (Certified Financial Planner), PFS (Personal Financial Specialist for CPAs), ChFC (Chartered Financial Consultant, in the life insurance industry), , and CFA (Chartered Financial Analyst, handling stock and bond portfolio)--recognize competence in the field of financial planning. They are gaining popularity and prestige. This course helps learners prepare for these professional examinations and is a valuable source for review and self-testing.

WHAT ARE THE OBJECTIVES OF PERSONAL FINANCIAL PLANNING?

The goals of personal financial planning include: preserve financial security, have a program to meet financial requirements, evaluate and select available options, manage risk effectively, take care of records, and avoid areas where impending legislation threatens profitability or tax treatment of the investment. Certain goals may have to be modified because of changing times. WHAT ARE THE KEY AREAS IN PERSONAL FINANCIAL PLANNING? The major areas of personal financial planning include Proper insurance coverage to protect against personal risk such as death, disability, and losses. For example, adequate life insurance is needed for dependents. Insurance coverage should be modified periodically, as necessary. Capital accumulation. There should be a regular savings and investment program. A balanced investment portfolio should exist (for example, certificates of deposit, equity securities, fixed income securities) taking into account financial goals and risk tolerance. Investment and property management. You should manage your assets for high return without undue risk. Tax planning. Tax saving techniques should be employed. Debt and credit management. You should not be overextended. Planning for retirement. Adequate retirement income should be provided for. Estate planning. Proper estate planning is needed to assure assets are transferred to beneficiaries, as desired. Some assets may be arranged in such a way as to provide your heirs protection from creditors` claims in bankruptcy. Examples are spendthrift provisions in life insurance settlement options and personal trust agreements.

As Exhibit 1 shows, personal financial planning process involves the following steps: Step 1: Determine your current financial situation. In this first step of the financial planning process, you must determine your current financial situation with regard to income, savings, living expenses, and debts. You need to obtain needed information (for example, current investments, provisions in insurance policies, retirement benefits, tax law provisions).The personal financial statements discussed in Chapter 2 will provide the information you need to match your goals with your current income and your potential earning power. Step 2: Set goals. Specific financial goals are vital to financial planning. Your financial goals can range from spending all of your current income to developing an extensive savings and investment program for your future financial security. The goals you choose should be based on your current situation, your values, and your financial situation. Further, you should determine desired risk level. The best way to consider risk is to gather

information based on your own and others` experiences and to use financial planning sources. The goals can be short-, intermediate-, and long-term. Short-term goals are goals to be achieved within the next year or so, such as saving for a vacation or paying off small debts. Intermediate goals have a time frame of two to five years. Long-term goals involve financial plans that are more than five years off, such as retirement savings, money for children`s college education, or the purchase of a vacation home. Goal frequency is another ingredient in the financial planning process. Some goals, such as vacations or money for gifts, may be set annually. Other goals, such as a college education, a car, or a house, occur less frequently. Your financial goals should have the following characteristics: Goals should be realistic. Goals should be based on your income and life situation. For example, it may not be realistic to buy a house if you are a full-time student. Financial goals should be stated in specific, measurable terms. Defining exactly what your goals are will allow you to create a plan that is designed to achieve them. For example, the goal of "putting $20,000 in an investment account within four years" is a less ambiguous guide to planning than the goal of "putting money into an investment account." Financial goals should have a time frame A time frame helps you measure your progress toward your financial goals. In the previous example, the goal is to be achieved in four years. Dividing your clear goal into manageable pieces will allow you to better achieve your financial objective. Step 3: Identify alternative courses of action Identifying alternatives is critical for making good decisions. Although many external factors will influence the available alternatives, your possible courses of action will usually fall into these categories: Keep on the same course of action. For example, you may determine that the amount you have saved each month is still appropriate. Enhance the current situation. You may choose to save a larger amount each month. Alter the current situation. You may decide to buy a money market fund instead of using a regular savings account. Undertake a new course of action. You may decide to use your monthly budget to pay off credit card debts. Step 4: Evaluate alternatives, including appraising current financial status. You need to assess possible courses of action, taking into consideration your life situation and current economic conditions. In the assessment process, you should also look at the consequences and risks associated with each alternative. Every option in life can have positive or negative effects. Various information sources are available to help you assess these possible outcomes. Every decision has a tradeoff. For example, a decision to invest in stock may mean you cannot take a vacation. You must understand the effect of each financial decision. Each financial decision you make can affect several other areas of your life. For example, an investment decision may have tax consequences that are harmful to your estate plans. Or a decision about your child`s education may affect when and how you meet your retirement goals. Remember that all of your financial decisions are interrelated. Step 5: Formulate an action plan to meet goals. The fifth step of the financial planning process is to develop a plan of action-a blueprint. This requires choosing ways to achieve your goals. For example, you can increase your savings by reducing your spending or by increasing your income through extra time on the job. Don`t delay your financial planning and implement your plan in accordance with your blueprint. Step 6: Review your plan periodically and making necessary revisions. Financial planning is a dynamic and on-going process that does not end when you take a particular action. You need to regularly assess your financial decisions. You should do a complete review of your finances at least once a year. Your goals may change over the years due to changes in your lifestyle or circumstances, such as an inheritance, marriage, birth, house purchase or change of job status. Revisit and revise your financial blueprint as time goes by to reflect these changes so that you stay on track with your long-term goals. Note: External events beyond your control such as inflation or changes in the stock market or interest rates can affect your financial planning results.

