TAILIEUCHUNG - Lecture Personal financial planning – Chapter 1: Introduction to personal financial planning

The chapter introduces personal financial planning (PFP) and its process for your preliminary examination. This chapter’s objectives are to: Understand what personal financial planning (PFP) is and how it works, place goals at the head of the PFP process, develop familiarity with PFP’s financial and personal frameworks. | Chapter 1 Introduction to Personal Financial Planning Chapter Goals Understand what personal financial planning (PFP) is and how it works. Place goals at the head of the PFP process. Develop familiarity with PFP’s financial and personal frameworks. Understand the specific role of financial planning and the financial plan as comprehensive integrated processes. Why Is Financial Planning Important? Many financial alternatives are available. Extensive information is available to help decide which alternative to choose. Wise decisions enable the achievement of financial goals. Financial planning assists in making wise decisions. The History of Personal Financial Planning Before the 1970s, PFP services were generally provided to only the very wealthy. Services began expanding to a larger population, due to: A middle class with increased discretionary income. The growing complexity of financial instruments and services. The development of PFP professionals. Increased media awareness of PFP. Characteristics of Finance Finance is concerned with the following variables: Markets 5. Fair value Capital 6. Cash flow Market structure 7. Risk Market value 8. Investments Let’s define each of these terms: Characteristics of Finance, cont. Markets: Places where tangible goods and financial instruments are bought and sold. Capital: Real, financial and human related assets that are generated by individuals and organizations or bought and sold in the marketplace. Market structures: The economic operations of the business, the government, and the household that facilitate the purchase and sale of items. Market Value: The market-established worth of a product or a financial instrument. Characteristics of Finance, cont. Fair Value: The inherent worth of nonmarketable assets based on cash flow, risk, and the time value of money principles. Cash Flow: The economic operation of the organization based on the cash it generates. Risk: The uncertainty of outcomes. Investments:

• Tài chính doanh nghiệp
• Personal financial planning
• Personal financial
• Lecture Personal financial planning
• Financial planning
• Characteristics of finance
• Finance tools
• Behavioral financial planning
• Behavioral life cycle theory
• Cash flow planning
• Flow planning
• Special circumstances planning
• Divorce planning
• Planning process
• Behavioral finance
• Retirement planning
• Retirement assets
• Educational planning
• Establish educational goal
• Tax planning
• Income taxation
• Estate planning
• Identify assets
• Financial statements analysis
• Financial statements
• Financial investments
• Expected rate of return
• Financial leverage
• Interest rates
• Time value of money
• Present value