Send the link below via email or IMCopy
Present to your audienceStart remote presentation
- Invited audience members will follow you as you navigate and present
- People invited to a presentation do not need a Prezi account
- This link expires 10 minutes after you close the presentation
- A maximum of 30 users can follow your presentation
- Learn more about this feature in our knowledge base article
Know your financial numbers!
Transcript of Know your financial numbers!
Multiple Purpose View
Comprehensive View Meaning of Financial Planning Process of Financial Planning to compare, w.r.t. benchmark
buy car based on km per l or petrol
number of goals by Ronaldo
queening for the food store
queening for TOTO, which booth or shop
apple iPhone vs android smart phone Financial Ratio Ratio Analysis is the process of taking financial data from an individual's financial statements to generate key ratios to gauge how he is fairing.
No one ratio tells the whole story. SRS Present Value
BGN, END mode Basic TVM ... to study the personal financial statements to find out if we are getting closer to achieving our financial goals or not.
It is an absolutely necessary first step to doing any sort of financial planning. Goal Setting Goal setting for clientele and financial consultant.... Income Statement The income statement gives us an idea how we got to our current financial state by looking at sources of income and expenditure during a period of usually one year. conceptualize, designed & formulated by:
Chew Hock Beng
Associate Director, Financial Advisory Group,
Financial Alliance Pte Ltd
Mobile : +65 9389 7195
eMail : firstname.lastname@example.org
LinkedIN: chewhockbeng Thank you... Jack's Income Statement for period
1 January 2011 to 31 Dec 2011 The balance sheet tells us the current state of our financial health at a specific point in time. The income statement gives us an idea how we got to our current financial state by looking at sources of income and expenditure during a period of usually one year. Assets = Liquid assets, invested assets, personal assets Liquid assets = savings account, checking account, money market instruments, fixed deposits. (liquidity vs marketability) invested assets = (long term objectives) stocks, bonds, unit trusts, precious metal, real estate, business investments, CPF savings. Personal Assets = for present & long term consumption, car, home clothes, watch, tech gadget, bicycle, (medisave?) Invested asset or personal asset? Car or vintage? Question? Money market? Liquid or portfolio management? Jewels? Personal use or for capital gain? ....the price at which the assets might sell for in the market. Fair Market Value Business value? FMV or OC? original cost ...the bottom line, what we are really worth. Net Worth is the snapshot of where you stands financially at a given point of time. Net Worth Own $1M property, owe $100k
Own 5 (a total of $5M) private properties and owe $900,000 each for each property. Which position is preferred? Mortgage Repayment =
principal repayment + interest portion Jack's Balance Sheet as at 31 Dec 2011 However, it does not necessarily imply that the funds are ready to be used.
The reason being that the statement of cash flows shows what has occurred but the disposition of the surplus (or deficit) is reflected in the assets, liabilities & net worth. Cash surplus can be used for savings and/or investment purposes, to acquire assets or reduce debts. Helps to discover potential problems in spending patterns.
Helps to identify solution to these problem.
Helps to allocate resources more effectively. This ratio calculates the number of months of emergency funds available. It shows the number of months a person can meet his monthly expenses from existing liquid assets assuming that he loses his job. This ratio shows what amount of a person's net worth is in liquid assets. This ratio shows how much is saved from the income. This ratio shows per dollar of take home pay (gross income minus employee's CPF), how much was used to pay off his loan repayments. This shows how much a person has devoted to accumulating capital in particular for retirement. As a person grows older, this ratio should increase. This ratio shows how much of a person's assets really belong to him. This ratio show how much of a person's assets are financed by debt. The lesser the better. Let's refer to the spread sheet for more details. Homework
Documentation Specific / Significant / Simple
Measurable / Manageable
Achievable / Attainable
Realistic / Relevant
Targeted Time / Traceable SHORT < 3yrs
LONG >7yrs Ongoing happiness
Loving family relationships
Intellectual fulfillment How about your Goal? D - prognosis before diagnosis is malpractice.
O - begin with end in mind.
M - the pointer. the map. the guide.