EXHIBIT 1 PERSONAL FINANCIAL PLANNING PROCESS

The long slow fall of the sharemarket raises many questions for investors, and challenges some of the faux wisdom that had crept into the market.

The long slow fall of the sharemarket raises many questions for investors, and challenges some of the faux wisdom that had crept into the market. For example, over the past three years I had many people tell me that the weight of money coming into the market on a regular basis from compulsory superannuation would prevent a repeat of the 1987 sharemarket crash. Others said that the mass of online data in this information age would reduce the volatility of shares because investors would be better informed and make more rational decisions. It seems the most recent sharemarket downturn has proven both these theories wrong. Given the dramatic return of the reality of volatility in sharemarket investing over the past 12 months, it is worth remembering that a successful personal finance strategy has two parts the underlying investments; and the strategy that will help manage tax, build wealth and, over time, move you towards a position where you can retire. It is important to evaluate these personal financial strategies in light of the current market volatility. I want to look at six key strategies. Investing regularly over time (dollar cost averaging) This is the strategy of regularly investing into assets. At first glance this seems to lack the sophistication of other financial planning strategies. However, many people talk about the miracle of compound interest where, over time the earnings on investment earnings create a snowball effect of fast-growing wealth. Regularly investing over time creates a compounding effect for the miracle of compound interest, where the investments are not only exposed to compound interest, but also to additional investment contributions. Investing regularly over time is also the opposite of trying to time markets, which is hard (perhaps impossible) to do at the best of times, and even harder during a period extraordinary ups and downs. There is a Peanuts cartoon that I remember in which Charlie Brown says that the secret of happiness is to own a convertible and a lake. That way, if the sun is shining you can say that it is a great day to drive the convertible; if it is raining you can say that it is great because the lake is filling up. Dollar cost averaging is like this; if markets are up you can say that this is great because your portfolio is going well. And when markets are down (as they are now) you can say great, because you are buying more assets at low prices. It is a great strategy in a period such as now; investing regularly takes the pressure out of having to call the bottom of the market cycle, while regularly buying assets at much lower prices than they were available 12 months ago. Keep in mind that this is how most of us contribute to our superannuation, adding regular investments as markets move up and down. Repaying non-tax-deductible debt Repaying your non-tax-deductible debt (mortgage, credit cards and personal loans) might hardly seem part of a sophisticated financial planning strategy.

