Grow Money

How to Grow Money?
& Manage your Wealth
How to Grow Your Money? & Manage your Wealth

By
CA Rajkumar S Adukia
CA Rajkumar S. Adukia
B. Com. (Hons.), FCA, ACS, ACMA, LL.B, Dip.IFR (UK), MBA, Dip LL&LW, Dip in
Criminology
Email: [email protected]
Mobile: 9820061049/9323061049
Irrespective of the number of literature we have on Financial Planning and Wealth

Management, growing wealth has always been a thing of personal interest. It is precisely the
reason why while loads of books on money making are available in the market and there are
very few people who have grown rich reading them. While these books offer what is called
the Advice, very few put them into practice.
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How to Grow Money? & Manage your Wealth
Contents
S.No
Index
1.
Know Your Money

a. Attributes of Money
2.
Earning Money
a. Scenario 1 - Personal Involvement/Participation Active Money
Earning
b. Scenario 2 - No Personal Involvement/Participation Passive
Money Earning
3.
Saving Money
a. Classifying Saving
Saving to Retain
Saving for Future Expenses
4.
Investing Money Growing Money

a. Golden Rules on Investing
b. Investment Objective
c. Asset Class
d. Categorizing Investment and Criteria for Selection of Investments
e. Classifying Investments
f.
Capital Market Investments

Equity
Debentures and Bonds
Primary Market Purchase of Securities
Secondary Market Purchase of Securities
What is a Depositary System?
Mutual Funds
Company Fixed Deposits
Pension Products
Insurance Policies
Government Schemes
i. National Savings Certificates (NSC)
ii. Public Provident Fund (PPF)
iii. Post Office Scheme (POS)
iv. Infrastructure Bonds
v. Kisan Vikas Patra (KVP)
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Where NOT to Invest?

i. Money Circulation Schemes (MCS) Multi-Level Marketing
Schemes (MLM) Network Marketing (NWM) Self
Employment Yojana (SEY
ii. Chit Funds
iii. Deposits
iv. Plantation Companies
v. Private Placements
Investor Education and Protection Fund
5.
Shaping your Future with Financial Planning

a. Steps in Financial planning
o
Know Your financial Goals
Know Your Financial Positions
Know Your Risks
Know Your Investments
b. Investing Your Savings

c. Investor Classification
d. Categorization of Financial Planning
o
Income Planning
Income Tax Planning
Insurance & health planning
Investment & Wealth Planning
Retirement Planning
Estate Planning
6.
Portfolio Managers/ Wealth Managers/Investment Advisors (IA) Regulation
7.
Ensure Steady Income Ensure Peace of Mind
8.
How to Document your Investments?
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1. KNOW YOUR MONEY
The aim of this book is to simplify your understanding of Money and its uses.
Bombarding terminologies do create a scare in the minds of laymen that hinder their
understanding of the some of the basic yet crucial aspects of Money.
Money in its different forms is represented as Income, Expense, Cash Flow,
Saving, Investment, Wealth, Finance, Status, and Financial Position. Money
is a powerful instrument that has a capacity to buy, earn, reap and grow.
The qualities of money are similar to that of Fire. It can both purify and make things
sacred and destroy everything that comes its way.
Why is it important to know about money?
Knowing about money is more like knowing a person. Unless you understand the nature
of the person it becomes difficult to move with him/her. Very similar and highly essential
it is to know the various attributes of money. Knowing these attributes assists you to take
well informed financial decisions.
a. Attributes of Money
An attribute is an inherent part of someone or something, which decides the very nature
of the person or thing. In short it is more about how a person or thing reacts or behaves
given a particular circumstance.
The attributes of money can be defined as follows

a. Motivation Money motivates, it has a great bearing on the emotional state of a
person. Having sufficient money makes an individual self-sustained, thereby making
him/her feel more secured and assured. This motivates a person to stay in the best of
his temper
b. Attention Having money being attention to the person having it. People notice
those individuals who do well and seem more consistent
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c. Mobility Money is Mobile, the nature of money is to flow. Money keeps moving
from an individual to a trader, from trader to another, from a trader to a bank, from a
bank to an individual.
d. Respect Money needs Respect. Where money is respected there it stays and yields
more. It can well be seen, where in some households people leave money on tables
and counters to be swindled away by workers, while other who take care to leave
money in appropriate places.
e. Reservation Money has no reservation. Money goes to everyone. All money needs
is a reason to move, it has no reservation as to the cast, creed or status of a person. It
keeps changing hands
f. Time Value of Money - A penny in hand today is worth more than a penny
tomorrow. True to what is said, inflation plays a major role in depreciating the value
of money in hand, hence holding back money in todays circumstance is only more
detrimental to its value than investing it.
g. Growth Money is one non-living thing that grows. Sounds weird! Take a bank
deposit or just leave it in a savings bank account, you can see money growing in its
value with the interest that is paid on the bank or deposit balance. This non-living
thing makes living possible for human beings
h. Risk No wonder there is a fear to lose that all powerful money. Everyone wants
money, by fair or foul means, hence there is a risk of theft, you invest money for
higher returns, there is a risk of losing money as they are in turn invested in highly
risky ventures.
i. Essential To live, to survive, to safeguard for all this and more you need money.
Money defines the status of living. It is essential to eat, to have a roof and to keep up
your modesty. It is our life blood for good reasons. Yet though money alone does not
or cannot buy happiness.
Crazy Money
You always need more money
You take time to make money and spend it in no time
Money comes with Risk
Money goes to everyone
Money can make you happy or sad
Rich become richer and poor become poorer
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Facts about Money

Save money gain more
Never put a ceiling on your income
Idle money is foolishness
Money and Attention go together
Money alone cannot give you happiness
Good money is clean money
Bad money is money earned from wrong means
Man should control money otherwise it will control him
Spending money is tricky
Your money decides your mood
Attention and Risk are siblings of Money
2. EARNING MONEY
All of us procure money from various sources. Employment, self-employment,

entrepreneurship, business are some of the many forms of earning money. It is widely
understood that in order to have money one has to procure it (earn it).
Unfortunately majority of the people believe that financial planning is all about earning
money. In short what they look forward is to know ways of earning money. Undoubtedly
earning money or procuring it is the first step in financial planning but it is not all. The
planning begins only after procuring it.
When we talk about earning money we talk about three things
1. Why should we earn money?

2. How do we earn money?
3. From where do we earn money?
WHY?
To eat
To survive
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To satisfy our daily needs

To safeguard ourselves
To learn
To live
To earn
HOW?
SALARY
MONEY
BUSINESS
INVESTME
NTS
Take up a job earn Salary

o Work in a company
o Work in a private office
o Work in an government organization
o Work in a shop
o Work in an agency
o Work in a school
o Work in hospitals
o Work in factories
Self Employed and earn Profit
o Teach
o Start a business
o Set up a shop
o Set up a consultancy
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o Private practice
o Consider offering professional services
Invest Money earn Returns
o In Business Ventures
o In Bank Deposits
o In deposits with companies
o In Securities
o In Bonds
o In Loans
o In Government instruments
o In Debentures
o In Provident Fund
o In Post Office
FROM WHERE?
You earn money by performing an activity, the activity can be one in which you are involved
personally and one in which you are not involved personally
o Personal Involvement /Participation
o No Personal Involvement/Participation
a. Scenario 1 - Personal Involvement/Participation Active Money Earning
In this scenario the money is earned by ones personal participation. Examples are
o Employment
o Proprietor Business
o Professional Practice by a Proprietor
o Vendor ( Proprietor)
b. Scenario 2 - No Personal Involvement/Participation Passive Money
Earning
In this scenario the money is earned without ones personal participation. Examples are
o Money invested in Business Ventures earning profit or interest
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o Money with Banks earning interest

o Money in Shares earning dividend or increase in value of shares
o Money in Government securities earning fixed income
o Money in Post office making good returns
o Money in Partnerships making profits
o Money in Joint Ventures that requires only monetary participation
o Money in Private Equity
o Money from Property (Commercial/Residential) Rentals
o Money from Bonds earning interest
o Money from IPO issues with dividends
Such earning comes handy during rainy days when ones personal participation becomes an
issue due to any reason what so ever. This also helps an individual to maintain his/her
standard of living irrespective of the income earned by way of personal participation. It is
important for one and all to set up this sort of an arrangement over a period of time.
Yes! Money works for you. You invest money retained with you in business ventures or
investment avenues where others work to earn money for you. Therefore whether or not you
participate, the money you invest is put to work and in turn fetches an earning for you.
While in the first instance you work for money, in the second one, you make money work for
you. In both instances, you earn additional money. Therefore procuring money as a process
does not stop with just income from employment or business, it also emerges from sound
investment decisions.
TIPS on Earning Money

1. Never put a ceiling on your income
2. Always invest money for further earnings
3. Always have an alternate source of income
4. Earn money the right way, cause, money earned out of right
means is rightly spent
5. Tap the sources of earning money keeping your requirements in
mind
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6. It is good to save and invest money as soon as you start earning,

cause it is a time with less liabilities
7. Self-employment and Entrepreneur options can be explore even if
you are in a regular employment provided it does not affect your
job or the terms of employment. Consider taking permissions if
required
8. It is good to form a Partnership, where each of the partners are
good at one aspect or the other and thereby all reap the benefits
of expertise from each one of them
Caution
1. Never venture into a business or profession you have no idea about
2. It is always good to gain experience under someone before venturing out on your
own
3. Always invest smaller amounts in business ventures before going big
4. Never put all the money in one basket
3. SAVING MONEY
What Matters?
It is not how much money you make

It is how much money you keep
A quick recap
Why do we earn?
We earn for our

o needs,
o necessities,
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o comforts,
o luxuries
Is that all? Or is there something that is equally important
We also very importantly earn to SAVE
You should also earn for saving/retaining. Not all that you earn can be spent, which means
you will be left with no money for emergencies.
Borrowing is not an option to get money, it is not procuring, it is creating a liability to meet
your need. Such borrowed amounts are returned with interest and that is the cost you pay for
borrowing money for your needs.
What do people do with the money they earn? They

o pay their bills,
o expend for their monthly needs,
o pay taxes,
o repay loans and it goes on.
How many people really set aside some amount for retaining? After all the expenses they are
hardly left with anything that they retaining as their savings.
As normal human beings we earn mainly for our primary needs followed by other obligations
like paying bills, taxes and the rest. Here our primary need includes the money we would
want to retain with us, our savings. Therefore while allocating the money earned it would be
wise to first allocated for our primary needs and then distribute the remaining towards our
other obligations. This not only do you find money to save, it also keeps your expenses under
check.
Well, what happens when the remaining money allocated are not sufficient to meet your
obligations with the government (taxes), creditors (loan, bills)? You should pay the amounts
otherwise you will be taken to task. It means you are under a pressure to find money to pay
them in time. Well, this kind of a pressure works well to find ways and means of earning
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more money than what you actually get paid. In other words you explore options of making
more money.
Any legal means of making money is welcome. Cause, good money and bad money have
their respective characteristics. Therefore, what we find here is that shifting your focus to
satisfy your needs first, is indirectly making you explore more options of making money or
procuring money.
As discussed earlier procuring money can be active or passive. At this juncture we should
appreciate the fact that how a shift in focus actually and automatically changes our approach
towards money, its procurement, retaining and investment.
All of the above and more to come, takes us through the nature of money, nature of investors
and all about being wise with money.
a. Classifying Savings
Savings can be classified as

o Saving to Retain
o Saving for Future Expenses
Saving to Retain
This constitutes actual saving. It is the amount that accumulates into a corpus for safe keeping
and for further investment. Hence one should ensure sufficient amount of money is
accumulated by carefully planning your expense.
Saving for Future Expenses
This amounts to saving for future expenses or in short earmarking money for a particular
expense. This is saving for a short term. This amount is meant to be spent. Therefore in the
long term such savings cannot be counted for savings or retained earnings
Examples of such expenses are as follows
o Saving for Marriage expenses
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o Saving to buy Vehicles

o Saving for Medical Expenses
o Saving for decorating the house
o Saving for replacements
o Saving for vacations
o Saving for celebrations
o Saving for functions
o Saving for Gifting
o Saving for Household maintenance and repair
o Saving for Childrens Educational expenses yearly school fees,
college fees, Coaching classes, exam fees
o Saving for Higher Education
o Saving for Household items ( as their value depreciates over a period
of use)
Classifying people into rich and poor only signifies their financial acumen towards being a
good and a bad investor. Good investors not just work hard to earn money, but in turn also
make money work for them. It helps them maintain not just their financial stability but also
supports them during raining days. On the other hand bad investors stick to certain self-made
and widely believed rules that only hard work can earn them good money and completely
neglect the aspect of investing and the concept of passive money.
Now it is clear how the rich get richer and the poor get poorer. Being wise with money and
financial decisions has nothing to do with greed. The only difference being, greed is about
getting rich overnight and being financial wise is growing rich by the day.
TIPS on Saving Money
1. Squeeze expenses and Save, it pays, especially

