Book Review - Financial Planning: A Ready Reckoner..

Book Review:

 Financial Planning: A Ready Reckoner..

Name:

Financial Planning:

A Ready Reckoner

Author:

Madhu Sinha

Publisher:

Tata McGraw Hill

Price:

Rs. 350

Pages:

270

Who should read it?

Beginners.

Informed investors.

Evolved investors.

Why you should read it...

Financial plannning is not a matter of choice; its virtually a necessity. While there will always be certified financial planners to help you with your investments, it is advisable to have a basic understanding of the subject. This book helps you do that by using lucid language & numerical examples.

Though the book has a text book feel, it contains valuable information for all kinds of readers to help them understand financial planning better.

Books on personal finance are a dime a dozen.There are enough gems to riffle through no matter what aspect you seek advice on.

However, discerning readers know that almost all such books are by foreign authors &  focus on the US market; there arent enough books by Indian writers.

This is especially true when it comes to financial planning. Indian readers stand to gain much from a book that not only explains how to manage ones finances, but also tells you how to make a professional financial plan in the Indian context.

In this regard, Madhu Sinhas Financial Planning:  A Ready Reckoner is a useful contribution.The author explains the subject in detail using Indian examples, which makes it easy even for novices.

The book, over 10 chapters and more than 250 pages long, discusses every aspect of financial planning, including ethics. The effort is creditable given Sinhas pedigree: she is a professor at the International College of Financial Planning,and a director with the Financial Planning Standards Board, India.

In the first chapter, Sinha tackles the question about the need for financial planning, arguing how the reforms in India and the subsequent inflow of capital have put more money in the hands of investors, but only a few people have the time and expertise to make a complete financial plan for themselves.

The chapter goes on to explain the rationale for a financial plan and,more importantly, how to go about building one.

The second & third chapters delve into the basics of mathematics for financial planning, with Sinha explaining, among other things, how to calculate future value, present value of a one-time investment,etc. These chapters might prove to be a little tough for beginners, but this should not be a deterrent. True to her calling as a professor, Sinha goes beyond the theoretical treatment of the subject to give examples of the calculations involved.

The fourth chapter talks about a subject often discussed, but rarely understood, by readersratios used in financial planning.These include debt to income ratio, income to savings, savings rate to income, liquidity, debt, risk exposure and net worth ratios. However, unlike the previous chapters, this one is easier to understand. It will be of immense help to readers who want to understand their spending and saving patterns before planning for their future.

The crux of the book lies in the two chapters on retirement planning, arguably the cornerstone of every financial plan. Sinha deals with all the aspects, including how much insurance you need, where to invest &  in what ratio,the need and uses of endowment plans, and the like.

Once again, she tries to explain the concepts through real-life, situation-based examples. It is here that the readers have the most to learn. Over 55 pages, it handles various investment options with an eye on both pre- and post-retirement options.

Subjects such as EPF, PPF and post office schemes are explained with examples. This will help readers make more informed choices.The need for reviewing the portfolio & changing tracks is also dealt with aptly.

The last few chapters take up the issue of retirement planning with numerical examples,but unless you are a student of the subject,it might not interest you. Here the book is like a textbook and beginners can easily skip this part.

Ultimately, Sinha does an excellent job of converting textbook material into a book that can be enjoyed and understood by all. While beginners stand to gain the most from it,it cannot be denied that it fills an important gap for Indian readers.

About the Author..

Madhu Sinha is professor (Academic Head) at International College of Financial Planning, and director with Financial Planning Standards Board, India. A columnist for a number of newspapers &  magazines, Sinha also counsels investors on financial planning and wealth management. A certified financial planner, she has over 16 years of experience in investment advisory and client management.

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