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Financial Plan Construction, Personal use - car, residential properties…
Financial Plan Construction
Islamic Financial Planning Process
3. Wealth Accumulation (education plan/ haj fund)
Making right investment with good returns
Must be Shariah compliance, avoid Mysir, Gharar and Riba
4. Wealth Purification (zakat planning / tax computation)
maximize payment of zakat
Set off against tax payment
2. Wealth protection (risk mgmt / need analysis)
Protect income, assets and children education through takaful protection
Risk management
5. Wealth Distribution (estate / legacy planning)
Hibah, Faraid, Wakaf, Will / Wasiat
1. Wealth Generation (cash flow / networth)
Acquire through Shariah Compliance method
Earn, save and budget
Source : salary, bonus, rental income
Determine the direction of retirement planning process
6. Hereafter Planning
create wakaf am / khas
ensure asset shariah compliance
Strategies
5. Zakat calculation
maximize zakat payment
making provision zakat able item
6. Education Plan
for children consider factors such as inflation rate
how much savings need to do monthly / annually
4. Taxation Planning
minimize the tax payable
maximize tax relief and incentive
3. Risk management need analysis
determine one year expenses buffer in event of emergency
ability to set off current o/s loans
7. Retirement planning
available resources during retirement
main source retirement fund EPF and investment
exclude personal items
2. Net worth Statement
assets and liabilities
determine ratio of assets and liability to meet financial obligations
8. Legacy planning
distribution of assets : faraid
1. Cash Flow Statement
To determine income and expenses
point to detect surplus or deficit
indicator of financial health statement
9. Hajj Planning
Alternate Solutions
Increase retirement ages
Increase income
Practice thrift during retirement age : trim lifestyle and spending
Find hobby that pays an income
Living in vicinity with low cost of living
Ask the right question
Cashflow, Net worth and Credit management
Monthly Income
Cash inflows income) minus cash outflows (fixed and variable expenses)
Cashflow
to know if client having surplus or deficit
Surplus : allow client to plan further wealth accumulation
(-) Deficit : reduce expenses to address the financial gap
Net worth
Net worth : Total assets - Total liabilities
Liquidity : Liquid assets / Monthly expenses
Basic Structure
Financial Plan must be shariah compliant
Identify financial goal and make suitable recommendation
identify client financial gap
Personal use - car, residential properties (not to be included)