2. Cut wasteful expenditure from your Budget
3. Cut down on Luxury
4. Small is Beautiful, keep things small they help in keeping expenses under check
5. Save in the name of Minor Children
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6. Differentiate between what you deserve and what you desire

7. Save Surplus Fund whether out of monthly income or any windfall
8. Aim at accumulating corpus out of money saved
9. It is good to set aside your savings before you start spending for the month
10. Aim at saving a certain amount every month and follow religiously
Caution
1. Saving should be kept safe
2. Do not invest all your savings, keep a safe amount in bank accounts or fixed
deposits for emergencies
3. Do not go by your friends experience in Investment, always enquire and research
from your side as well
4. INVESTING MONEY GROWING MONEY
Growing Money
Investing money, in short is in putting money to work. As said earlier, Money is the only
non-living thing that grows when put to work. Again, it is important to note that long term
investments actually pave way for the money to grow. Does it mean short term investments
dont? The reason behind lauding long term investment is that, it takes into account the ups
and downs and balances the peak and lean period, therefore the money actually tends to grow
giving a compounding effect to money.
Money kept idle loses Value

It is also important to note that money that is kept idle loses its value. Thanks to inflation, the
real value of money depreciates and hence putting them in savings accounts is the least you
can do to save money from depreciating.
Retained Earnings
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Good that you earn money and also decide to retain some of it and what do you do after it?
You Invest. Basically you make the money work for you. Investments can be classified into
safe and risky ones. While safe investments earn lesser return, risky ones get greater returns.
What do you want from Investing?

o Huge Returns
o Value appreciation
o More money than before
Seldom all are expectations come true.
What should you remember while investing?

o When you start investing, expect nothing for a year or so, especially in
stocks
o In short, invest only what you can lose.
o Analyse the cause of your loss
o It is important to develop knowledge about investing and the sector in
which intend to invest is essential. Knowledge matters.
o This gives you an edge over other and helps you succeed in an
investment decision.
o Always keep tab on the financial news and information and if required
even take a few courses on investments, it is likely to give you a good
insight into investing
a. GOLDEN RULES ON INVESTING

o Start saving soon and investing early
o Invest at Regular Intervals
o Always aim at Long term investments
o It is always important to diversify investments.
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Steps to consider before INVESTING your Savings

The after saving and pre investing phase should take care of the following
o A liquid fund for contingencies is set apart ( this amount should not
be considered for investment though this should be either kept as a
bank balance or deposit)
o A liquid fund for immediate requirements is developed( this amount
should not be considered for investment as they are meant for an
expenditure quite immediate)
o Basic Insurance, is required, it is always suggested to have a term
plan that comes with a lesser premium when compared with a life
insurance with sum assured for the same amount.
o Usage of Credit to be kept minimum, as the credit not only eats up
your savings, it also creates more liability ( using credit card factually
means expending money out of your future earnings, which is not
worth practicing)
o A fund for your Retirement is absolutely essential, a fixed sum of
money accumulated towards a retirement reserve is crucial to ensure
peaceful retirement for you and your spouse ( This is especially
important when you have no retirement corpus accumulated by your
employer)
Considerations for Planning Your Investment Strategy
Investing as a job requires certain considerations to be planning before venturing into one, the
following considerations should be considered before formally beginning your investment
o Write down your Investment Goals
o Time that you can allocate to pursue your investment goals
o What is the level of your knowledge with regard to investments and
investing?
o Funds available for investment purposes
o To what extent can you take losses without affects other considerations
o Your todays financial position
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o What is the level of your risk tolerance? ( low, medium, high)
General Cautions while Investing
1. It is important to get details especially written documents explaining more about the
investment you consider
2. It is not only important to read such documents and understand them, it is equally
important to verify their authenticity
3. Before you decide to make an investment, know the cost associated with it and
subsequent benefits you are about to receive.
4. Any investment should be assessed for its liquidity aspect together with their safety
5. The above aspects will enable you to analyse whether the investment under
consideration is an appropriate for your investment goals
6. Also check how this particular investment goes with the other investments you have
already made or about to make
7. If the investment requires you to deal through an intermediary, ensure you operate
through an authorized intermediary
8. Enquire and thoroughly research about the intermediary
9. Know what to do if something goes wrong with your investment, know your options
and avenues, proceed only if satisfied
10. Never invest money you need in the Short Term
b. Investment Objective
There are 3 basic investment objectives:
Safety,
Returns and
Liquidity
It means that one would like the investment to be absolutely safe, while it generates
handsome returns and also provides high liquidity. It is rather very difficult to maximize all
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three objectives at the same time. A trade-off is required. If one wants high returns, one may
have to take some risks; or if one wants high liquidity, one may have to compromise on
returns.
c. Asset Class
There are investment opportunities that are high on risk and there are investment
opportunities that are low on risk. Each is called an asset class. An investor needs to allocate
his savings to one or more asset classes depending upon his circumstances.
d. Categorising Investments and Criteria for Selection of Investments
There are parameters one should look at based on their individual status. The following can
be considered a thumb rule for investing
Age of the Investor and Asset Allocation (Mix)
Perfect asset allocation is the one that suits your profile. A key factor in determining your
investing profile is your age. Well age is not the only factor to take into consideration; you
can manage your asset allocation according to your age.
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While younger investors are better off with a portfolio featuring more stocks with greater
growth opportunities. Older investors nearing retirement should prefer portfolios with a
greater percentage of fixed income and reliable revenue streams with a very less proportion
of stocks with their associated risks.
An asset allocation involves several rules of thumb. A common suggestion is to invest your
age in bonds. Say you are a 40 year old, you may use a 40/60 (bond/equity) allocation.
Though it might seem a little conservative for young people, it is a slightly risky adventure
for people above 40 years.
e. Classifying Investments
Investments
Physical Asset
Investments
Financial Asset
Investments
Physical Asset Investments

Investments in the following are considered as Physical Asset Investments
o Real Estate Investments
o Commodities Investments
o Investment in Gold
o Investment in Jewellery
o Investment in Precious Stones
Financial Asset Investments
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Investments in the following are considered as Financial Asset Investments

o Bank Deposits
o Fixed Deposits
o Post Office Investments
o Insurance Policies
o Public Provident Funds
o Pension Fund Schemes
o Mutual Funds
o Shares
o Bonds
o Debentures
f. Capital Market Investments
Equity Shares
An appropriate investment avenue for an investor who is prepared to take risks for higher
returns. Over the long term, returns from equity shares at aggregated levels are generally
higher than most other avenues. (As on 31st March, 2011, the BSE Sensex had generated a
compounded annualized return of 17.6 per cent over the last 10 years).
Debentures and Bonds
There are three types of debentures:

Total amount is redeemed by the issuer at a
specified time
Part of the value is redeemed and the
remaining is converted to equity shares at a specified price and time
Full value is converted into equity at a specified
price and time
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It is an ideal investment avenue for investors seeking assured and regular income. They
typically offer interest rates higher than bank fixed deposits. Some bonds offer tax benefits to
the investors
Primary Market - Purchase of Securities
An issue is called an Initial Public Offering (IPO) when an unlisted company makes a fresh
issue of shares or some of its existing shareholders make an offer to sell of part of their
existing shareholding for the first time to the public. An IPO of fresh shares is made by a
company when there is a need for money, for the purposes of growth-expansion or
diversification or acquisitions or sometimes to meet its increasing working capital
requirements.
What is Further Public Offering (FPO)?
When an already listed company makes a fresh issue of securities to the public or the existing
promoters make an offer for sale to the public it is referred to as Further Public Offering
(FPO).
When it is made?
Fresh securities are issued by a company when it needs money for
growth-expansion or
diversification or
acquisitions or
even to meet its increasing working capital requirements.
It is important to note that the FPO route is also being utilized extensively by the Government
for the PSUs for the purpose of disinvestment of governments holdings.
Investing in IPOs/FPOs
DOs
Read the Prospectus/Abridged Prospectus carefully, with special attention to:
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o -Risk factors
o -Background of promoters
o -Company history
o -Outstanding litigations and defaults
o -Financial statements
o -Object of the issue
o -Basis of Issue price
o -Instructions for making an application
Always use the ASBA process for applying - Wherein the investor authorizes his
bank to block in his bank account an amount equivalent to the application money.
While the money remains in the bank, on finalization of the basis of allotment, only
the amount equivalent to the allotment amount is debited to the bank account, and the
remaining amount is open for regular use.
Where one hasnot received the credit to demat account/refund of application money,
it is important to lodge a complaint with compliance officer of the issuer and with
post-issue lead manager for further follow up and action.
DONTs
Never be influenced by any implicit/explicit promise made by the issuer or anybody

else
Never invest based only on the prevailing bull run of the market index or of scrips of
other companies in the same industry or scrips of the issuer company/group
companies
Never expect the price of the shares of the issuer company to necessarily go up upon
listing or forever
Secondary Market Purchase of Securities
It is a market where the issued shares and bonds/debentures are sold and bought among
investors through a broker of a stock exchange.
Investing in the secondary market

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DOs
announcements made by them and other disclosures made. A main source of

information are the websites of the exchanges and companies, databases of data
vendors, business newspapers and magazines
Go for trading/investment strategies commensurate with your risk-bearing capacity as
all investments carry some risk, the degree of which varies according to the
investment strategy adopted
-recognized stock exchanges and deal

only through SEBI-registered brokers/sub-brokers
Ensure you provide clear and unambiguous instructions to your broker/sub-broker/DP

Make sure to insist on a contract note for each transaction and verify details in the
contract note, immediately on receipt. Crosscheck details of your trade available with
the details on the exchange's website
Make sure that the broker's name, trade time and number, transaction price and
brokerage are shown distinctly on the contract note given.
Kindly issue cheques/ drafts only in the trade name of the broker
case of
purchase within the prescribed time
Ensure receipt of payment/deliveries within 48 hours of payout

