"The Changing Role of Private Investors in the Capital Markets"
ROLE of SIP for First Time Investors
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Transcript of ROLE of SIP for First Time Investors
A STUDY ON THE ROLE OF SIP AS AN IDEAL TOOL FOR FIRST TIME INVESTORS
BOTSA HARI PRASADPGDM151701135F2
Under Guidance of Mr. A.N.A SRINIVAS(Company Guide)
&Prof. VIJAYNTHA PAWASE(Faculty Guide)
INVESTMENT AVENUES
Real
Estates
Mutu
al Fu
nds
Equity Bonds
Bank Deposits
Life
Insurance
RISK RETURN MATRIX
CONCEPT OF MUTUAL FUNDINVETORS POOL THEIR MONEY
FUND MANAGER INVESTS THEY
MONEY IN SECURTIES
INCOME DIVIDEND GENERATED
INCOME IS DISTRIBUTED
AMONG SHARE HOLDERS
THREE COMMON REASONS FOR NOT INVESTING
• I don’t have enough money to invest
• I’m too busy making money to worry about managing it.
• I don’t have the time or expertise to follow market movements and make investments at the right time
SYSTEMATIC INVESTMENT PLAN is the only answer to all reasons.
INVESTMENT MADE EASY – SIP
SIP is an investment program that allows you to contribute a fixed amount (as low as Rs.1000 )in mutual funds at regular
intervals.
BENEFITS OF SIPInculcates the discipline to save and invest regularly
Negates the risk associated with market timings
Power of compounding
Rupee cost averaging
BENEFITS OF INVESTING SYSTEMATICALLY: POWER OF COMPOUNDING
• SIP is an effective means to beat market volatility and benefits from the enormous power of compounding over time.
Systematic Investment Plan Returns
Investment scenario A
Investment scenario B
Investment scenario c
Number of years
5 years 10 years 15 years
Monthly investment
Rs. 5000 Rs. 5000 Rs.5000
Total investment
Rs. 300000 Rs. 600000 Rs. 900000
Assumed annualized return
18% 18% 18%
Final corpus Rs. 4.93 Lac Rs. 16.86 Lac Rs. 46.01 Lac
BENEFITS OF INVESTING SYSTEMATICALLY: RUPEE COST AVERAGING
SIP-RUPEE COST AVERAGINGSIP INVESTORS LUMPSUM INVESTORS
MONTH UNIT PRICE INVESTMENT UNITS PURCHASED
INVESTMENT UNIT PURCHASED
1 50 1000 20 9000 1802 47 1000 213 45 1000 224 44 1000 235 46 1000 226 48 1000 217 49 1000 208 50 1000 209 52 1000 19Total investment 9000 9000Total units purchased 188 180Average unit price 48 50
IMPORTANCE OF STARTING EARLY
The three golden rules for all investors
Invest early
Invest regularly
Invest for long term
Particulars Scenario A Scenario BStart Age 25 years 40 yearsMonthly Investment
Rs.10000 Rs.10000
Stop Age 60 years 60 yearsTotal Investment Rs.42lacs Rs.24lacsSavings to grow to Rs.6.5cr Rs.99.9lacs
INVEST REGULARLY
HOW TO MAKE SIP WORK FOR YOU?• Set your financial goals
• Identify the scheme
• Decide the SIP amount
• Look for a long term
commitment
• Aim for the big picture
• Start investing
ICICI PRUDENTIAL VALUE DISCOVERY FUND Long term wealth creation solution A diversified equity fund that aims to generate
returns by investing in stocks with attractive valuations.
Investment approach Value based approach Bottom-up approach with flexi cap exposure
Period Returns (%)
1 year 12.4
2 year 11.1
3 year 19.9
5 year 16.2
ICICI PRUDENTIAL BALANCED FUND
Long term wealth creation solution An equity fund that aims for growth by investing in
equity and derivatives
Investment approach Uses in-house Price to Book Value Model Uses derivative instruments for hedging or portfolio
rebalancing Invests in Large Cap and Midcap Stocks
Period Returns (%)
1 year 12.4
2 year 11.1
3 year 19.9
5 year 16.2
COMPARISON OF ICICI MUTUAL FUNDS WITH OTHERS
As on 30th June, 2016Scheme NAV 1 Yr 3 Yrs 5 YrsAggressive funds
ICICI Prudential Balanced
97.25 6.69% 20.77% 15.40%
Birla sun life equity fund
313.24 6.25% 28.31% 15.08%
Kotak select focus fund 24.38 6.61% 24.41% 15.82%
Conservative fundsICICI Prudential Value Discovery Fund
119.87 5.48% 32.66% 19.74%
SBI Magnum Multi Cap Fund
35.46 10.10% 26.17% 15.33%
HDFC Capital Builder Fund
208.45 4.79% 22.44% 13.25%
*Mutual funds investments are subject to market risks, read all scheme related documents carefully.