www.khabeer.com.pk

Islamic Financial PlanningJune 2013

Presentation on:

Second Islamic Finance Expo & Conference 2013

Contents What is Islamic Financial Planning Riba-free investment products in Pakistan Who are you? Earners considerations Earners financial planning process Retiree considerations Retiree financial planning process High Net Worth considerations Corporates, endowments & funds

Slide # 2 June 2013

What is Islamic Financial Planning?

Planning your savings and investments

to achieve your financial goals

using riba-free financial products

of the appropriate risk.

Slide # 3 June 2013

Riba-free Investment Products Islamic banks and Islamic windows of :

Saving accounts (~6%)

Deposit / investment accounts of various tenures (6-9.5%)

Riba-free mutual funds:

Fixed Income – Government and Bank (~7.5%)

Fixed Income – Moderate Risk (~7.6%)

Fixed Income – Corporate Risk (~10% - somewhat variable)

Asset Allocation / Balanced (~20% over past 3 years - very variable)

Equity (~30% over past 3 years – very variable)

Voluntary pension schemesSlide # 4 June 2013

Riba-free Investment Products (Continued)

Takaful (Islamic Insurance):

Whole life policy (risk protection + investment)

Term life policy

Accidental death & disability

Hospitalization and health policy

Car policy

House content and house policy

Real Estate

Commodities & other complex productsSlide # 5 June 2013

Who are you? An Earner

Building up equity through savings

Early, middle and late stage earners

A Retiree

Have retired and want to earn an income on your savings

A High Net-Worth Individual

Substantial wealth - may want to earn income for

financial independence or provide for future generations

Slide # 6 June 2013

Earner Considerations

Slide # 7 June 2013

Income going to:

Consumption

Non-financial investment

Savings to achieve financial goals

Risk consideration in investments:

Time horizon of goal

Inflation vs risk

Risk tolerance

Earner Financial Planning Process

Slide # 8 June 2013

Eliminate debt – especially high cost debt

Protection against emergencies

Save for an emergency fund – very low risk investments

Appropriate takaful plans

Short term goals

Time horizon of up to 3 years

Save for car, umrah, house renovation, etc.

Safe investments such as 1 year bank deposits and riba-free

income mutual funds

Earner Financial Planning Process (Continued)

Slide # 9 June 2013

Long term goals

Time horizon of 4 to 30+ years

Save for house purchase, retirement, capital for own

business, etc.

Inflation is a greater risk than financial volatility

Risky, long horizon investments

Equity and real estate are the only investments in Pakistan

that protect against inflation over the long run

Retiree Considerations At least a basic income

Based on your lifestyle

Income growing with inflation Although current inflation is around 8% it has touched 20% in the

past

Income for life Income should last at least till the life of the retiree and spouse

Risk appetite How much risk the retiree is comfortable bearing

Slide # 10 June 2013

Retiree Financial Planning Process Prepare for Retirement

Start saving early for retirement

Ensure that all debts are paid-off by retirement date

If possible, have your own dwelling – optimize house size for retirement

Gradual changes in lifestyle so that it is compatible with your expected

income

Look around for income opportunities during retirement to live an active life

The 70:30 investment plan Invest 70% in low risk plans and funds with a view to consume them during

the next 15 years – best would be a 80% riba-free income and 20% equity

mutual fund plan

Invest the remaining in equity heavy plans or equity fundsSlide # 11 June 2013

High Net-Worth Considerations

Slide # 12 June 2013

Income for financial independence A separate trust of income vehicle that would give enough income

indefinitely to maintain your lifestyle

Financial Independence for Future Generation Set-aside of enough money so that your children, grand-children

and future generations

Separate investment accounts for each family member

Trust funds with indefinite life

Corporates, Endowments & Funds

Slide # 13 June 2013

Corporations / businesses Invest surplus funds in low risk riba free products (bank deposits & mutual

funds) for extra income

Endowments / NGOs Funds for current and near-term spending in low risk riba-free products

(bank deposits & mutual funds).

Long-term and permanent funds in inflation protected investments such as

equities & real estate

Provident / Retirement Funds Balanced asset allocation with equities between 10%-30% based on age

profile of members. Some equity needed to combat inflation. Remaining

in riba-free income products.

THANK YOU FOR YOUR ATTENTIONPLEASE VISIT WWW.KHABEER.COM.PK TO LEARN MORE ABOUT RIBA-FREE INVESTMENTS

We at Khabeer Financial Services pray to Allah the Al-Khabeer (the all-knowing, the expert) that

we are able to provide wise advice and correct information that acts to the benefit to our clients

and that we are able to improve and extend the Shariah Compliant financial industry in Pakistan.

Slide # 14 June 2013