Get periodical statement of accounts
Take time to scrutinize both the transactions and the holding statements that you
receive from your DP
The Delivery Instruction Slips (DIS) Book issued by the DP should be carefully
maintained. It is important to insist that the DIS numbers are pre-printed and your
Client ID is pre-stamped
One can use the freezing facility in the demat account where it is not being used.
DON'Ts
Never forget to take account of the potential risks that are involved in investment in
shares
Never go for off-market transactions
Never deal with unregistered intermediaries
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Never fall prey to promises of unrealistic returns or guaranteed returns

Never invest on the basis of hearsays, rumors and tips
Never be influenced into buying into fundamentally unsound companies
Never should you blindly follow investment advice given on TV channels/ websites/
SMS
Never invest under pressure or imitate investment decisions of others who may have
profited from their investment decisions
Never get misled by companies showing approvals / registrations from Government
agencies as the approvals could be for certain other purposes
Never should you get carried away with advertisements about the financial
performance of companies
What is a Depository System?
Physical share certificates are now converted to Electronic form. A depository holds
securities (like shares, debentures, bonds, mutual fund units etc.) of investors in electronic
form (demat form) through a registered Depository Participant (DP). It provides services
related to transactions in securities.
A DP is an agent of the depository through which it interfaces with the investor and provides
depository services. It is now compulsory for every investor to open a beneficial owner (BO)
account to apply in IPOs/FPOs or to trade in the stock exchange.
The advantages of availing depository services include:

o A safe and convenient way to hold securities
o Immediate transfer of securities
o No stamp duty on transfer of securities
o Elimination of risks associated with physical certificates such as bad delivery, fake
securities, delays, thefts etc.
o Reduction in paperwork involved in transfer of securities
o Reduction in transaction cost
o No odd lot problem, even one share can be traded
o Nomination facility
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o Change in address recorded with DP gets registered with all companies in which
investor holds securities electronically eliminating the need to correspond with each
of them separately
o Transmission of securities is done by DP eliminating correspondence with companies
o Holding investments in equity and debt instruments in a single account.
Rights as a Shareholder
Shareholders need protection from malpractices and frauds. SEBI regulates the capital
market, its guidelines ensures rights of the shareholders are protected. For this purpose, it
monitors all constituents of the capital market from issuers on one hand to stock exchanges
on the other hand and all other intermediaries like stock brokers, merchant bankers and
underwriters. More information on SEBI can be had from www.sebi.gov.in. The websites of
the two national-level stock exchanges are as follows: BSE - www.bseindia.com and NSE www.nseindia.com.
Rights as a shareholder
To receive the shares on allotment or purchase within the stipulated time
To receive copies of the Annual Report of the company
To receive dividends, if declared, in due time
To receive approved corporate benefits like rights, bonus, etc.
To receive offer in case of takeover, delisting or buyback
To participate/vote in general meetings
To inspect the statutory registers at the registered office of the company
To inspect the minute books of the general meetings and receive copies
To complain and seek redressal against fraudulent and investor unfriendly companies
To proceed against the company, if in default, by way of civil or criminal proceedings
To receive the residual proceeds in case of winding up
Rights as a debenture holder
To receive interest/redemption in the stipulated time

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To receive a copy of the trust deed on request

To apply before the CLB in case of default in redemption of debentures on the date of
maturity
To apply for winding up of the company if the company fails to pay its debt
To approach the Debenture Trustee for grievances
Portfolio
Portfolio is the name given to the stocks you own. Such portfolio should consist of a
maximum of 10 stocks at any given time. It is important to sell loss making stocks when they
are 10% down from the purchase price, this will indeed result in selling many number of
stocks in ones portfolio, given that it is always advised to buy stocks for a longer period of
time, still it is better to sell them to ensure losses do not eat into profit making stocks. It is
also equally important to add stocks that have a potential to grow.
While diversification mantra is heard far aloud, especially while investing in stocks, it is
important to hit a balanced approach, whether it is sensible to invest Rs. 100 crores in 10
stocks or 1 lakh in 20 stocks is a sensibility decision to be taken by the investor. It is obvious
that a person having Rs 1 lakh and investing in 20 stocks just has too many of them, as the
market rises or falls each of them exhibit a different behavior, hence it is always wise to stick
to the 10 rule as far as stocks are concerned.
MUTUAL FUNDS
There are two-steps to identify a suitable mutual fund:

Selecting a fund with investment objectives and preferences, return objectives, time
horizon and risk tolerances that meet the requirements of the investor.
Selecting a fund that has a detailed asset allocation strategy by fund type category to
reflect the investment objectives of the fund.
The Indian Equity Market has grown significantly in the recent years; Mutual Funds are not
left far behind. Both the avenues have created wealth for the investors. But for the creation of
wealth through this avenue a proper understanding of the Mutual Funds is must.
26 | P a g e
Regulatory structure of Mutual funds
Operation of mutual funds is controlled by SEBI.

The RBI controls money market mutual funds
UTI has its own Guidelines.
Purchase of Mutual Fund Schemes
New Fund Offering (NFO) is a new scheme launched by a mutual fund to collect funds from
the investors. Investors can also contact agents and distributors of mutual funds for necessary
information and application forms. The units of existing schemes can be purchased directly
from the fund itself or from distributors/brokers/sub-brokers/agents.
Investing in mutual fund schemes
DOs
Read the offer document carefully before investing
Investments in mutual funds may be risky, and do not necessarily result in gains
Invest in a scheme depending upon your investment objective and risk appetite
Note that past performance of a scheme or a fund is not indicative of the scheme's or
the fund's future performance. Past performance may or may not be sustained in the
future
Keep regular track of the NAV of the schemes in which you have invested
Ensure that you receive an account statement for your investments/ redemptions
DON'Ts
Never invest in a scheme just because somebody is offering you a commission or

some other incentive, gift etc.
Never get carried away by the name of the scheme/ mutual fund
Never be guided solely by the past performance of a scheme/ fund
Never forget to take note of the risks involved in the investment
27 | P a g e
Never hesitate to approach the proper authorities for redressal of your

doubts/grievances.
Never deal with any agent/broker dealer who is not registered with AMFI
COMPANY FIXED DEPOSITS
Companies accept Fixed Deposits from investors for short durations of 6 months to 3 years.
While they are similar to bank fixed deposits but they offer lesser liquidity and usually carry
higher risk and return. This results in mobilization of household savings for utilization in
productive purposes by the corporate sector.
Features of Company Fixed Deposits are:

Fixed deposit scheme offered by a company. Similar to a bank deposit
Used by companies to borrow from small investors
The investment period must be selected carefully as most FDs are not encashable
prior to their maturity
Not as safe as a bank deposit. Company deposits are unsecured
Offer higher returns than bank FDs, since they entail higher risks
Ratings can be a guide to their safety
Rights of deposit holders
Right to receive periodic interest payments on time.

Right to receive intimation regarding any amendment to the terms of repayment of
deposits.
Right to receive the amount of matured deposits on time.
Right to intimation regarding unclaimed deposits before transfer to the IEPF.
Right to file complaint in the prescribed format before Company Law Board (in the
office where the registered office of the company is situated) in case of default in
repayment of deposits.
Right to alternatively file complaint in the Consumer Forum under the Consumer
Protection Act, 1986.
28 | P a g e
Investing in company Fixed Deposits Schemes
DOs
Do check the credit rating assigned by the Credit Rating Agencies to the Fixed
Deposits being considered
Do ignore the unrated Fixed Deposit schemes
Do understand the background and credibility of the promoters
Do choose a company with a better track record for similar rated companies
Do avoid investing in Fixed Deposits of companies whose promoters have a dubious
record
Do realize while investing in Fixed Deposits that if the company is unable to repay
your money, you may end up losing it, as Deposits are unsecured
Do refer to the investor service standards of the company
Do lodge a complaint with the concerned regulator in case the company defaults in
repayment of deposits (For listed companies, file complaint with SEBI; for
manufacturing companies, file complaint with MCA; for banks and NBFCs, file
complaint with RBI)
Do state the name of the guardian in the application, if the deposit is in the name of a
minor
Do always have a nominee for the deposits made by you
DONTs
Never invest all or substantial part of your savings in Fixed Deposits
Never get lured by high interest rates
Never forget to check on track record of the company
Never invest in companies that care little about investor services
Never hesitate to seek regulators assistance for any grievance
PENSION PRODUCTS
29 | P a g e
The New Pension System (NPS) has been conceived as a no-load product. It also has other
investor-friendly features like full portability at no cost, which allows investors to switch
fund managers.
With no inducement to push one fund over another, the point of sale will either allow the
customer to make the product choice, or the customer will be put in a default option. (Default
options are used to make the decision for the customer who would rather not choose. The
NPS uses a well-regarded, lifecycle-based investing formula that reduces the equity
allocation of a person as they age.) The NPS could have taken the route of higher sales
commissions than insurance to get market share, but it has chosen an ethically mature path,
risking a slow start to the product off take in the market.
A retirement corpus can be built during the working life of a person by regularly contributing
(the minimum amount being Rs. 6,000 p.a.) to the NPS till the age of 60. Such contributions
are invested by the Pension Fund Manager (PFM) the investor chooses, in the investment
option of his choice namely active choice and auto choice.
Active Choice
Asset Class E (Equity): Invests in index funds (the maximum allowed is 50%, the
balance has to be in Asset Class G & C)
Asset Class G (Government securities): Invests in central and state government bonds
Asset Class C (non government debt): Invests in liquid funds of Asset Management
Companies, bank fixed deposits, rated bonds issued by corporates, banks, financial
institutions, PSUs, Municipality and Infrastructure entities.
Auto Choice (Life cycle fund)
The contributions are automatically allocated to the three asset classes in a predefined manner
depending on the investors age. Upon subscribing, the investor is allotted a Permanent
Pension Account Number (PPAN). The PPAN will remain constant even if the investor
changes the PFM, his location or employer. The returns earned on the contributions would
depend on the investment option. Charges are applicable to the NPS account as prescribed by
30 | P a g e
the regulator-Pension Fund Regulatory and Development Authority(PFRDA). For further

details, visit www.pfrda.org.in
Annuity/Pension Policies/Funds are products of the insurance companies and offer

guaranteed income either for life or for a certain period without any insurance cover.
INSURANCE POLICIES
Insurance, as the name suggests is an insurance against future loss. Life insurance is the most
common insurance cover for an individual. Life Insurance is a contract providing for payment
of a sum of money to the person assured, or following him to the person entitled to receive
the same, on the happening of a certain event. It is a good method to protect your family
financially, in case of death, by providing funds for the loss of income.
Term Life Insurance

o Lump sum is paid to the designated beneficiary in case of the death of the
insured
o Policies are usually for 5, 10, 15, 20 or 30 years
o Low premium compared to other policies
o Does not carry any cash value
Endowment Policies
o Provide for periodic payment of premiums and a lump sum amount either in
the event of death of the insured or on the date of expiry of the policy,
whichever occurs earlier
Annuity / Pension Policies / Funds

o No life insurance cover but a guaranteed income either for life or a certain
period
o Taken so as to get income after the retirement
31 | P a g e
o Premium can be paid as a single lump sum or through installments paid over a
certain number of years
o The insured receives back a specific sum periodically from a specified date
onwards (can be monthly, half yearly or annual)
o In case of the death, it also offers residual benefit to the nominee.
Units Linked Insurance Policy (ULIP)

o ULIP is a life insurance policy, providing a combination of risk cover and
investment.
o The dynamics of the capital market have a direct bearing on performance of
ULIPs.
o Most insurers offer a wide range of funds to suit ones investment objectives,
risk profile and time horizons. Different funds have different risk profiles. The
potential for returns also varies from fund to fund
o ULIPs offered by different insurers have varying charge structures. Broadly
the different fees and charges include- Premium allocation charges, Mortality
charges, fund management fees, policy/administration charges and fund
switching charges
Postal Life Insurance
PLI is the only insurer in the Indian Life Insurance market today, which gives the highest
return (bonus) with the lowest premium charged for any product in the market.
A PLI/RPLI policy holder also gets following facilities :
Change of nomination.
The insurant can take loan by pledging his/her policy to Heads of the Circle/Region
on behalf of President of India, provided the policy has completed 3 years in case of
Endowment Assurance and 4 years in case of Whole Life Assurance. The facility of
assignment is also available.
Assignment of Policy to any Financial Institution for taking loan.
32 | P a g e
Revival of his/her lapsed policy. Policy lapses after 6 unpaid premiums if it remained
in force for less than 3 years and after 12 unpaid premiums if it remained in force for
more than 3 years.
Issue of Duplicate Policy Bond in case of the original Policy Bond is lost,
burnt/torn/mutilation.
Conversion from Whole Life Assurance to Endowment Assurance and from
Endowment Assurance to other Endowment Assurance as per rules.
Rural Postal Life Insurance (RPIL)