Consider this every additional mortgage/credit card repayment provides you with a tax-free investment return equal to the interest rate on that debt. That might be a 16% tax-free return on a credit card or an 8.25% return on a mortgage. Repaying debt also reduces the amount of borrowing in a persons overall situation, a reduction of your overall exposure to interest rate movements and a reduction in the amount of your income required to service debt. This is a strong strategy in times of uncertainty like these; the returns from repaying debt more quickly are risk free. Borrowing to invest Borrowing to invest gearing is a staple personal finance strategy. The strategy sees someone take on more investment risk, to increase the expected return of their portfolio. Of course there are volatility and risk in any gearing strategy. I am in the process of reading the The Snowball: Warren Buffett and the Business of Life. He always stated a reluctance to borrow to invest. However, when he was young and wanted to increase his $20,000 portfolio he only borrowed a further $5000. In todays terminology this would be a loan-to-value ratio of 20%. So when the worlds greatest investor did put some borrowed money to work it was with a loan-to-value ratio of 20% a cautionary tale for all of us who are realistic enough to know that we are not Warren Buffett. The important aspect to such a strategy is that the current volatility increases the chances of seeing a sharp drop in portfolio values. Anyone using a gearing strategy should have contingency plans in place if their portfolio value drops sharply. Borrowing to invest often takes up a lot of investment cashflow. This makes it tougher to be buying extra investments and taking advantage of a situation when values have fallen as they have now. Salary sacrificing to superannuation Salary sacrificing to superannuation is the strategy whereby pre-tax income, which would usually be taxed at 31.5% for the average income earner, is diverted into superannuation where it is only taxed at 15%. The core of this strategy is the tax saving. For every $10,000 salary sacrificed to superannuation the tax saving is $1650 a year. It might not sound much, but it is a little over $30 a week, or close to $1 for each hour worked. And no one would refuse a $1 an hour pay rise. This remains a great strategy in the current environment; any tax saving has to be a positive. People approaching retirement might consider a subtle change, to increase the extent to which future salary sacrifice contributions are invested in cash. That way, they can build up enough cash to fund their first three to five years of retirement and can avoid having to sell growth assets if the market volatility continues. The downside of salary sacrificing to superannuation is for younger people who cant access contributions until age 60. Given comments about a more difficult economic environment in the short term, if they feel that they need any extra cash (for example, if they run a business and think profits

might drop) they may be wise to reduce the salary sacrifice contributions and build up some cash outside of superannuation. Other than that, it should be all systems go with a strategy that saves tax and sees a person regularly investing over time. Transition to retirement strategy This strategy involves drawing on some superannuation benefits in a tax advantaged way, while salary sacrificing additional income to superannuation. My opinion is that for people over the age of 60 and still working this is the most powerful financial planning strategy that there is. In the current environment a powerful strategy such as this works well. Similar to the comments on the salary sacrificing strategy, people getting close to retirement might consider increasing their salary sacrifice contributions to cash if they need to build up their cash balance close to retirement. Income planning in retirement Retirement becomes a key time to think about the asset allocation of a portfolio. A key strategy is to look at a portfolio from the perspective of how much income has to be paid out of the portfolio, and plan for that. For example, consider a $1 million portfolio where a person wishes to draw at the rate of $50,000 a year. Having (at least) $250,000 set aside in cash means that the person knows where five years of income are drawn from. That $250,000 is topped up by the interest, dividends and distributions from the remainder of the portfolio; if the portfolio is providing an average gross yield of 6.5% then this is $65,000 a year. The result; a person should be able to draw an income from the portfolio of $50,000 a year, increasing with inflation, by relying on the initial cash allocation and the stream of interest, dividends and distributions to the cash account. This is a strong strategy in a volatile market; suddenly the inevitable volatility of growth assets such as shares and property are less important because of the cash that you have available and the income earned by the portfolio, both of which are far more reliable than having to rely on the ups and downs of the market. Conclusion Difficult investment times make it more important that the underlying personal finance strategy is working for you. Settling on a strategy, and understanding why it works, will help in working through this current difficult market.

Demand for organized Personal Financial Planning Industry in India increases

The personal finance planning industry in India is on the rise as the economy is getting stronger and people are gaining more and more. This has led to the rise of the requirement of professional organizations that provide efficient asset tracking solution India. Owing to such organizations, numerous prosperous individuals have been able to keep abreast with the knowledge regarding the statuses of the investments of their wealth.

Nowadays, several private equity firms in India are providing these services to the clients, who find such effective financial solutions under one roof. Due to the asset tracking solutions, bad investments can be avoided and precious monies can be saved from being wasted. These are the factors that have made people with means feel the need for a well organized personal finance planning industry in India. Even, wealth management firms, like Client Associates, are engaged in similar activities and greatly assist in safeguarding the finances of their clients.