E - inspect what you expect. Productivity
Client Relationship Enhancement
.... www.mdrt.org The PIE Concept income.insurance.investment.
experience.education.earning. Good Business comes with Good Ethics. How about your mission? How about your vision? good ethics means good business. B.Eng, CLU, ChFC, CFP®, CFOS®, RFC®, LUTCF, FSS, CBC, ACBC, Dip.SCI(Life),
Dip.SCI(General), ANZIFF(Assoc) CIP, ASII, SFSP (S'pore), FIFP(S'pore) Supplemental Retirement Scheme Financial planning is the process of meeting your life goals through the proper management of your finances. It is a process that consists of specific steps that help you ascertain your financial condition objectively. Financial planning should provide direction and meaning to all your financial decisions. By viewing each financial decision as part of a whole, you can consider its short and long term effects on your life goals. You can therefore adapt more easily to life changes and feel more secure that your goals are on track. BENEFIT www.fpas.org.sg yes?
no? Can FP be DIY? you need expertise you don't possess in certain areas of your finances.
For example, a planner can help you evaluate the level of risk in your investment portfolio or adjust your retirement plan due to changing family circumstances.
you want to get a professional opinion about the financial plan you developed for yourself.
you don't feel you have the time to spare to do your own financial planning.
you have an immediate need or unexpected life event such as a birth, inheritance or major illness.
you feel that a professional adviser could help you improve on how you are currently managing your finances.
you know that you need to improve your current financial situation but don't know where to start. Possible reasons to engage financial planner.... Selling a specific financial product to solve a single financial planning issue. It is not financial planning. However, if the product sold is due to financial planning implementation, then it is part of the financial planning process. Rather than taking a single-purpose approach of just solving a single financial problem with a single financial product or service, many financial advisers take a multiple purpose approach by dealing with insurance, investment and/or tax planning. Comprehensive financial planning considers all aspects of a client’s financial position, which includes all the client’s financial needs and objectives, and utilizes several integrated and coordinated planning strategies for fulfilling those needs and objectives. uncovered
addressed required wide range of expertise a team of specialist objectivity full engagement on-going · a stockbroker who advises a customer to buy shares of common
stock of a particular company
· a salesperson who sells to a client shares in a real estate limited
· a preparer of income tax returns who suggests that a client
establish an IRAS
· a banker who opens a trust account for the benefit of a
customer’s handicapped child
· a life insurance agent who sells key person life insurance to the
owner of a small business
· a personal finance counselor who shows a client how to set up
and live within a budget · a multi-line insurance agent who sells all lines of life, health,property, and liability insurance
· a tax attorney who assists clients with their income, estate, and
gift tax planning
· an investment adviser who is registered as such with the SGX
· a life insurance-based adviser who also sells a investment-linked to
meet both the protection and wealth accumulation needs of clients Wealth Accumulation How does a financial plan looks like? One Two Three Wealth
Maintenance Wealth Protection Wealth Enhancement Wealth Distribution Personal data
Client goals and objectives
Identification of issues and problems
Balance Sheet/Net Worth
Cash flow management
Financial Independence, retirement planning, education, and other special needs
Implementation plan Elements of a comprehensive financial plan Liquidity Ratio Gearing Ratio Accumulation Ratio Solvency Ratio Liquidity Ratio Gearing Ratio Accumulation Ratio Net-Worth Ratio vs Cash-Flow Ratio  [ii]   [ii] ? [i]   [ii] ? [i] ?     Financial Calculator
Formulae @ chewhockbeng.blogspot.sg SWOT SMART WYSIWYG Asset may melt. A debt is still a debt! Evaluate what you spend.
Allocate income in terms of percentage.
Set up spending priorities.
Pay yourself first. Budgeting What Money Means to you? Are we getting the numbers or the things behind the numbers? HEARD WYSIWYG a lie is still a lie! BIG or small Figures don't lie, liar figure. PMT FV to pv pv to FV Present Value Future Value PV FV N = Period, i = interest PV FV N = period, i = interest DISCOUNTING DCA RSP RSO ... ... ... ... ... ... ... ... ... ... PMT N = Period,
i = interest FV LOAN Car loan Amortization Purchase price = $100,000/-
Interest rate = 3.0%
Loan tenure = 10 years
What is the monthly installments?
What is the effective rate? Purchase price = $500,000/-
Tenure = 30 years (50 years)
Loan rate = 2.6% p.a.
What is the loan amount?
What is the monthly installments? Student Loan Loan Interest Tenure Total
Interest Principal Loan
Principal PMT = How about when to apply the BGN & END mode? RULE 72 Cash Flow Budgeting is a useful management tool because:
 Help to frame or chart your spending patterns
 Test whether your plans will produce enough income to meet all your cash needs
 It provides direction
 It provides control
 Establish how much money is needed and when it will be needed
 Help ensuring whether capital expenditure is properly controlled
 Help cash position for cash reserve Why http://johnshack.com/ www.aish.com http://app.mof.gov.sg/supplementary_retirement_scheme.aspx