RPLI offers following types of plans:
1. Whole Life Assurance ( GRAMA SURAKSHA)
2. Convertible Whole Life Assurance (GRAMA SUVIDHA)
3. Endowment Assurance ( GRAMA SANTOSH)
4. Anticipated Endowment Assurance (GRAMA SUMANGAL)
5. GRAM PRIYA
6. Scheme for Physically handicapped persons
The salient features of the Whole Life, Endowment, Convertible Whole Life and Anticipated
Endowment Schemes of RPLI are same as the corresponding schemes of PLI except that the
minimum Sum Assured is Rs.10,000 and the maximum Sum Assured is Rs.3 lac. The
maximum age limit of entry is 55 years in case of Whole Life and Endowment Assurance but
45 years in case of other plans.
All the schemes have compulsory medical examination. For the non-medical policies, the
maximum limit of Sum Assured is Rs.25,000/-, and maximum age is 35 years. In case of
Non-standard age proof for Rural PLI policies, the maximum age limit is 45 years.
DOs
Do review your insurance coverage
Do consider how much life cover you need and your affordability to pay premium
Do study details of various schemes
33 | P a g e
Select a policy that suits you in terms of your requirement and premium outflows
Do get an advice from an insurance professional who offers policies of different
insurance companies
Do go online to get the best quotes and verify the same before choosing one
Do consider two single plans rather than joint cover
Do disclose correct information in your application
Do check and update your policy regularly
DONTs
Dont purchase a policy unless you understand the concept behind it
Dont buy life insurance unless you need it
Dont opt for the cheapest deal without understanding the risk
Dont forget to check for terminal illness benefits
Dont limit your choice to one insurer
Dont over-burden yourself with unaffordable premium outflows
Dont blindly trust the information that is available online
Dont lie in your medical exam
Don't cancel any current insurance policy until you receive a certificate
Don't do anything to hinder an investigation if you file a claim
Don't default on your payments which may lead to cancellation at the time of need
Don't forget to report accidents and mishaps to your insurance company, even if you
don't plan on filing a claim
GOVERNMENT SCHEMES
The Government offers a wide variety of savings/investment products:

i.
National Savings Certificates (NSC)

o Popular Income Tax Savings scheme, available throughout the year
o Interest rate of 8.5% & 8.8% respectively for 5 year and 10 year NSCs
o Minimum investment Rs. 100, no upper limit
o Maturity period of 6 years
34 | P a g e
o Transferable and a provision of loan
ii.
Public Provident Fund (PPF)
o Tax free interest rate of 8.7% p.a w.e.f 1st April 2014
o Minimum investment limit is Rs. 500 and maximum is Rs. 1,50,000/o Maturity period of 15 years
o The first loan can be taken in the third financial year from the date of opening
of the account, or up to 25% of the amount at credit at the end of the first
financial year. Loan amount can be returned in maximum of 36 installments
o A person can withdraw an amount (not more than 50% of the balance) every
year from the 7th year onwards
iii.
Post Office Scheme (POS)

o One of the best Tax Saving Schemes
o It is available throughout the year
o Post Office schemes depends upon the type of investment and maturity period,
which can be divided into following categories: Monthly Deposit/Saving
Deposit/Time Deposit/ Recurring Deposit
iv.
Infrastructure Bonds
o Lock in period of three years
o Tax benefit U/S 80C on investments
o Any redemption prior to maturity nullifies the tax exemption
v.
Kisan Vikas Patra (KVP)

o Money invested in this scheme doubles in 8 years and 7 months
o There is a minimum investment limitation of Rs. 100 with no upper limit
o This scheme is available throughout the year
o Currently, there is no tax benefit on investment under this scheme
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Table on Current Interest Rates on the following Investments
Name of Scheme
Rate of interest
Rate
w.e.f. 1.4.2013
interest
of
w.e.f.
1.4.2014
Savings Deposit
4.00%
4.00%
1 Year Time Deposit
8.20%
8.40%
2 Year Time Deposit
8.20%
8.40%
3 Year Time Deposit
8.30%
8.40%
5 Year Time Deposit
8.40%
8.50%
5 Years Recurring Deposit
8.30%
8.40%
5 Year SCSS
9.20%
9.20%
5 Year MIS
8.40%
8.40%
5 year National Savings Certificate(VIII) Issue
8.50%
8.50%
10 Year National Savings Certificate (IX) Issue
8.80%
8.80%
PPF
8.70%
8.70%
Where NOT to invest?

o Money Circulation Schemes (MCS) Multi-Level Marketing Schemes
(MLM) Network Marketing (NWM) Self Employment Yojana (SEY)
36 | P a g e
By enrollment into such scheme, one gets back some or full initial investment and then keeps
gaining financially by enrolling new members. So also the second set of enrollers keeps
multiplying and gain financially, luring every onlooker. Such a system of chain to work
endlessly to provide profit to everyone concerned ultimately breaks down at some stage,
resulting in big financial losses to many.
When a person fails to get his required clients or enrollers, the promoters of the scheme do
not tell about the non-viability of the scheme but blame it as ones personal failure. Many
companies have now disguised into the activity of marketing goods, services, drugs and
health care products.
o Chit Funds
Chit fund is a kind of savings scheme under which a person enters into an agreement with a
specified number of persons that every one of them shall subscribe a certain sum of money by
way of periodical installments over a definite period and that each such subscriber shall, in
his turn, as determined by lot or by auction or by tender, be entitled to the prize amount.
However, there are many such schemes which have been misused by their promoters and
there are many instances of the founders running what is basically a Ponzi scheme and
absconding with their money.
o Deposits
Finance Companies take deposits from the public, promising them unusually high returns.
Since high returns are unsustainable, ongoing repayments of interest and deposit amounts
depend on continuous and uninterrupted flow of fresh deposits. At some stage, when the flow
of deposits gets stifled, the payments to the investors stop, leaving them high-and-dry.
o Private Placements
Many companies offer equity shares/convertible debentures/preference shares etc to the

public through the private placement route, often for a a mega project and promise dream
37 | P a g e
returns. By law, such securities cannot be sold to more tan 49 persons, beyond which the
Company is equired to come out with a Public Issue under the guidelines of SEBI.
o Plantation Companies
Many companies offer schemes that multiply money by investment into plantations. Most of
such companies are not registered with SEBI, and typically have fled with the investors
monies.
Caution suspect for safety
There can be no free lunch and that there is some catch when someone offers to make money
for you easily and quickly. Getting rich quick scheme or high returns schemes should be
suspected. Such schemes are unsecured, are illegal and are not regulated by the Government.
Therefore, if you lose money, you will not be able to seek any help from the Government.
Entities and Their Regulatory Bodies
38 | P a g e
Investor Education and Protection Fund
This Investor Education and Protection Fund (IEPF) has been set-up under Section 205C of
the Companies Act, 1956 by way of the Companies (Amendment) Act, 1999. As per the Act,
the following amounts which have remained unclaimed and unpaid for a period of seven
years from the date they became due for payment shall be credited to the IEPF:39 | P a g e
(a) Unpaid dividend accounts of the companies;

(b) The application moneys received and due for refund;
(c) Matured deposits;
(d) The interest accrued in the amounts referred to in clauses (a) to (d);
(e) matured debentures;
(f) Grants and donations by the Central Govt., State Govt., companies or any other
institutions ;
(g) The interest or other income received out of the investments made from the Fund.
The Fund has been established with a view to support the activities relating to investor
education, awareness and protection. Following are the objectives/ activities of the Fund:
Educating investors about market operations
Equipping investors to analyze information to take informed decisions
Making investors aware about market volatilities
Empowering the investors by making them aware of their rights and responsibilities
under various laws
Continuously disseminating information about unscrupulous elements and unfair
practices in securities market and
Broadening the investors base by encouraging new investors to participate in
securities market
Promoting research and investor surveys to create a knowledge base that facilitate
informed policy decisions.
The Act provides for setting up of a Committee for taking decisions regarding spending
moneys out of the Fund for carrying out the objects as mentioned above. For the purpose of
administration of IEPF, the Investor Education and Protection Fund (awareness and
protection of investors) Rules 2001 were notified on 1st October 2001.
These Rules, inter alia, contain provisions relating to constitution and functions of the
Committee, activities relating to investors education, awareness and protection to be
undertaken with the recommendation of the Committee, conditions for utilisation of Funds by
the Committee, proforma for applications for registration of associations, institutions or
organisations and also for seeking financial assistance under IEPF, etc.
40 | P a g e
Major initiatives under IEPF
Under IEPF, various programmes on investor education and awareness have been funded and
organized through Voluntary Associations or organizations registered under IEPF. About 69
associations/ organizations have been registered under IEPF, till date.
The various initiatives for increasing the investors awareness and education have been
undertaken under the aegis of IEPF , few of them for investors reference
An Investor Helpline www.investorhelpline.in project which had been launched

under IEPF through Midas Touch Investors Association to provide a mechanism for
redressal of grievances and to create investor awareness has been rendering effective
service to the investors. The redressal rate has been around 46 percent.
Further, another website, namely www.watchoutinvestors.com which is a national
registry of economic defaulters and covers information on convictions by various
regulatory bodies has also been rendering effective service to not only investors and
prospective investors but also to professionals such as advocates, chartered
accountants and company secretaries. The registry contains information about 91,000
such entities/ individuals.
Another website, namely, www.iepf.gov.in was launched to serve as a knowledge
sharing platform in the area of financial literacy as a measure of investor awareness
and education.
List
Of
Useful
Websites
Of
Government,
Regulatory
&
Other
Education/Academic Institutions, Depositories And Stock Exchanges

