FEM 3204 : 3 (2 1) Perancangan Kewangan Dalam Pasaran Global Financial Planning in a Global Market

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FEM 3204 3 (21)Perancangan Kewangan Dalam
Pasaran GlobalFinancial Planning in a Global
Market

• HUSNIYAH BT. ABD. RAHIM
• BILIK A2-14
• Jabatan Pengurusan Sumber Pengajian Pengguna
• Fakulti Ekologi Manusia

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JADUAL

• Kuliah
• Hari Rabu
• Masa 12 2 petang
• Tempat BKFEM4
• Amali
• Hari Khamis
• Masa 4 - 7 petang
• Tempat BKFEM5
• Hari Jumaat Jumaat
• Masa 10 pagi 1 petang

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Penilaian

• Kerja kursus 60
• Amali 30
• Tugasan Individu 15
• Ujian 15
• Peperiksaan Akhir 40
• Jumlah 100

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Chapter 1 Introduction to Financial Planning
and the Global Market
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Role of Money

• Money flows in the financial system.
• It affects the supplies of goods and services to
  the individuals
• Also affecting the ability of individuals and
  businesses to obtain credit.
• The supply of money affects the market whereby
  the surplus of money together with a surplus of
  goods may result in rising prices or inflation

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As the Mean of Exchange

• Money acts as the mean of exchange in the market
  between individuals a uniform medium of
  exchange.
• Previously, the only medium of exchange was
  through barter, or trade. Goods are exchanged
  with other goods. However this requires mutual
  agreement between both parties
• Money helps to facilitate market activity in
  purchasing, in labour pay

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Define the Position in Society

• Money may be used to define the position of the
  individual in the society it reflect status of
  the individuals
• Individuals with more money stands a better
  position in the society as compared to those with
  less money
• Hence, money create the social disparity between
  individuals.

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Plays the Economic Role

• In its economic role, money helps the economy
  from being static
• By having money added to the financial system
  (this included in the monetary policy), the flow
  of economy continues

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Money has Value

• Individuals recognize and agree upon the value of
  money consistent and standardized value
• Standardized value means that an individual or
  the businessman will agree that one ringgit
  Malaysia always equals to 100 cents.

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Financial Planning

• Financial planning involves the following
  components
• Job selection
• Choosing jobs suitable with ones ability
  education level determine the job private or
  public sector employer that cares about employee
  welfare
• Financial situation
• Determine financial situation (net worth) through
  the financial records. Balance sheet, cash-flow
  statement

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Financial Planning (cont.)

• Determine life goals financial goals
• Determine lifes goals especially financial
  goals
• short-term (lt5 years) or long-term, should be
  reasonable appropriate goals.
• Family members activities financial situation
  determine the lifes goal

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Financial Planning(cont.)

• Cash-flow management
• Budgeting - Plan spending carefully so that
  income is spent wisely, spending less than
  income unspent money is the surplus of income
• Expenses involving use of large amount of money
  for durable goods, credit, transportation,
  insurance, housing, and tax give high impact on
  the balance of income, need wise spending.
• Daily expenses gives small effect on the balance
  of income.

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Financial Planning(cont.)

• Savings investment
• To be able to save in achieving specific
  financial goal, budgeting is essential.
• Think how to invest extra from income to achieve
  goals save or invest, retirement plan
• After spending, refer to the lifes goal to
  determine whether expenses achieve the goals,
  need feed-back.

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Financial Planning(cont.)

• Managing risk
• Make sure risk is managed with suitable insurance
  policy involve family members
• Effect of tax changes in economic situation
• Study on how tax changes in economic situation
  affects your financial situation income tax
  govt. policy on labour tax

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Time Value of Money

• Making choices among various financial decisions
  needs to consider the time value of money the
  increases in an amount of money as a result of
  interest earned.
• Saving or investing RM1 instead of spending it
  results in a future amount greater than RM1
• An RM1 received today is worth more than an RM1
  received one year from today, as the RM1 received
  today can be saved or invested.

