Financial Education Drive for Doctors by Doctors

Financial planning

Dr Ramnath Ghute
MD (Radio), Mumbai
WEALTHCON,Founder
SONOTIPS, President
Financial planning

Dr Ramnath Ghute
MD (Rad), Mumbai
WEALTHCON,Founder
SONOTIPS,President
 DISCLAIMER
1. This talk is only for EDUCATIONALpurpose.
Investors need to do own research before
any financial decision.
2. Controversial concepts in the talk are
opinions of speaker. Its not intended to
demean anyindividual,classor community.
3. Some contents are from online resources.
FINANCIAL PLANNING MEANS

1. PLAN OFASSETCREATION
2. PLAN OFASSETDISPOSAL
 Plan of AssetDisposal
• Begin with End in mind

• WHY?
• Financial goals- Retirement income, Child education,
Marriage, Vacation etc

• Build Road For children or develop children forRoad

TYPICAL LIFE STAGES OF DOCTORS
1. EDUCATION(Upto 30 years)- Noassets

2. Early professional life (30-40 Years)-Liabilities ( EMI), Insurance

Policies, Land, Jewellery , Car , Vacation

3. Mid professional life (40-50 Years)-Awakening Findsfinancial

advisor –SIPof Mutual Funds, LAND,Gold

4. Late Professional life ( >50 Years)–Children grown up and well

settledpractice
Three Essentials of Wealth Creation

Income from profession

Investment Return

Spending
Spending
 Parkinson’s Law
“No matter how much money people earn, they tend to
spend the entire amount and save a little”
90
80 EXPENSESTRAILS INCOME
70
60
50 Income
40 Expenses
30 Saving
20
10
0
20052006200720082009201020112012201320142015
 REASONS
1. LACKOFKNOWLEDGE
2. PEERPRESSURE
3. SOCIAL MOBILITY
4. CHASINGSUPERIORITY (POPS)
 SPENDIING

PRODUCTS OFNEED(PONs) PRODUCTS OF PRESTIGE

Required for living (POPs)
Not required for living
Utility and convenience
Prestige and style
CAR
Luxury car, jewellery
,iPhone
Why do we Buy POPs?

Appreciation from others (Core

human need).

Work Hard→ Earn money →

POPs→ Appreciation→ Feel Good
(Kick)
 Conditioning
• Our actions are is run onsoftware
• Softwares are beliefs , opinions and
judgements which are installed by parents,
teachers and friends .
• Very strong and not easy to uninstall.

• Education –Job-Marriage-Home loan-Car

loan--POPs
Solution to need of appreciationand feel good

Is there any other way to feel good?– Passion and

hobbies

Is there any other way to get appreciation?- Help

Others projects(HOPs), Social service. Replace POPs
with HOPs.
Help doesn’t mean charity.

Help Others → Appreciation → Feel good ( Strong

kick than POPs)
 Wealthcon Messageof Financial plan

• PART1- Replace (POPs) with HOPs and Hobbies.

• Part 2- Increase investment return (atleast 5-10%

more than present )
• Automatic ,Effortless, Systematic Investment plan
• Investment in Efficient assets ( Shares, Mutual
funds, Real Estate (Selective)
INVESTMENT RETURN
 DOUBLE TAXATION
INCOME(INCOME TAX)
SPEND(GST)

To buy item of Rs 100 you need to earn

RS185

INCOME TAX→ ASSETCREATION

 Double BITE (TAXATION)
To buy item of Rs 100 you need to earn RS185

INCOME 185

INCOME TAX 57

GST 28

SPENDING ITEM (CAR) 100

TOTAL TAX 85
Bad News for TaxEvader

Death and Taxesarecertain

Benjamin Franklin
 SECTION 80C
USEentire limit of S.80C for asset creation. Current
Rs1.5 lacs plus 50K

Only in these 4 products are worth to learn

1. ELSS(Equity linked saving scheme)
2. PPF(Public provident fund)
3. SSY(Sukanya Samruddhi Yojana)
4. NPS( National pension scheme) – 50Kadditional
S 80 D– Health insurance
Deductions for Expenses
• Mediclaim 25K ( S80D)
• Home loan interest ( 2 lacs)- S24
• Education loan interest - S80E
 Your Choice
Financial planner’s plan Wealthcon’s Plan

• SIP in various Mutual • Tax efficient plan

funds • Active investor
• No tax education • Direct mutual fund
investment
• Passive investor
• Direct Shares investments
• Calculators • Very simple and practical
 FINANCIAL PLAN

WEALTH WEALTH
INSURANCE
CREATION PROTECTION
EQUITY (Share and DEBT (Debt
Term Insurance Funds,
Heath insurance Mutual funds
PPF.SSY,CD,FD)
REALESTATE(Land,
Building except self GOLD(Coin and
occupied house) Paper Gold)
WEALTH CREATION (SEAmodel)