GOVERNMENT, REGULATORY & OTHER BODIES
COMPANY LAW BOARD
CREDIT INFORMATION BUREAU (INDIA) LTD.
MINISTRY OF CORPORATE AFFAIRS
MINISTRY OF FINANCE
RESERVE BANK OF INDIA
SECURITIES & EXCHANGE BOARD OF INDIA
41 | P a g e
WEBSITE
www.clb.nic.in
www.cibil.com
www.mca.gov.in
www.finmin.nic.in
www.rbi.org.in
www.sebi.gov.in
Bodies,
EDUCATION
BSE TRAINING INSTITUTE
FINANCIAL PLANNING STANDARDS BOARD,INDIA
FT KNOWLEDGE MANAGEMENT CO.LTD.
ICSI-CENTRE FOR CORPORATE RESEARCH & TRAINING
INDIAN INSTITUTE OF CAPITAL MARKETS
INDIAN INSTITUTE OF CORPORATE AFFAIRS
INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA,THE
INSTITUTE OF COMPANY SECRETARIES OF INDIA,THE
INSTITUTE OF COST ACCOUNTANTS OF INDIA
INVESTOR PROTECTION & EDUCATION FUND
NATIONAL COUNCIL OF APPLIED ECONOMIC RESEARCH
NATIONAL INSTITUTE OF SECURITIES MARKETS
WEBSITE
www.bseindia.com
www.fpsbindia.org
www.ftkmc.com
www.icsi.edu
www.utiicm.com
www.iica.in
www.icai.org
www.icsi.edu
www.icwai.org
www.iepf.gov.in
www.ncaer.org
www.nism.ac.in
DEPOSITORIES
CENTRAL DEPOSITORY SERVICES (INDIA) LTD.
NATIONAL SECURITIES DEPOSITORY LTD.
WEBSITE
www.cdslindia.com
www.nsdl.co.in
STOCK EXCHANGES
AHMEDABAD STOCK EXCHANGE LTD.
BANGALORE STOCK EXCHANGE LTD.
BHUBANESWAR STOCK EXCHANGE LTD.
BOMBAY STOCK EXCHANGE LTD.
CALCUTTA STOCK EXCHANGE LTD.
COCHIN STOCK EXCHANGE LTD.
DELHI STOCK EXCHANGE LTD.
INTER-CONNECTED STOCK EXCHANGE OF INDIA LTD.
JAIPUR STOCK EXCHANGE LTD.
LUDHIANA STOCK EXCHANGE LTD.
MADHYA PRADESH STOCK EXCHANGE LTD.
MADRAS STOCK EXCHANGE LTD.
MCX STOCK EXCHANGE LTD.
NATIONAL STOCK EXCHANGE OF INDIA LTD.
OTC EXCHANGE OF INDIA
PUNE STOCK EXCHANGE LTD.
UNITED STOCK EXCHANGE OF INDIA LTD.
UTTAR PRADESH STOCK EXCHANGE LTD.
VADODARA STOCK EXCHANGE LTD.
WEBSITE
www.aselindia.org
www.bgse.co.in
www.bhseindia.com
www.bseindia.com
www.cse-india.com
www.cochinstockexchange.com
www.dseindia.org.in
www.iseindia.com
www.jsel.in
www.lse.co.in
www.mpseindia.com
www.madrasstockexchange.in
www.mcx-sx.com
www.nseindia.com
www.otcei.net
www.punestockexchange.com
www.useindia.com
www.upse-india.com
www.vselindia.com
42 | P a g e
5. SHAPING YOUR FUTURE WITH FINANCIAL PLANNING
What is Financial Planning?
It is a process that uses your financial resource to satisfy your financial goals. In short, it helps
you plan the use of your money to meet your needs and retain something for rainy days.
Who needs financial planning?
There is no discretion as to who is classified to plan their finances. It applies to everyone who
uses money to survive in this world, the difference lies only in their scale and level of income,
investments and expenses.
Does every one plan their finances?
Not really, cause they hardly know what it means to plan their finance and hence always have
reasons to postpone it. And people who have done have not just been fair with their money, but
have also generated wealth for themselves and their generations.
a. Steps in Financial Planning
While Financial Planning is a process of planning your finances, there are certain things you
need to know before you could proceed with the planning phase. The factors to consider before
financial planning have been in 4 steps below. A fair understanding of these four steps are sure
to make the financial planning process more meaningful
43 | P a g e
Step 1
Know Your Financial Goals
Step 2
Know Your Financial Position
Step 3
Know Your Risks
Step 4
Know Your Investments
o Knowing Your Financial Goals
Financial goals of an individual define what he or she would like to achieve in terms of money
over a period of time. Some examples of financial goals are
o Buying a residential property worth 3 crores in April 2013
o Saving Rs. 60 lakhs for daughters marriage expenses in 2030
o Purchasing a resort worth Rs. 1 crore in Kerala
o Planning for a retirement income of Rs. 6.lakhs per month starting 2030
o Repaying Housing loan worth Rs. 35 lakhs in 5 years starting from 2014
o Purchasing Gold worth 5 lakhs in 3 years time
o Saving Rs. 10 lakhs for renovating the independent house in Delhi in 2
years time
These goals can be divided into Short Term, Medium Term and Long Term depending upon the
means available to support them
o Knowing Your Financial Position
Cash Flow Statement

A statement that gives details about how much money you received, how much you spend and
how much you save is called the Cash Flow Statement.
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A cash flow statement consists of details pertaining to cash received and cash paid during the
years irrespective of the year to which it belongs. All payments made by way of cash or through
bank are considered and payments made from all bank accounts are considered. The payments
could be for expenses, repayment, investment and loan everything is considered. The balancing
figure is generally allocated among bank balances and cash in hand.
This statement is a basic document to be prepared in case of individuals who do not maintain
proper books of accounts. From the details available in this account a Statement on Income and
Expenditure and Balance Sheet can be prepared.
Statement on Networth
A Statement on Networth provides a quick looks at your financial situation at a certain point of
time. It gives details about your assets, liabilities, and the difference between the two is your
networth. In short it tells you how much money you will be left with had you paid of all your
liabilities with the help of money from your assets ( cash generated by way of interest or by sale
of the asset).
Sample Networth Statement
Mr. Vijay Kulkarni

Liquid Assets
Rs.
Savings Account
5,00,000
Fixed
Deposit
with 3,00,000
Bank
Liquid Fund
Cash
50,000
Invested Assets
Stocks
45 | P a g e
1,00,000

Mutual Funds
2,00,000
Bonds
1,00,000
PPF
5,00,000
Gold
3,00,000
Real Estate Land
25,00,000
Other Assets
House
50,00,000
Car
5,50,000
Total Assets (A)
98,00,000
Liabilities
Home Loan
40,00,000
Car Loan
2,00,000
Total Liabilities (B)
42,00,000
Total Networth (A-B)
56,00,000
Investment Calculations
Investment calculations involve preparing a schedule for saving target one wishes to reach
keeping their long term goals in mind. While preparing these figures one has have in mind the
Time value of money concept, for we all know that a rupee earned today is far more valuable
than a rupee earned tomorrow. Also it will be of interest to reader to know the magic
Compounding Interest can create.
Compounding Effect
People with very limited income have been able to save around 3 to 4 crores by investing in
equities over a period of two to three decades amounts in the range of 10, 50 and 500.
The idea behind preparing a Cash Flow Statement or a Networth Statement is for the investor or
the individual to understand his position and what exactly he does with money he earns or
receives. Where an individual has savings in lakhs of rupees earning an interest of about 6 % , it
46 | P a g e

will be worthwhile to pay off his loans taken at the rate of 16% from the savings held, instead of
retaining the savings and repaying the loan with interest.
o Knowing Your Risk
Every individual born in this world has some kind of risk to face. While some of them are not
man made choices while the others are. On this basic we can divide the risk into General Risk
and Risk of Choice
o General Risk General risk includes loss of life, loss of property,
disability, risk of health and few other uncalled for liabilities
o Risk of Choice This risk is concerned with the choice we make as far as
our investments are concerned, in other words we can also called a
Financial Risk. There can be a loss or a gain. In case of business ventures,
and professional practice, the environment can be favourable or adverse. It
also includes the risk of investing in equities, gold and real estate
o Know Your Investments
Now, having had a fairly good idea about your goals, your financial position and the possible
risks you are about face, its time to evaluate how to put the money you have saved into use and
also to decide what percentage of money saved will be investment to meet your Short term,
Medium term and Long term goals.
b. Investing your Savings
There are three things that you need to consider before investing your savings.
o Percentage of Savings retained for Contingencies and other Emergencies
if any
o Investments having a Short Term Tenure
o Investment having a Long Term Tenure
47 | P a g e
The percentage of savings retained from being invested should be sufficiently large to ensure a
strong base and big enough to absorb all contingencies of the immediate future. Investments
having short term tenure include fixed deposits, Bonds, Debentures, Investments having a long
term tenure include Gold, Real Estate, Equities, Debt and Alternative Investments like Private
Equity.
Investor Classification
Investors can be classified as follows
Salary Earners
Self Employed/Entrepreneurs
Professionals
Others
They can further be categorized into
Beginners
Middle Level
Final Level
Salary Earners:
Every month Salary is wealth accumulation
Rule of Thumb : Always hold 3 months salary in savings (job change/delay in payout)
Beginners: Be more aggressive (no or less liabilities, consistent income level)
Mid-career people Be Moderate ( more liabilities, commitments)
High Networth Individuals (HNIs) A balance of Moderation and Aggressiveness (

More Money)
48 | P a g e
Self Employed/Entreprenuers
Investment Own Funds/Borrowed Funds
Average of Income Earned every month
Insurance cover for business and personal needs
Surplus funds on savings
Funds for further investment in business
Loan repayment
Professionals
Average earnings every month
Loans for setting up Professional Practice and its repayment
Monthly commitments
Surplus savings
Fund for further investment
Investment in Real Estate
Sole proprietorship/ Firm/Company
Planning your Finances
Financial Planning is a must
Know where you stand - Net Worth (Assets Liabilities), Personal Budget
Make your financial goals clear - Goals and Objectives - Major Purchase, Childrens
Education, Retirement, Marriage, Vacation
Know how to reach your targets and time lines
Implement your financial plan
Reap the benefits
49 | P a g e
Categorisation of Financial Planning
Financial
Planning
Income
Planning
Income Tax
Planning
Insurance &
Health
Planning
Investment &
Wealth
Planning
Retirement
Planning
Estate
Planning
Income Planning
An individuals income planning strategy defines his sources of income and how he plans to
meet his short and long term goals.
Sources of Income
o Salary
o Business Income
o Self-Employment
o Investment Income
While the first three sources of income invariably requires personal participation by the
individual, investment income does not require his personal participation but still generates
50 | P a g e

income. Therefore, while dealing with the sources of income it is important to have both active
and passive income sources that help the individual on those rainy days when personal
participation becomes difficult.
Income Tax Planning
People falling in the high income category, end up paying close to 30% of their earnings in the
form of taxes. Hence investments offering tax benefits should be the preferred option.
Knowledge on simple tax saving investments can help in planning for their taxes.
Chapter VIA Deductions under the Income Tax Act, 1961
Section
80C
(Individual
& HUF)
Details of deductions
Quantum
A. LIP of Spouse and Children
Maximum Rs 1,50,000 is allowed
and any member in case of HUF

B. Deferred annuity, SPF, RPF,
PPF,
Superannuation
NSC(8TH),5 years
Fund,
PO Time
deposit, Senior citizen Saving

Scheme, Term deposit of 5 years,
Deposit for 10 or 15 years in Post
office saving bank.
C. Bonds of NABARD, Deposit
scheme of NHB, Notified deposit
scheme,.
D. MF referred u/s 10(23D),
51 | P a g e
(For 80C). Investment need not be

from taxable income.

