RPL I NTRODUCTIONS : T HE P ERSONAL J OURNEY TO RPL Robert Bloom, RPL August 17, 2015 APCO 2015.
P ersonal Finance
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Transcript of P ersonal Finance
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Personal FinanceEce YavuzbaşGökçe UzTevfik KumruKemal Pınarbaşı
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Outline Definition Benefits Financial position Adequate protection Tax planning Investment and accumulation goals Retirement planning Estate planning Personal Budget Software Programs
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It’s not your salary that makes you rich, it’s your spending habits.
Charles A. Jeffe
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Definition of Personal FinancePersonal finance is defined as the way in which an individual or a family makes decisions in relation to their financial portfolio.Personal financial plan: a plan that specifies your financial goals and describes the spending, financing, and investing plans that are intended to achieve those goals
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Benefits of Personal Finance•Personal Financial Planning may not help you to earn more money, but it
will help you to use your money more wisely.
•As part of your personal financial plan, think about what is important to
you. What do you want to accomplish?
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Benefits of Personal Finance
•Budgeting•Savings
•Investment•Risk Management
•Cash-flow management
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Components•Financial position
•Adequate protection•Tax planning
•Investment and accumulation goals•Retirement planning
•Estate planning
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Financial PositionFinancial planning needs to understand what
his/her/their financial situation is. Household assets Household liabilitiesHousehold cash flow
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Financial PositionDevelop and implement a budgetCalculate your net worth (wealth) using a
balance sheetDevelop a personal income statement and use
it to analyze your spending Introduce budgeting software: Quicken,
Mint.com and others
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Adequate ProtectionProtected in event of an emergency must also
be in placeNatural disasters and deathBuying insurance for each of these areasRisk Allocation
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Tax PlanningCertainties: Taxes and Death IncomeValue of AssetsSingle largest expense in a householdTax deductionsCredits
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Estate Planning
Investing
Budget
Savings and Debt
Retirement Planning Insurance
Cash ManagementGoals
Taxes
Impacts of Taxes
Investment and accumulation goalsPlanning how to accumulate enough money for
large purchasesMajor reasons to accumulate assets include
purchasing a house or car, starting a business ,paying for education expenses and saving for retirement
Major risk to the households, the rate of price increases over time or inflation
Investment and accumulation goalsFinancial planners suggest regular savings in a
variety of ınvestmentsThe investment portfolio has to get a higher
rate of return Investors risk attitudes vary from person to
personThese types of financial goals require careful
planning and secure investments.
Retirement planningPersonal finance involves planning for your or
your families retirementYou need to know how much money do you
need to be retired and how do you finance this retirement
Private pension
Private Pension
Private pensionThis is a long-term investment that are used by
intermediaries instead of youWhen you come retirement age, you obtain a
sum of moneyPayments are deposited to the Takasbank.They
are under the control of governmentYou can see your fund fluctuations on web site.
Retirement companies
Advantages of the private pension A small amount of contribution is paid each month You can earn more money with less money You can determine the degree of risk You don’t need to pay an other fee when devolved into
another company Funds are conducted by professional portfolio
managers The allocation of funds can be changed six times a
year There is no loss of money
Disadvantages of the private pensionTo be long-term investmentYou have to pay operating expenses like 8%Fund operating deductions are made If you exit the system less than 10 years,10% is
interruptedWhen you evaluating the savings at
exchange,you have to pay a tax for earning per tl to the government.however ıf you evaluate the saving at private pension companies, government don’t get a tax from you.
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Estate Planning•Estate planning involves planning for what will happen when you die, and planning for the tax due to the government at that time.
•Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses.
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Personal Budget
A personal budget is a finance plan that allocates future personal income towards expenses, savings aand debt re-payment.
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Cash Flow Trade Off’sKey Cash Management tradeoffs:
1. The Risk-Return trade off2. The Spending-Investment Risk trade off3. The Time Expended-Return trade off
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ConclusionHow can people protect themselves against
unforeseen personal events, as well as those in the external economy?
How can family assets best be transferred across generations (bequests and inheritance)?
How does tax policy (tax subsidies and/or penalties) affect personal financial decisions?
How does credit affect an individual's financial standing?
How can one plan for a secure financial future in an environment of economic instability?
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Thank You For Your AttentionDo you have any question?