Role_of_chartered_accountant_in_capital_markets_at_Institute_of_Chartered_Accountants_of_India by suchenfz


									Role of Chartered Accountants
In Capital Markets

      By Shubha Ganesh
          April 2007
In 2006
   The Rs 150,000 crores (Rs 1,500 billion)
    invested by Indian investors in real estate
    yielded 50% plus capital appreciation on

   Commercial and retail rentals gave 40 % plus
In 2006
   The Rs 358,000 crores (Rs 3,580 billion)
    incrementally invested in Bank deposits on
    average earned 7 % to 8 % returns

   An additional Rs 74,000 crores (Rs 740
    billion) went into demand deposits at 3.5 %
    to zero % returns, a 25 per cent growth over
    the 2005 number.
In 2006
   The Rs 45,000 crores (Rs 450 billion) invested
    in gold saw an appreciation of around 35 %
    on average
   The Rs 37,000 crores (Rs 370 billion) raised
    by new equity mutual funds
   Total mutual fund equity assets moving to Rs
    125,000 crores (Rs 1250 billion). The range
    of equity funds returns was 30 to 60 % over
    the year.
In 2006
   Other commodities too gave strong returns,
    with silver up 58 % over last year's average

   Lead, nickel, zinc, copper too hit multiple year
    highs, as did most soft commodities like
    wheat, corn and other agricultural
   Cash with the public and small savings both
    showed declining shares in the investments
    by Indian investors.
In 2007
   Indians are saving 29 per cent of the GDP at

   The younger generation Indians are earning
    more and saving more

   All these savings have to be invested
    and managed
The Tool
   Financial Planning, Investment planning and
    wealth creation all talk about managing

   Financial Planning is a broader concept

   Taxation is a sub-sect
The Managers?
   CFP are new professionals who are into
    Financial Planning

   The latest entrants are Banks and NBFCs

   They advise people on all types of
    investments including taxes and estate
   Not compulsory yet
Are they Intruders?
   Does this step into our tax consultancy ?

   Is it under threat?

   Should we limit ourselves to taxes and tax
We can do it

   Is it not possible to perform this function with
    little expertise?

   Why should we not include investment
    advisory in our portfolio of services?
Why Us?
   NBFCs and banks tend to advise clients to
    buy the products on which they get the best

   Chartered Accountants with their accounting
    background and independence and
    trustworthiness are best suited to take on this
The big picture

   Enlarge practice by giving the larger service

   Formalize what is being done informally

   Better Income
Learning Goals of this session
   Financial Planning

   Applicability to Practice

   Applicability to self/Personal life
The Pathfinder
   Financial planning is the process of
    meeting a person's life goals through the
    proper management of their finances.

   Financial planning is all about taking charge
    of circumstances
6 Steps of Financial Planning

1. Develop financial goals.
2. Determine your current financial situation.
3. Identify and evaluate alternative plans to achieve your
4. Select and implement the best alternative to achieve your
5. Create and implement a financial action plan.
6. Reevaluate and revise your plan.
Overall Plan

   Develop an overall investment plan with
    proper investment portfolio that
    supports our goals, while staying within
    your investment time horizon and risk
Steps to Create a Personal Investing Plan
        Step 1
My investment goals are:                                                               Step 3
                                                Step 2
____________________                                                           I have Rs.__________
                                        By ___________, I will
____________________                                                             available to invest.
                                       have obtained Rs.______.
                                                                                Date _____________

          Step 9
Continue evaluating choices.

                                                                                     Step 4
                                                                        Possible investment alternatives:
       Step 8                                                               2._________________
    Final decision                                                          3._________________
 1._______________                                                          4._________________

                                              Step 6                               Step 5
                               Projected return on each alternative   Risk factors for each alternative
        Step 7                                                          1.____________________
  Investment decision                                                   2.____________________
  1._______________                                                     3.____________________
  2._______________                                                     4.____________________
Financial goals
   Needs- absolute necessities

   Wants- desires
Risk management
There is risk of loss of both life and property.
  Life insurance can be used to protect a family
  against the risk of premature death.
Disability insurance can protect against the loss
  of a persons ability to earn a living.
Property and causality insurance can protect
  our worldly goods against accident and such
  perils as fire, flood, earthquake and theft.
Tax Planning
Retirement Planning
        Investment Pyramid

                                                        High risk
                         Junk bonds

         High Quality
           Stocks                   Rental
         Mutual funds

      Utility        Government          Corporate
      stocks          Securities          bonds

                Money            Savings                   risk
CDs             Market                           Cash
Choosing investments
   Risk tolerance

   Time horizon

   Diversification

   Asset allocation
Asset Allocation
   Asset allocation refers to the strategy of
    dividing your total investment portfolio
    among various asset classes, such as
    stocks, bonds and money market
Asset Allocation Plan
   Determining the proportion of
    investments in each of the three basic
    asset classes.

   aggressive,
    moderate
   and conservative.
Asset Allocation Goal

   Maximize return for your chosen level of risk,

   Minimize risk given a certain expected level of
The Right Fit

   To make the asset allocation process easier
    for clients, many investment companies
    create a series of model portfolios, each
    comprising different proportions of asset
Risk Profile and Investing
   Financial Planning is finally balancing
    the KNOWNS subject to the
Thank You

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