Pension fund of MF[10(23D)],
Eligible issue of securities.
E.
Cost
of
purchase
or
construction of residential house

including repayment of loan and
expenses on transfer of property,
tution fees to any educational
institutions for full time eduction
of 2 childrens.
80CCC
(Individual)
Deduction in case of contribution
Maximum is Rs 1,00,000
to pension fund. However, it
The premium must be deposited to
should be noted that surrender
keep in force a contract for an
value or employer contribution is
annuity plan of the LIC or any
considered income.
other insurer for receiving pension

from the fund. The Finance Act
2006 has enhanced the ceiling of
deduction under Section 80CCC
from Rs.10,000 to Rs. 1,00,000
with effect from 1.4.2007
80CCD
(individual)
to
Maximum is sum of employers
pension
and employees contribution to the
scheme. Employees of central and
scheme limited upto 10 % of salary.
others are eligible.
Further, in any year where any
Deduction
in
contribution
to
respect
new
amount
is
received
from
the
pension account such amount shall

be charged to tax as income of that
previous year. The Finance Act,
2009 has extended benefit to any
individual assesse, not being a
52 | P a g e

Central Government employee.
80CCE
It should be noted that employer
It should be noted that as per
contribution is allowable as extra
section 80CCE , the maximum
u/s 80CCD(2) of the Income Tax
amount of deduction which can be
Act from Asst yr 2012-13 and
claimed
only employee's contribution is
,80CCC 80CCD(1) is Rs 1,00,0000
in
aggregate
of
80C
within limit of Rs 1 Lakh as stated

in 80CCE
80CCG
Individual having gross total

income upto Rs 12 Lakh can
50 % 0f the invested amount.

Limit is Rs 25,000 max.
claim this deduction for investing

in IPOs of share or mutual fund
units.
80D
(Individual
&HUF)
Medical
insurance
on
self,
Age Below 60 years: Rs 15,000
spouse, children or parents. The
including Rs. 5000 on preventive
deduction is also allowable for
checkup
CGHS contribution to Central and
children + Rs 15,000 for insurance
State scheme. It is also for
on parents.
conducting health check-up to Rs

6000.
80DD
(Individual
&HUF)
For
for
self,
spouse
and
Age above 60 years: Replace Rs

15,000 with 20,000.
maintenance
including
treatment or insuring the lives of

physical
disable
Rs 50,000. In case disability is

severe, the amount is Rs 1,00,000.
dependent
relatives
80DDB
(Individual
&HUF)
53 | P a g e
For medical treatment of self or
Actual amount paid to the extent
relatives suffering from specified
of Rs 40,000. In case of patient

disease
being Senior Citizen, amount is Rs

60,000.
80E
(Individual)
80EE
For interest payment on loan
Actual amount paid as interest
taken for higher studies(after 12)
and start from the financial year in
for self or education of spouse or
which he /she starts paying interest
children
and up to a maximum of 8 years.
Interest on home loan sanctioned
Rs 1,00,000/-
during FY 2013-14. However,

value of the property should be
below Rs 50 Lakh and max loan
sanctioned should be Rs 25 lakh.
Further the assessee should not
have any other residential house.
80G
(All
Assessees)
Donations
to
charitable
institution
(Max. 10,000 if paid in cash
from A/Y 13-14)
100% of amount of donation

made to 19 entities (National
defense fund, Prime minister relief
fund etc. ).
50% (Gandhi/Drouhgt/charitable
purpose/infrastructural
development fund).
For Asst Yr 2014-15, National

Children Fund will also get 100%
deduction.
80GG
For rent paid
This is only for people not getting

any
54 | P a g e
House
Rent
Allowance.

Maximum is Rs 2000 per month.
Rule
11B
is
method
of
computation.
80GGA
For
donation
in
Only those tax payers who have
rural
no business income can claim this
development (Max. 10,000 if paid
deduction .Maximum is equivalent
in cash from A/Y 13-14)
to 100 % of donation.
scientific
80GGB
For
80GGC
parties
80QQB
to
entities
research
contribution
or
to
political
Allowed only to resident authors

for royalty income for books other
100 % of donations
Royalty income or Rs 3,00,000

whichever is less.
than text book
80RRB
For income receipt as royalty on

patents of resident individuals
Deduction
80U
permanent
in
respect
physical
whichever is less.
of
disability
including blindness to taxpayer
Rebate to individual having low
87A
taxable income
Insurance and Health Planning
55 | P a g e
Our risks include
Actual royalty or Rs 3,00,000
Rs. 50,000 which goes to Rs

1,00,000
in
case
taxpayer
is
suffering from severe disability.
Amount of tax or Rs 2,000

whichever is less
Our Lives
Medical Contingencies
Assets
Insurance Planning is the first step to cover against risk.
Opting for adequate life insurance cover is essential
Insurance requirement to be reviewed once in every 2 years
Insurance secures our
Future
Finances
Loved Ones
Types of Insurance Policies
Term Insurance
Whole Life Policy
Endowment Policy
Money Back Policies
Annuities and Pension
Unit Linked Insurance Plan
Postal Life Insurance
Riders: Comprehensive Coverage
Investment and Wealth Planning
It is all about weaving an investment net with
56 | P a g e
Equity
Fixed Income Deposits
Post Office Schemes
Gold
Commodities
Currency
Derivatives
Mutual Funds
Exchange Traded Funds
Real Estate
Alternative Investment
Investment Options for Non-Resident Indians
Aiming at the Right Asset Mix
Asset mix is the balance between stocks, bonds and cash, returns and risk level
monitor
Stocks - greater growth & greater volatility
Gold the bumper crop
Mutual Funds the fund equalizer
EFTs the norm
Real Estate the cash cow
Asset Allocation
Equity
Comprises of Shares & Stocks
Variety Blue Chip, Growth Stocks, Income Stocks, Cyclical Stocks, Defensive
Stocks, Speculative stocks
Advantage Greater returns, diversification, liquidity, information, tax benefits,

appreciation, dividends, pledge, voting
Regulator BSE, NSE,
Markets Primary & Secondary, Online Trading
57 | P a g e
Investors Retail Institutional Investors, Non Institutional Investors, Qualified

Institutional Buyers
Gold
Why invest in Gold??
Diversification
Low Liquidity Risk
Hedge against Inflation
Good Returns
Low Credit Risk
Safe Haven Investment
Avenues of Investment
Jewellery
Gold Coins
Gold Bars
ETF
Global Mutual Fund
Gold Fund of Fund
Gold Derivatives (Futures) through MCX
E-Gold
Gold Accumulation Schemes/Savings for Gold Scheme
Gold Deposit Scheme
No Loan Against Gold
RBI bars banks from lending against gold Exchange Traded Funds(ETFs) to further curb
gold imports.
NBFCs are not allowed to lend against gold in any form.
Fixed Income
58 | P a g e
Types Government Securities, Public Sector Bonds, Private Sector Bonds
Varieties Government Guaranteed Bonds, Zero Coupon Bonds, Treasury Bills,

STRIPS, PSU Bonds, Commercial Paper, Debentures, Floating Rate Bonds, Inter
Corporate Deposits, Certificate of Deposits
Status of Holding Investors are Creditors to the Issuer
Market Debt Market (WDM, RDM, G-secs)
Types of Trade Outright Sale or Purchase, Repo Trade
Regulator - RBI
Money Market Instruments
Certificate of Deposit (CD)
Commercial Paper (C.P)
Inter Bank Participation Certificates (IBPC)
Inter Bank term Money
Treasury Bills
Bill Rediscounting
Call/Notice/Term Money
Commercial Papers
Are short term borrowings by Corporates, FIs, Primary Dealers (PDs) from Money
Market
CP when issued in physical form are negotiable by endorsement and delivery
Issued subject to min 5 lacs and in multiples of 5 lacs thereafter
Maturity 15 days to 1 year
Unsecured and backed by the credit of the issuing company
Any private or public sector companies willing to raise money through the CP market
has to meet the following requirements
Private Banking
59 | P a g e
Classification of bank deposits
Savings Bank Account
Current Deposit Account
Fixed Deposit Account
Recurring Deposit Account
Fixed Deposit interest rates in India vary anywhere between 7.00 % to 9.25%
Monitoring maturity dates
Policy Changes by RBI
Post Office Schemes
Post Office Savings Account
Post Office Recurring Deposit Account
Post Office Monthly Income Accounts
National Savings Certificate (VIII Issue)
Kisan Vikas Patra
Senior Citizen Saving Scheme (SCSS)
Public Provident Fund Scheme
Deposit Scheme for Retiring Government Employees
Deposit Scheme for Retiring Employees of Public Sector Companies
Commodities
Allow a portfolio to improve overall return at the same level of risk
Who should invest? Any investor who wants to take advantage of price movements
A kicker (side card) in the portfolio
Commodity market in India clocks a daily average Turnover of Rs 120 150 billion
(Rs 12,000 15,000 crores
Forward Markets Commission Regulates commodity trading
Demand and Supply factor and Inventory drive the commodity market
Major Categories of Commodities Traded
60 | P a g e
Industrial Metals
Precious Metals: Bullion
Agricultural Commodities
Energy Commodities
Commodity Spot Market
Offers effective method of spot price discovery
Processors, end users. exporters, corporate procure agri produce from here
Helps in Futures exchange
Promotes grading and standardization in agricultural produce
Commodities are traded in
National Spot Exchange (NSEL)
NCDEX Spot Exchange (NSPOT)
Commodities Derivative Market
A derivative instrument whose value is derived from the underlying

commodity
Example: an investor can invest directly in a steel derivative rather than

investing in the shares of Tata Steel
61 | P a g e
Where do I need to go to trade in Commodity Futures?
National Commodity and Derivative Exchange (NCDEX)
Multi Commodity Exchange of India Ltd (MCX)
National Multi Commodity Exchange of India Ltd (NMCE)
ACE Derivatices and Commodity Exchange (ACE)
Indian Commodity Exchange Limited (ICEX)
Major categories of commodities one can trade
Vegetable Oil Seeds, Oils and Meals
Pulses
Spices
Metals
Energy products
Vegetables
Fibres and Manufactures- Cotton
Other Gaurseed, Guar, Gum and Sugar

