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R.GOPINATH [email protected] INSCRIPTIONS 17 TRUTH NEVER FADES

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R.GOPINATH

[email protected]

INSCRIPTIONS 17 TRUTH NEVER FADES

HIGH LIGHTS

SCULPTOR INSCRIBES: MIND MANAGEMENT IN AUDIO VISUAL FORMAT BY CLICKING THE LINK

GURUS SPEAK: NET WORTH METHOD TO ESTIMATE LIFE INSURANCE COVER, FAMILY SOLVENCY RATIO AND WANE

PERIOD CALCULATION

CATERPILLAR SPACE: MR THIRULOK KUMAR

GALLERY

MIND MANAGEMENT

R. GOPINATH [email protected]

SCULPTOR INSCRIBES

https://www.dropbox.com/s/5qcfs1vxykca1e7/Sculptor%20inscribes%20Apr2017.mp4?dl=0

PLEASE CLICK THE LINK BELOW AND ENJOY THIS ARTICLE IN AN AUDIO VISUAL FORMAT. THE MOVIE FILE RUNS FOR 36 MINUTES.

THE SLIDES USED IN THE MOVIE ARE GIVEN IN THE NEXT TWO PAGES JUST FOR YOUR REFERENCE

GURUS SPEAK

WEALTH THAT GROWS AND LASTS FOREVER

PRINCIPLE NO: 6“FINANCIAL PYRAMID”

“PROTECTION- THE FOUNDATION”

continued from the previous issue [email protected]

Leaders motivate and support their team to better the best that they can possibly reach.

This is what we expect from any leader, be it a prime minister, chief minister, CEO of a company or the captain of a team. Primarily two 1) to motivate and 2) to support. The same is true of a family head also. As a leader of the family, he/she is expected to motivate his team and also to support them. Leaders provide all the resources that it takes their teams to realise their ambitions. Net Worth analysis will show how much prepared a person or how effectively he can perform the role of a leader of his family.

We are on the topic of Financial pyramid. The first stage in Fin pyramid is protection. Protection means protecting the earning capacity of the person. Since earning money by using one’s body, mind and time is the major source of income for many of the humans, we need to protect ourselves from the risks that can reduce or stop the earning capacity by affecting any one of these three resources. So we identified that we need adequate Life insurance, critical illness insurance and disability insurance to fill up this stage of the pyramid. Then the question arises what is “adequate”?

We have seen working methods to estimate capital protection, Capital need analysis, Human life value to decide on the insurance cover that a person will require. Yet another useful method is “Networth analysis”. As the name indicates it is arrived by drawing a balance sheet and finding the difference between the assets and the liabilities.

We will recapitulate what we had seen in the last issue:We saw 5 Elements of Finance, Then my P&L Account:

Then the Balance sheet:

So we understood that the only way in which we can balance this balance sheet is by buying a life insurance cover of `1,35,00,000

LIABILITIES ₹L ASSETS ₹L type

EDUCATION 50 RETIREMENT FUND 40 i

MARRIAGE 50 EQUITIES 70 i

SETTLING DOWN 100 PROPERTY 50 pa

EMERGENCY 10 SUNDRY ASSETS 20 pa

LOANS 25 DEBT INSTRUMENTS 15 i

SPOUSE PENSION 100 CASH/BANK 5 c

TOTAL 335 200

NET WORTH -135

PROFIT & LOSS A/C ₹

ANNUAL SALARY + DISTRIBUTED PROFITS 120L

ANNUAL EXPENSES AND TAXES 96L

NET PROFITS 24L

As we look into the classification of assets PA- Personal assets, I - Investment assets and C- Cash and equivalent assets.

Now let us look at some ratios:

First one is the Family solvency ratio:

As much as companies regularly study their solvency ratio and always endeavour to maintain high levels, families also need to study their solvency ratio and try to maintain 100% + .

Companies many times have multiple backings. For example the hundreds of thousands of shareholders, sister concerns and associate companies. In case a company is undergoing a bad patch, all these interested parties are likely to help save the company, for they have interest in this company and also they have the financial capacity to help.

But look at a family, do they enjoy so much of backing? Unfortunately the answer is “NO”. Even though the families may be having patrons, it is still unlikely that they have the financial capacity to pull out a family out off the difficulty. Even if they volunteer to, the families still might find it embarrassing to accept such help.

How to we estimate the family solvency ratio?

In the balance sheet of the family:Sum total of the investment assets, cash and the Net Profit of the previous year as a ratio to their liabilities is FSR.