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Time Value of Money (cont.)

• 3 amounts are used to calculate the time value of
  money for savings in the form of interest earned
• Amount of savings (principal) (P in RM)
• Annual interest rate (i)
• Length of time the money is on deposit (T in
  year)
• Interest earned P x i x T
• Eg. RM500 deposited at 6 for 6 months
• Interest earned RM500 x 0.06 x 6/12 RM15

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Time Value of Money (cont.)

• The increased value of money of interest earned
  can be calculated in two ways
• Total amount available later future value
• Current value of an amount desired later
  present value

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Time Value of Money (cont.)

• 1. Future value of a single amount
• Amount to which current savings will increase by
  interest rate time
• RM100 deposited in a 6 account for 1 year
• Future value RM100 (RM100 x 0.06 x 1 year)
  RM 106
• If more than 1 year, eg. 2 years Future value
  calculated as
• future value 1st year interest earned in 2nd
  year
• RM106 (RM106 x 0.06 x 1 year) RM 106
  RM6.36 RM112.36

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Time Value of Money (cont.)

• 1. Future value of a single amount (cont.)
• Future value table simplify the above
  calculations table for future value of single
  amount
• The table provide a factor value for certain
  interest rate time period. Interest rate must
  be constant full year for the deposits for this
  table to be used
• Future value The factor multiply with the
  amount deposited

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Time Value of Money (cont.3)

• Eg. RM500 deposited in 6 account for 6 years
• This is to determine future value of a single
  amount deposited
• From table, the factor is 1.419
• Future value RM500 x 1.419 RM 709.50
• Future Value of Single Amount

Year 5 6 7
5 1.276 1.338 1.403
6 1.340 1.419 1.501
7 1.407 1.504 1.606
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Time Value of Money (cont.)

• 2. Future value of a series of deposit
• Sometimes deposits are made regularly by year
  (annually)
• Series of equal deposits or payment annually is
  called annuity.
• Use table Future Value of Annuity (or series of
  annual deposits)
• Interest rate must be constant full year for
  the deposits for this table to be used

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Time Value of Money (cont.)

• Eg. RM50 deposited in 7 account for 6 years
• This is to determine future value of a series of
  equal deposits with constant interest rate
• From table, the factor is 7.153
• Future value at end of 6 years RM50 x 7.153
  RM 357.65
• Future Value of Annuity

Year 5 6 7
5 5.526 5.637 5.751
6 6.802 6.975 7.153
7 8.142 8.394 8.654
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Time Value of Money (cont. )

• 3. Present value of a single amount (aka
  discounting)
• Current value for a future amount (known) based
  on interest rate time period
• Can determine how much to deposit now to obtained
  desired amount in the future.
• If you want RM1,000 in 5 years time, will
  deposit money in a 5 account, you need to
  deposit
• Refer table Present Value of Single Amount, the
  factor is 0.784
• amount deposited RM1,000 x 0.784 RM 784

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Time Value of Money (cont.)

• 4. Present value of a series of deposit
• To determine how much you will deposit if you
  want to withdraw equal amounts each year
• Current value for a future amount (known) based
  on interest rate time period with condition of
  withdrawing equal amounts annually
• If you want to withdraw RM400 annually in 9 years
  will deposit money in an 8 account, you need
  to deposit
• Refer table Present Value of Annuity (Series of
  Deposits), the factor is 6.247
• amount deposited amount withdraw x factor value
  RM400 x 6.247 RM 2,498.80

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Challenges in the Global market

• Numerous of products and services offered by
  various business
• Medium of products and services offered stores,
  direct-selling, internet
• Various financial products and services offered
  for the same goal eg. savings, investment,
  insurance, credit/loan
• Various types of foods and clothing with
  different quality and range of prices, for
  different activities