Currency
While trade is international, currencies are national
Exchange rate is affected by the suppy and demand for the countrys currency in the
international forex market
Trading in Currency Futures allowed on 3 exchanges
Multi Commodity Exchange Stock Exchange (MCX-SX)
National Stock Exchange (NSE)
United Stock Exchange (USE)
Currency Options are
during a specified period of time
contract
that grant the buyer
of the option the right and
not the obligation to,
to buy or sell underlying currency
at a specified exchange rate
USD-INR Option
European Call & Put Options
Derivatives
Financial contracts which derive their value from a spot price called the underlying
Derivative Instruments traded are Futures and Options
Derivative Exchange/Segment function as a Self Regulatory Organization and SEBI Acts

as the oversight regulator
Futures contracts, Index Options, Stock options, Stock Futures, Mini Derivative contract
on Index, Long tenure Index Option contracts, Volatility Index, Bond Index and
Exchange traded Currency Derivatives are permitted by SEBI
Mutual Funds
Types of Mutual Funds include the following
Equity Linked Savings Scheme
62 | P a g e
Arbitrage Funds
Dynamic Funds
Fixed Maturity Plans
International Mutual Funds
Monthly Income Plans
Multi Cap Funds
Quant Funds
Real Estate
Guidance on Purchase of Property
Planning and Budgeting
Research
Home Loan
Safety points in the Home Agreement
Home Insurance
Real Estate Investment Includes
Agricultural Land
Farm Houses
Urban Land
House Property
Commercial Property
Real Estate Investment Options in India
Investment in Real Estate Stocks
Investment in Property
Unique Characteristics of Real Estate
Durability
Heterogeneous
High transaction costs
Long time delays
63 | P a g e
Both an investment good and consumption good
Immobility
Home Buying Tips from Start to Finish
64 | P a g e
Identifying Your Needs
Independent House or Apartment
Budget
Number of rooms and bathrooms
Approximate Area
Proximity to work place, school etc
Parking availability
Water supply, power back up etc
Furnished/unfurnished
Connectivity
Vicinity to market
Special amenities such as club house, pools or spas.
Available utilities such as cable or DSL, satellite.
Sewer, cesspool or septic connections
Finance
Own funds
Loan from Banks/HFCs
Funds from your employer
Loan against assets
Provident Fund Loan
Scouting for property
Brokers
Newspapers
Websites
Word of mouth
Cost Estimate
Purchase Price
Stamp duty
Registration charges
Khata transfer charges
Utility Deposits like Water connection deposit, Electricity connection

deposit, etc.
Other incidental expenses
Talk to Banks/HFCs
Loan Amount
Loan Eligibility
Terms and conditions of loan
Interest Rate
Borrowing costs like processing fee, commitment charges, prepayment

penalty, etc.
Loan tenures and EMI
Time taken for sanctioning the loan
Time taken for disbursing the loan
Freebies and corporate offers
Short listing Properties
Site or property visit
Speaking to the neighbors or occupants
Clear marketable titles
Credibility of the seller
Quality of the construction
Legal verification
Monthly payouts like maintenance charges, society
charges, etc.
Finalizing the Deal
Negotiate on price and timing of payments ( upfront / installments)
Press for price negotiation if there are any modifications /repairs /painting to be
done
65 | P a g e
Municipal taxes or property taxes
Do not forget to collect all original property documents from the seller
Before paying the seller, make sure he has fulfilled all his commitments and
promises
If the transaction involves a broker, withhold some amount of money until he

delivers as promised
Documents required when the property is purchased from a builder
An allotment letter from the developer on paying the booking amount
Agreement for Sale
Documents required to be checked if you are buying a resale flat
For flats being purchased in a registered co-operative society
For flats being purchased in an unregistered society or flats originally allotted by

a Development Authority
Check the credentials of your new property
Invitation of Claims
Search at the Sub-Registrar's Office
Enquiry at Municipal Corporation
Enquiry with the Ward office
If the owner of the property is deceased
Property Documents to be collected from the Seller
In case of a direct purchase from a builder

1.
Copy of Agreement for Sale.
1. Copy of Registration Receipt.

2. Copies of receipts of payment already made.
3. NOC from builders.
66 | P a g e
In case of direct allotment in a Co-operative Housing Society

1.
Allotment letter.
2.
Share certificate.
3.
Society registration certificate.
4.
Copy of sale/lease deed in favour of the society.
5.
NOC from society
In case of direct allotment in a Co-operative Housing Society by Public Agency
1.
Allotment letter, Share certificate, Society Registration certificate.
2.
Lease Agreement.
3.
Public agency's approved list of members.
4.
NOC from Public Agency in favour of bank/HFC
5.
NOC from society.
In case of Public Agency's allotment to individuals

1. Allotment letter from Public Agency.
2. Tripartite Agreement between the borrower, Bank/HFC and the Public
Agency in the prescribed format.
In case of resale
1.
Copy of all previous vendors' registered documents
along with copy of your purchase agreement duly stamped and registered
and the registration receipt wherever applicable.
Purchase of rentable properties
Location
Numbers
High home prices
Low maintenance buildings
Ask to see the rental history
Owner/Manager out of the country
A Buyers/Tenants Checklist
Check if Use of Property would amount to Change of Land Use
Check if Non Residential Activity in Residential Premises Is

Permissible
Check if the Municipal Guidelines allow Mixed Use
Certain Professional Activity permissible in Residential Areas
Check if the Building adheres to the Sanctioned Plan
Private Equity
67 | P a g e
Venture Capital
Replacement Capital
Buyout
Special Situation
Risk of investment through PE
Role of Stock Market
Rare Coins and Paper Currency
Stamp Collection
Art
Antiquities
Wine
NRIs
Deposit Schemes
Investments in Securities and Debt
Investment in Mutual Funds
Investment in Immovable Assets
Investment in Tax saving options
Retirement Planning
Retirement planning involves planning for the following
Allocation of finances for Retirement
No Government sponsored retirement plan
Nuclear Families
Unforeseen Medical expenses
Estate Planning
The Flexibility to Deal with Changes
Systematic investment every month is a way to a tension free healthy retirement.
Steps to be followed in Retirement Planning
Decide of age for retirement
Annual income need for retirement years
Current market value of all the savings and investments
68 | P a g e
Determine a realistic annualized rate of return
Consider company pension plan if any
Now compute the value required on retirement
Retirement Investment Options
Public Provident Fund (PPF)
National Savings Certificate (NSC)
Employees Provident Fund (EPF)
Mutual Fund Products
Insurance Products
New Pension Schemes
Reverse Mortgage
Estate Planning
The sum of all the assets of a person, less his liabilities becomes his ESTATE. For examples all
properties, bank accounts investments, insurances and collectibles, less the liabilities of a person
are collectively called a persons estate. Estate planning is about
Accumulating and Disposing of an estate to maximize the goals of the estate

owner.
Distribute wealth to a certain beneficiary or beneficiaries to whomever the owner

wishes.
Important to take the help of an attorney experienced in estate law
Objectives of Estate Planning
69 | P a g e
Asset transfer to beneficiaries
Tax- effective transfer
Planning in case of disabilities
Time of distribution can be pre-decided
Business succession
Selection of Trustee or guardian or the executor
Terminologies in Estate Planning

o Will - A document that conveys your wishes about your estate and helps
in following it after your death
o Testator A person who makes his will
o Executor A person who executes the will after the death of the testator
o Legatee/Beneficiary A person who inherits the estate under a will.
o Inestate A person who dies without making a valid last will is said to
die inestate
o Probate A legal process of settling the estate of a deceased person
o Power of Attorney A authorization to act on someone elses behalf in a
legal or business matter.
o Trust It is a relationship in which a person called the trustor transfers
something of value, movable or immovable to another person called a
trustee. The Trustee then manages and controls these assets for the benefit
of a third person called a beneficiary.
Steps and Tools in Estate Planning
Steps
Listing of assets and liabilities
Open family discussion on selecting the guardian
Update the current beneficiaries like life insurance
Decide upon the distribution of the assets on death
Funeral arrangements with spouse and family
Assistance of an estate planning authority
Tools
70 | P a g e
Life Insurance
Will
Trust
Tips in Estate Planning
1. While making a Will, it is important to state the nature of the asset as to

whether it is inherited or not, as no ancestral property can be assigned to
any person
2. A will requires no stamp duty or registration, but yes two witnesses must
attest the Will
3. It is important to update the Will every few years
4. It is important to endorse insurance policies under Married Women
Property Act, 1874, which ensures that the policies cannot be attached
by the Vendors and benefits of go to wife and children of the deceased
6. PORTFOLIO MANAGERS/WEALTH MANAGERS/INVESTMENT ADVISORS

(IA) REGULATION
Who can become Portfolio Managers?
Chartered Accountants
Certified Financial Planners
Chartered Financial Analyst
Management Graduates with specialization in Finance
Investment Advisors Regulation in India
On January 21, 2013 SEBI issued The (Investment Advisors) Regulation 2013
71 | P a g e
These regulations shall come into force on the 90th day from the date of notification i.e
April 20, 2013.
Regulating the activity of Investment Advice
Investment Advice Advice on Investment Products and Financial Planning
Regulation exempts number of intermediaries and intermediation activities from

Registration
Consultation on hedging and cash management services likely to be covered
Investment Advisors Registration
Registration with SEBI as Investment Advisor (IA)
Subject to fulfillment of certain basic Criteria
Minimum educational qualification
Affiliation with National Institute of Securities Market
Regulation of Investment Advisors
Regulation imposes responsibility on IAs
Fiduciary responsibility towards client
Record keeping
Suitability Appropriateness
Code of Conduct
Disclosures of conflict of interests
Segregation of Activities other than investment advisory
Payment of Commission
Stock Brokers and Merchant bankers (exempted from IA registration)
Are required to comply with provisions relating to
Manner in which clients are to be boarded
Investment advice is to be rendered
Exemptions
72 | P a g e
Any member of
ICAI, ICSI, ICWAI,
Actuarial Society of India or
any other professional body as may be specified by the Board, who provides
investment advice to their clients, incidental to his professional service.
Any stock broker or sub-broker registered under SEBI (Stock Broker and SubBroker) Regulations, 1992,
Portfolio manager registered under SEBI (Portfolio Managers) Regulations, 1993 or
Merchant banker registered under SEBI (Merchant Bankers) Regulations, 1992, who
provides any investment advice to its clients incidental to their primary activity.
Any fund manager, by whatever name called of a mutual fund, alternative investment
fund or any other intermediary or entity registered with the Board;
Any person who provides investment advice exclusively to clients based out of India.
Any representative and partner of an investment adviser which is registered under
these regulations
Any other person as may be specified by the Board.
Registration Fees
Every applicant shall pay non-refundable application fees of five thousand rupees (Rs.
5,000) along with the application for grant or renewal of certificate of registration.
Applicants which are individuals and firms shall pay a sum of ten thousand rupees (Rs.
10,000) as registration/ renewal fee at the time of grant or renewal of certificate by the
Board.
A body corporate shall pay a sum of one lakh rupees (Rs. 1,00,000) as registration/
renewal fee at the time of grant or renewal of certificate by the Board.
The above fees shall be paid by the applicant within fifteen days (15 days) from the date
of receipt of intimation from the Board by a demand draft (DD) in favor of 'Securities
and Exchange Board of India' payable at Mumbai or at respective regional or local office.
Registration Procedure
73 | P a g e
The Applicant for grant of registration as an Investment Adviser under SEBI (Investment
Advisers) Regulations, 2013 should make an application to SEBI in Form A
The applicant will receive a reply from SEBI within one month.
Capital Requirement
Case of Body Corporates: Net worth of not less than twenty five lakh rupees (Rs. 25,
00,000)
Net Worth" means the aggregate value of paid up share capital plus free reserves
(excluding reserves created out of revaluation) reduced by the aggregate value of
accumulated losses, deferred expenditure not written off, including miscellaneous
expenses not written off, and capital adequacy requirement for other services
offered by the advisers in accordance with the applicable rules and regulations.
In Case of Individuals / Partnership firms: Net tangible assets of value not less than one
lakh rupees (Rs. 1, 00,000)
Status of Existing Investment Advisors
Existing investment advisers shall comply with the capital adequacy requirement within
one year from the date of commencement of these regulations.
Period of Validity
Period of Validity of the Certificate is five years (5 years) from the date of issue.
Renewal of Certificate: Three months before the expiry of the period of validity of the
certificate, the Investment adviser may, if he so desires, make an application in FORM-A
for grant of renewal of certificate of registration. The renewal application also dealt in the
same manner as if investment advisor is applying for the first time.
74 | P a g e