Look at the above example:

`L

Retirement fund 40

Equtities 70

Debt instruments 15

Cash 5

Net profits 24

Sum total of these 154

Whereas the liability is 335 so the FSR for this family will be 154/335= 46% This is a very low level of solvency. That indicates that if the person happens to die now, the family’s assets can only fulfil 46% of their liabilities.

There is a question about net profits as to why net profits has been added here while arriving at the ratio? It is only added because we are considering that we may not be doing this calculation exactly at the end of a financial year. It is likely that this year also the person might generate that much net profits, and that amount might be available to buy assets now.

Now another important criteria to be considered here is that if this person does not cover the balance liabilities with a life insurance cover, then how long should the family expect him to keep earning till the liabilities can be taken care of? That is called as “Wane period” This is estimated by the negative of net worth/ Net profits *365

In this case under discussion it could be like this (185/24)*365 = 2798 days.

54%

46%

Solvency Liabiliites not secured

This is too long a period for the family to hope for recovery. Wane period refers to the waxing and the waning period of the moon.

The solution to the whole predicament is Life insurance cover of `1,35,00,000

Leaders motivate and support their team to better the best that they can possibly reach.

This is what we expect from any leader, be it a prime minister, chief minister, CEO of a company or the captain of a team. Primarily two 1) to motivate and 2) to support. The same is true of a family head also. As a leader of the family, he/she is expected to motivate his team and also to support them. Leaders provide all the resources that it takes their teams to realise their ambitions. Net Worth analysis will show how much prepared a person or how effectively he can perform the role of a leader of his family.

LIFE INSURANCE Vs DEMONETIZATION

BY

MR TRILOK KUMAR

[email protected]

Investors can invest in two types of assets, Physical assets and Financial assets. Physical assets can be Tangible or seen, felt, held or collected like House,Gold,Car etc... Physical assets always carry an Emotional Attachments. Where as Financial assets are Indirect form of Investments like Savings accounts, Fixed deposits, Life Insurance, Bills & Bonds, Stock market, SIP, Post office saving schemes etc... Financial assets are always Zero Percentage Maintenance Cost. There is No Best Investment Portfolio im Market it is in the MIX of both Financial assets and Physical assets.

In Last 31 years Indian Market Scenario from 1985-2016, there is a Shift between Physical assets and Financial assets. Physical asset like 2BHK Flat cost 5 lakhs in 1985 had boomed to 1 crore in 2016, the price reached to Peak Purchasing Power which naturally reaches the Saturation Level in Real Estate Market. Gold Value of 10 grams in 1985 was rs 3500 but in 2016 is raised to rs 30000. Gross Domestic Product (GDP) was 1.4 in 1985 but it is Grown to 7.6 in 2016. The number of Tax Payers was 40 lakhs people in 1985, but in 2016 No of Tax Payers is 5 crores. Total no of Registered Vehicles in 1985 was two crores, Where as it is grown to 16 crores Registered Vehicles in 2016 Pan India. Total number of Telephone Connectivity among 100 people was only 2.3, but in 2016 it has spread to 80 people among 100 in India. Dollar Rate was INR 24 in 1985, but in 2016 it has fluctuated to INR 68 . Fixed Deposit for one year Rate was 13% in 1985, where as RBI has reduced the Rate to 5.75% in 2016 Because of Demonetization.

Foreign Institutional Investors (FII) Investments was ZERO in 1985, but it is Penetrated in 2016 to 160.2 Billion USD in India. Stock Market Sensex was 1600 Points in 1985,Where as in 2016 it is grown to 27500 Points. So there is a Shift in Indian Market like (1985-2000) Financial Market, (2000-2015) Physical Market, (2015-2030)Dynamic Financial Market in India.

Demonitization helps people to buy more Financial Assets according to their financial appetite,

In that Life Insurance is the one &only Exclusive Leverage Financial Asset which Secures a Families Present,Past and Future in a Risk Free Manner. LIFE INSURANCE “if death is exempted in our life then Life Insurance is null & void contract”

CATERPILLAR SPACE

GALLERY

INSCRIPTIONS team is proud to congratulate Master T. Abishek, son of Mr Trilok kumar agent LIC of India Bangalore division 2 for winning the first prize for the Bengaluru district in the Kannada language competition conducted for all districts for the whole of the state of Karnataka

GRUHAPRAVESAM OF BHARATAM THE NEW OFFICE OF GOPAST

CALIBRATION EXERCISE BY LEADING LIGHTS

PARTICIPANTS AT CHENNAI

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