Volume 1

IMS Proschool - Financial Planning Weekly – Volume 1



To Create Wealth, what matters is the rate of return on your investments!

Save Tax and Avail Benefits of Indexation

Rs. 8500 becomes Rs.20000 in 10 years. This advertisement further declares that Post Tax rate of return as 12.18% (simple interest)

Now where is the catch in this advertisement?

The catch is what is the return an investor should look for which will help him to become Wealthier.

The return is to look for is post tax CAGR
Post Tax CAGR for the above deal is 20000 1/10
8500 - 1 = 8.92%

Adjusting this for tax, we get = 8.04% p.a.

Now how did you and your customers got taken by 12.18% rate of return, because the ad was calculated for simple return = 20000 – 8500 = 13.53%
85000

and post tax was shown as 12.18% p.a.

If you were a CFP, you would have immediately got the idea and helped yourself and your client, else you would buy a product and get a return which is lower than the inflation rate.


Important Information on CFP Certification


Financial Planning is considered to be the most rewarding and satisfactory career in Financial Services Sector.
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