7. ENSURE STEADY ENSURE PEACE OF MIND
Proper financial planning tends to make life more systematic and earning more consistent. By
now you identify the sources of income, the quantum of income from each of the different
sources, estimate the expenditure both short term and long term, plan for expenses, invest
savings in different types of investments, above all you are rest assured that the path which you
have chosen is wise.
This is indeed the ultimate benefit of planning your finances. You are assured peace of mind and
financial soundness definitely increases the scope and growth of ones wealth. At the end of the
day what do you live for, it is for a peaceful nights sleep preparing for an enthusiastic tomorrow.
8. HOW TO DOCUMENT YOUR INVESTMENTS
Financial Plan and its importance

A financial plan is a series of steps which are carried out, or goals that are accomplished, which
relate to an individual's financial affairs. It is a series of steps or specific goals undertaken for
spending and saving future income. This plan allocates future income to various types
of expenses and also reserves some income for short-term and long-term savings.
The importance of financial planning especially in the present scenario cannot be overstated.
Among others, two factors are responsible for the same i.e. inflation and changing lifestyles.
Inflation is a situation where too much money chases a limited number of goods. This leads to a
fall in the value of money. It is also expressed as a rise in the general price level. Financial
planning can ensure that one is equipped to deal with the impact of inflation, especially in phases
like retirement when expenses continue but income streams dry up. The second factor is
changing lifestyles. With higher disposable incomes, it is common for individuals to upgrade
their standard of living. Apart from these, there are contingencies like medical emergencies or
unplanned expenditure that an individual might have to cope with. Sound financial planning can
enable him to easily mitigate such situations, without straining his finances.
It is possible to manage income effectively through financial planning. It helps in segregating it
into tax payments, other monthly expenditures and savings. Financial planning is also necessary
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from the point of family security. The various policies available in the market serve the purpose
of financially securing the family. The savings created through appropriate planning come to the
rescue in difficult times. Death of the bread winner in a family, affects the standard of living to a
great extent. A proper financial plan such as a Will, Settlement Deed and various other
investment instruments acts as a guard in such situations and enables the family to survive hard
times.
How to document your investments?
Next comes the important part of documenting these investments. It is not just necessary to do
appropriate financial planning but the investor should be wise enough to document all these
investments. There may be several ways of investments but the investor should be able to
remember and keep track of these investments. For this he needs to ensure that he documents all
his investments and keep it in a place that is easily accessible.
Dos and Donts
The investor should be always aware of his legal rights under each investment. For this,
he should always read the investment documents and understand his legal rights.
Copies of all investment documentation i.e. Xerox copies of application forms,
acknowledgement slips, agreements, contract notes, insurance policies etc. should be
kept safely in a place that is accessible to the investor.
The dates of opening and closing of accounts, dates of maturity (for e.g. fixed deposits
etc.), periods of interest, whether monthly or annual, pension due dates etc. may all be
detailed in a sheet of paper. It can also be drafted in an excel sheet format and saved in
the computer.
Details of each instrument may be detailed in the excel sheet. History of the instrument
and how it was acquired can also be mentioned.
Face Value of each instrument and returns expected from that instrument may also be
mentioned in the excel sheet.
In case of Power of Attorney, the parties and the powers given may be mentioned.
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In case of Will, the details of properties bequeathed and the beneficiaries may be
mentioned in the excel sheet.
Where it is a Private Trust, the purpose of the trust, the parties etc. may be mentioned.
In case of Partition, the details of immovable property partitioned, the parties involved
may be noted in the sheet.
Where it is a Settlement Deed, the parties and property involved can be given.
All though the basic preparation of this document of investments may take some time
and patience, this will surely go a long way in saving our time and energy in future. This
will be a great reckoner not only for the investor but also for any other person handling
on behalf of the investor in terms of distress.
Apart from the above, the document will also be of great help in tax planning and submit
the tax returns.
Format of documenting the investments
Sl.
Type
no.
instrument
of Name
bank
company
etc.
Fixed deposit
Recurring
deposit
Insurance
policy
Shares
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of Date
/ opening
purchase
of Date
/ maturity
of Face value Expected Comm

of
the return
instrument
(Rs.)
ents

Sl.
Type
no.
instrument
Will
Settlement
deed
Gift
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of Date
of Parties to the Details
document
of Details
document
movable
immovable
(deed)
property
property
of Comment
s
About the Author - CA Rajkumar S Adukia
Rajkumar S. Adukia
B. Com (Hons.), FCA, ACS, ACMA, LL.B, M.B.A, DIPR, Dip IFRS (UK), Dip LL & LW, Dip in
Criminology
Mobile 098200 61049/093230 61049
Fax 26765579
Email [email protected]
To receive regular updates on various professional issues kindly send test mail to [email protected]
Mr. Rajkumar Adukia is an eminent business consultant, academician, writer, and speaker. Mr.
Adukia, senior partner of Adukia & Associates has authored more than 32 books on a wide range
of subjects. His books on IFRS namely, Encyclopedia on IFRS (3000 pages) and The Handbook
on IFRS (1000 pages) has served number of professionals who are on the lookout for a practical
guidance on IFRS. The book on Professional Opportunities for Chartered Accountants is a
handy tool and ready referencer to all Chartered Accountants.
Mr. Adukia is a rank holder from Bombay University and did his graduation from Sydenham
College of Commerce & Economics. He received a Gold Medal for highest marks in
Accountancy & Auditing in the Examination. He passed the Chartered Accountancy with 1st
Rank in Inter CA & 6th Rank in Final CA, and 3rd Rank in Final Cost Accountancy Course in
1983. He started his practice as a Chartered Accountant on 1st July 1983, in the three decades
following which he left no stone unturned, be it academic expertise or professional expansion.
His level of knowledge, source of information, professional expertise spread across a wide range
79 | P a g e

of subjects right from the simplest to the most complex, has made him a strong and sought after
professional in every form of professional assignment.
In addition to being a Chartered Accountant, Company Secretary and a Cost Accountant, MBA,
Dip IFR (UK), Mr. Adukia also holds a degree in law and Diploma in Labour Laws. He has been
involved in the activities of the Institute since 1984 as a convenor of Kalbadevi CPE study circle.
He was the Chairman of the Western Region of Institute of Chartered Accountants of India in
1997 and has been actively involved in various committees of ICAI. He became a member of the
Central Council in 1998 and ever since he has worked tirelessly towards knowledge sharing,
professional development and enhancing professional opportunities for members. He is currently
the Chairman of Committee on Financial Markets and Investor Protection, Committee on
Government Accounting and Ethical Standard Board.
He has been coordinating with various professional institutions, associations universities,
University Grants Commission and other educational institutions. Besides he has actively
participated with accountability and standards-setting organizations in India and at the
international level. He was a member of J.J. Irani committee which drafted Companies Bill 2008.
He is also member of Secretarial Standards Board of ICSI. Currently he represents ASSOCHAM
as member of Cost Accounting Standards Board of ICWAI. He is a member of working group of
Competition Commission Of India, National Housing Bank, NABARD, RBI, CBI etc.
He has served on the Board of Directors in the capacity of independent director at BOI Asset
management Co. Ltd, Bharat Sanchar Nigam Limited and SBI Mutual Funds Management Pvt
Ltd. He is also a member of the London Fraud Investigation Team
Mr. Rajkumar Adukia specializes in Financial Planning and Wealth Management, SEZs, IFRS,
Enterprise Risk Management, Internal Audit, Business Advisory and Planning, Commercial Law
Compliance, Labour Laws, Project Work, Carbon Credit, Taxation, Trusts and Green Audit. His
clientele include large corporations, owner-managed companies, small manufacturers, service
businesses, property management and construction, exporters and importers, and professionals.
80 | P a g e

He has undertaken specific assignments on fraud investigation and reporting in the corporate
sector and has developed background material on the same.
Based on his rich experience, he has written numerous articles on most aspects of financeaccounting, auditing, taxation, valuation, public finance. His authoritative articles appear
regularly in financial papers like Business India, Financial Express, Economic Times and other
professional / business magazines. He has authored
several accounting and auditing manuals.
He has authored books on vast range of topics including Internal Audit, Bank Audit, SEZ,
CARO, PMLA, Anti-dumping, Green Audit, IFRS, Income Tax Search, Survey and Seizure, etc.
His books are known for their practicality and for their proactive approaches to meeting practice
needs.
Mr. Rajkumar is a frequent speaker on trade and finance at seminars and conferences organized
by the Institute of Chartered Accountants of India, various Chambers of Commerce, Income Tax
Offices and other Professional Associations. He has also lectured at the S.P. Jain Institute of
Management, Intensive Coaching Classes for Inter & Final CA students and Direct Taxes
Regional Training Institute of CBDT. He also develops and delivers short courses, seminars and
workshops on changes and opportunities in trade and finance. He has extensive experience as a
speaker, moderator and panelist at workshops and conferences held for both students and
professionals across the country and abroad. Mr. Adukia has delivered lectures abroad at forums
of International Federation of Accountants and travelled very extensively abroad for professional
work.
81 | P a g e

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How to Grow Money?

& Manage your Wealth

How to Grow Your Money? & Manage your Wealth

Irrespective of the number of literature we have on Financial Planning and Wealth

How to Grow Money? & Manage your Wealth

Know Your Money

Investing Money Growing Money

Capital Market Investments

How to Grow Money? & Manage your Wealth

Where NOT to Invest?

Shaping your Future with Financial Planning

Know Your financial Goals

Know Your Financial Positions

Know Your Risks

Know Your Investments

b. Investing Your Savings

Income Tax Planning

Insurance & health planning

Investment & Wealth Planning

Portfolio Managers/ Wealth Managers/Investment Advisors (IA) Regulation

Ensure Steady Income Ensure Peace of Mind

How to Document your Investments?

How to Grow Money? & Manage your Wealth

1. KNOW YOUR MONEY

Why is it important to know about money?

The attributes of money can be defined as follows

How to Grow Money? & Manage your Wealth

How to Grow Money? & Manage your Wealth

Facts about Money

All of us procure money from various sources. Employment, self-employment,

When we talk about earning money we talk about three things

1. Why should we earn money?

How to Grow Money? & Manage your Wealth

To satisfy our daily needs

Take up a job earn Salary

How to Grow Money? & Manage your Wealth

How to Grow Money? & Manage your Wealth

o Money with Banks earning interest

TIPS on Earning Money

How to Grow Money? & Manage your Wealth

6. It is good to save and invest money as soon as you start earning,

It is not how much money you make

We earn for our

How to Grow Money? & Manage your Wealth

Is that all? Or is there something that is equally important

We also very importantly earn to SAVE

What do people do with the money they earn? They

How to Grow Money? & Manage your Wealth

Savings can be classified as

How to Grow Money? & Manage your Wealth

o Saving to buy Vehicles

TIPS on Saving Money

1. Squeeze expenses and Save, it pays, especially

How to Grow Money? & Manage your Wealth

6. Differentiate between what you deserve and what you desire

4. INVESTING MONEY GROWING MONEY

Money kept idle loses Value

How to Grow Money? & Manage your Wealth

What do you want from Investing?