SYSTEMATIC

EFFORTLESS AUTOMATIC
SEA MODELOF WEALTH CREATION
SYSTEMATIC- Regular, Monthly ,Weekly (SIP & EMI)
EFFORTLESS-Cognitive efforts kills performance
AUTOMATIC- ECS,Standing InstructionBank
RETIREMENT PLANNING=TAX PLANNING=ELSS

APPLICABLE TOALL
12500/month
25000 /month (Couple), SIP

INDISPENSABLE
WEALTHCON Financialplan
GTI- Gross total income
NTI- Net Taxable Income
PTI-Post tax income
44ADA plan
S 44ADA of incometax Act
• Professional
• Presumptive tax
• Revenue < 50 Lacs
• Net profit >50%
 44ADA PLAN
1. REVENUE<50Lacs
2. Profit 60%
3. Profit is used for Asset creation (A1) ,Inevitable
cheque Spending (S1) and Tax (T)
4. It saves headache of bookskeeping
5. It does Not save tax
6. Cash withdrawn as bank balance can’t be shown
as expenses
When to make financialplan?
March of every year
1. How much will be your income and taxliability?
2. How much money you want to use forasset
creation?
3. How much money you want to Spend?
STEP 1
REVENUE ALLOCATION
REVENUE % INVESTMENT & Cheque Expenses-50%

TAX-10%

SPENDING-40%

Revenue-50 L
Investment & Cheque expenses-25 L
Tax-5L
Cash Spending20L
 Wealthcon-44ADA plan
Monthly Revenue

Cash Current Account SavingAccount

(40%) (40%) (20%)

Spending 1. EMI 1. ELSS

2. INSURANCE 2. SIP (Shares & MF)
3. Investment(R&G)
4. CHEQUESPENIDNG
SYSTEMATIC,
5. TAX EFFORTLESS,
AUTOMATIC
SPINAL CORD
 Wealthcon-44ADA plan
TOTALLMONTHLY INCOME YOUR IDEAL %

A1 (Asset, E&D) 20
S1 Cheque Plus (Asset R&G) 30
Tax 10
S2 cash 30
A2 Cash(Asset ,R&G) 10
S3 (discretionary) 0
BALANCE IN BANK 0
 CASH (40%)

ALLPOSSIBLEEXPENSES
RGinvestments ( Cash component)
 Saving Account(20%)
Long term goals- Retirement,Child Education and Marriage

Capital Market Investment

1. 80C-ELSS
2. Direct SHARES-Large Capshares
3. Direct Mutual funds- Mid and Small CapMF
 Current Account(40%)
• Home Loan EMI
• Insurance
• Expenses which CANNOT be done in Cash
• RGinvestments (Cheque )

• TAX(10%) –Liquid fund

 TWO FAQS
1. How much should I invest?
-Variable to each family, SAVEMAXIMUM

2. Where to invest?
• If goal is less than 3 years – Arbitrage fund,Liquidfund,
Debt Fund,FD
• If Goal is 3-7 years- Debt funds and Balanced mutual
fund
• If goal is More than 7 years – Shares (large cap),
Mutual funds (Mid cap and small cap), ELSS,PPF, Gold
fund, Real Estate
ASSET ALLOCATION
ASSETS %

GOLD
REAL ESTATE
EQUITY
DEBT
 CASH
DON’T DO IT
1.Loss of time value and opportunity
2.You can’t escape tax IT or GST
3.You spend on unnecessary items and payGST(28%)
4. You pay commissions to agents
5. Gold :making and breaking charges, Capital gain tax
6.Real estate : High Networth & Poor Cashflow.
Liquidity issue
Pay income tax→ Create Assets → Get out ofrace

As early as possible
ASSESMENT OF REQUIREMENTS
GOAL Yearsto Amountrequired Multipl
commence y
withdraw
al

LOANS 0 Annual EMI

CHILDREN HSCpass Find out annualexpenses 8
EDUCATION Required for College
education at present.
RETIREMENT - Find out annualexpenses 15
Required for LIVINGat
present
LUMSUM Child Variable
marriage
World tour variable
 7 Rules of wealthcreation
1. SYSTEMATIC, EFFORTLESS,AUTOMATIC
investment is key
2. Buy only ELSSfor 80C tax benefit and Retirement
3. Never buy insurance policy for investment.
4. Never buy any product which give negative PTPI
return (Wealth destruction products).
5. Never OUTSOURCEfinance
6. Never buy products of prestige (POPs) till you get
financial freedom.
7. Don’t generate cash. Pay tax & Create Asset
THANK YOU!

Dr Ramnath
drramnath@gmail.com