Vikalpa FinvestVikalpa Finvest

CONTENTS CONTENTS FINANCIAL PLANNING

EQUITY

SIP

Financial Goals

EducationEducation Earning YearsEarning Years

Phase IPhase I Phase IIPhase II Phase IIIPhase III

Age- 22 yrsAge- 22 yrs Age- 60 yrsAge- 60 yrs

MarriageMarriage

Child birthChild birth

Child’s EducationChild’s Education

Child’s MarriageChild’s Marriage

HousingHousing

22 yrs22 yrs 38 yrs38 yrs 10- 20 yrs10- 20 yrs

Post Retirement Years Post Retirement Years

INVESTMENT OPTIONS TO INVESTMENT OPTIONS TO REALISE YOURREALISE YOUR FINANCIAL DREAMS FINANCIAL DREAMS

GOLD

BANK FD’S.

SMALL SAVING SCHEMES

RBI BONDS

CO. DEPOSITS

EQUITY

MUTUAL FUNDS

Why equities in long run ?

108.32

10 9.69 10

12.13

10

18.47

0

2

4

6

8

10

12

14

16

18

20

InflationOther Asst

Bank FD

EquityCo’s DepositGold

Source: RBI Data from 1980 - 2008

THE BIGGER RISKTHE BIGGER RISKLOSS OF LOSS OF PURCHASING POWERPURCHASING POWER

But equities are risky?????

INFLATION YOUR ENEMY!(Assuming Inflation rate 7%)

RS. 10000 TODAY WILL BE WORTH……

• AFTER 5 YEARS RS 6957

• AFTER 10 YEARS RS 4840

• AFTER 20 YEARS RS 2342

• AFTER 30 YEARS RS 1134

EQUITY INVESTMENT??

EQUITY IS ‘EQUAL OWNERSHIP’ OF THE COMPANY

Returns from equities have trailed profit growth rates for very long

Long term returns from Equities = Profit growth rates + Dividends

Over 1871-2008(US MARKET)

real returns from US stocks : 7 % p.a.

real profit growth + real dividends yields : 6.7 %p.a.

What is Equity?

Sensex Growth from 1980 -2008

After all, in the last 28 years, we’ve seen ….

– Two wars

– At least three major financial scandals

– Assassination of 2 prime ministers

– At least 3 recessionary periods

– 10 different governments and

– An unfair share of natural disasters, yet

However had one invested in the Sensex Rs 1 lacs in 1980 it has grown to 170 Lakh equivalent to GDP growth of 17%

EQUITY MARKET-DRIVERS

FUNDAMENTALS

LIQUIDITY

SENTIMENTS

Markets appear promising

Strong GDP growth

Agriculture can provide extra kicker

Services leading to employment opportunities.

Demographics in India’s favour

Infrastructure spending and Capex – Multiplier effect

Global Advantage spreading to other sectors

Strong corporate performance

Valuations relative to growth reasonable.

Flows, domestic and global expected to remain strong.

2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

UK US

France Germany Japan

G6

Italy France Germany

Italy

Germany Japan

Russia

Brazil

India

China

BRICs

Italy

France

*cars indicate when BRICs US$GDP exceeds US$GDP in the G6

GS BRICs Model Projections.

Germany

When will India overtake the g6?

Source:Goldman Sachs BRIC’s* Model Projections*Brazil, Russia, India, China

WHY MUTUAL FUND ?

Definition of Mutual Fund

A mutual fund is a collective investment that allows many investors, with a common objective, to pool individual investments and give to a professional manager who in turn would invest this money in line with the common objective.

Why Mutual Fund?

Experience of managing funds across market cycles

Impeccable track record

Suitable for investors who value consistency in the long-term over short-term rewards

Benefits of Mutual Funds

Liquidity

Prof. Mgt.

Risk Diversification

Flexibility

Transparency

Regulated

Tax BenefitsPlus

CAN WE USE MUTUAL FUND FOR SAVING TAX?

THE SECRET OF BECOMING WEALTHY

“You don’t have to be wealthy to be an investor. . .

But…

You have to be an investor to be wealthy.”

What does the investor want?

Steady Returns

What do I do when interest

rates are volatile?

I don’t want too

much risk !!

What do I do when stock

markets volatile?

EQUITIES THROUGH EQUITIES THROUGH SIP OF MUTUAL SIP OF MUTUAL FUNDSFUNDS

BUILDING WEALTH DROP BY DROP

What is SIP?

We call it Disciplined Regular Investment

The Markets are volatile: they move up and down in an unpredictable manner

Invest a fixed amount, at regular, predetermined intervals and use the market fluctuations to your benefit

How does it help you:

• Light on pocket.

• Over time the market fluctuations are averaged

• RUPEE COST AVERAGING

• This leads to HIGHER RETURNS

•HELP IN ACHIEVING FINANCIAL GOALS!

How Do I Build Wealth?

There is simple and straight forward way

•Start investing early.

•Put time on your side.

•Invest regularly.

•Don’t worry about market timing.

BUT……….IT’S BORRING!

The alternative is to….

–Follow market very closely.

–Time your entry and exit very well.

–Select your stocks judiciously.

–And hope that you get it right more often than not!

THE CHOICE IS YOURS ………………..

Wealth Creation Principle is nothing

but “Enhancement Of future

Value”.

FV = PV (1 + r)n

To Create Wealth – Enhance Future Value?

The more you The more you save, makes save, makes a differencea difference

The The sooner sooner

you start, you start, makes a makes a

differencedifference

PV nr

The more The more you earn, you earn, makes a makes a differencdifferenc

ee

Power of Compounding

Einstein refers to the “Power of Compounding” as the “Eight wonder of the world”.

0

700

1400

2100

2800

3500

0 5 10 15 20 25

15%

10%

8%

Difference is quiet significant in long run.

Growth of Rs. 100

Equity Best Bet of Investments in Long Run

Delays affect wealth creation

Rs. 1000 invested p.m. @ 10% p.a. till the age of 60 yrs

The Power of Starting Early

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

25 30 35 40 45 50

If you start investing when you are (years)

We

alt

h o

n R

eti

rem

en

t

Gains from Investment

Investment

Just 5 years of delay reduces the

wealth by half!

AMT INVESTED RS.12,40,00O (12.4 Lakh)

RETURNS (COMPOUNDED ANNUALISED) 46.03%

WEALTH BUILD RS. 1,57,95,387 (1.57 Cr)

VALUE AS ON 31st Oct 06

Power of Compounding – QUIZ

Rs. 10,000 invested every month for a period of 30 years(TOTAL INVESTMENT WILL BE 36 LAKH)

At 8% -

At 15% -

At 20% -

1.5 crores

7.0 crores

23 crores

Postal Recurring

SIP in Equity Funds

SIP in Equity Funds

Conclusion – Strike the GOLDMINE Conclusion – Strike the GOLDMINE

START YOUR SIP

Investment Objective:

“The primary objective of the scheme will be to provide capital appreciation to its unit holders through judicious deployment of the corpus of the Scheme in sectors categorized under “basic industry” in the normal parlance and in context of the Indian economy, including but not limited to, energy, petrochemicals, oil & gas, power generation & distribution and electrical equipment suppliers, metals and building material.”

GROW WITH INDIA INVEST IN

MUTUAL FUNDS.

CONTACT

“Failing to Plan is Planning to Fail” Robin Sharma, Monk who sold his Ferrari

Thank You !!