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For Internal Use Only / Not for Distribution to the Public
Building your wealth with wise investing
An Investor Education & Awareness Initiative By Franklin Templeton Mutual Fund
For Internal Use Only / Not for Distribution to the Public
• Wise investing refers to a systematic process-and-prudence-driven approach
• It is not about timing the market and feeling the excitement
• Wise investing is about disciplined investing
Wise Investing
For Internal Use Only / Not for Distribution to the Public
• Investible surplus
• Investment objective
• Risk appetite and Risk Tolerance
• Asset Allocation
• Diversification
• Inflation
• Cost of investing
• Tracking & reviewing investments
• Selecting an unbiased advisor
Facets To Be Looked Into For Wise Investing
For Internal Use Only / Not for Distribution to the Public
• It refers to the amount of money which you are left with after having
defrayed all your expenses & liabilities
• It is imperative to take a good look at your finances to elevate your
investible surplus
• Ideally, invest your money first and spend what you have left
Investible Surplus
For Internal Use Only / Not for Distribution to the Public
• Investment objective refers to the purpose for which one is investing
• Setting an investment objective simply means ascertaining why you would like to invest
• Knowing the investment objective also helps in planning for your financial goals
• It helps you choose suitable investment instruments for your portfolio
Investment Objective
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Risk Appetite And Risk Tolerance
• Risk Appetite refers to one’s willingness to take risk
• Risk Tolerance implies ability to actually take risk
which is measured by
• Income
• Expenses
• Financial responsibility you are shouldering
• Nearness to financial goals
• Whether your contingency fund has been built
• Whether you have sufficient insurance coverage
For Internal Use Only / Not for Distribution to the Public
Asset Allocation
Asset allocation essentially refers to investing your hard earned money in different asset classes such as equity, debt, gold and real estate prudently
Allocate your assets based on…
• Risk appetite and risk tolerance;
• Financial goals; and
• Investment horizon
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Diversification
Diversification refers to spreading your investment in different baskets
comprising various asset classes and investment instruments
It is one of the basic tenets of investing
Diversification helps to reduce the risk to your investment portfolio
Diversification needs to be done wisely
• Diversifying across asset classes
• Diversifying across investment avenues
• Diversifying across issuer of securities
• Diversifying across countries
For Internal Use Only / Not for Distribution to the Public
Inflation
Investments should always yield positive inflation-adjusted returns
Calculated as:
Inflation refers to the rising cost of living
Inflation Adjusted Returns = Rate of Return on Investment – Rate of Inflation
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Cost Of Investing
Cost of investing should always be low
Cost of investing refers to expenses associated with investing and holding the investments in your portfolio
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Tracking & Reviewing Investments
The frequency could be once a quarter
Tracking investments refers to monitoring your investments
Reviewing refers to going a step forward and taking an action to make changes to investments held by you
For Internal Use Only / Not for Distribution to the Public
• An unbiased investment advisor can contribute immensely
• Focus on knowing his attitude and rationalisation
• Know his educational qualifications
• Judge his infrastructure and value added services
Selecting An Unbiased Advisor
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• Discipline in investment is vital in wise investing
• Systematic Investment Plans (SIPs) can work for you
• SIPs enforce a disciplined approach towards investing
• Aids in maintaining regularity in investing
Role Of Discipline In Wise Investing
For Internal Use Only / Not for Distribution to the Public
• Light on your wallet as it allows you to invest in small specified
denominations regularly
• Makes market timing irrelevant
• Power of compounding
• Rupee cost averaging
Disciplined Investment Via Sips Offer Following Benefits
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The Longer You Choose The SIP Tenure The Better It Is
Disclaimer: The figures presented here are for illustration purpose only. The rate of return is assumed at 12% p.a.
5-Year SIP10-Year SIP
15-Year SIP20-Year SIP
82,500 231,079
506,123
993,088
Value of Monthly SIP of Rs.1000 in an Equity Scheme over Time Periods
For Internal Use Only / Not for Distribution to the Public
An Early Bird Gets A Bigger Pie
Particulars Vijay Ajay Sanjay
Present age (years) 25 30 35
Retirement age (years) 60 60 60
Investment tenure (years) 35 30 25
Monthly investment (Rs.) 7,000 7,000 7,000
Returns per annum 10% 10% 10%
Sum accumulated (Rs) Rs.2.66 crore Rs.1.58 crore Rs.92.87 lacs
Disclaimer: The names and figures are fictitious and used for example purpose only.
Also, return per annum mentioned above is for illustration purpose only
For Internal Use Only / Not for Distribution to the Public
• Investing without a plan
• Not Diversifying well
• Ignoring related risk
• Getting married to your investments
• Timing the markets
Investment Mistakes You Should Avoid!
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Some key take away points!
17
• Do not rush with investing
• Investing is a serious business
• Have an investment objective in place
• Know your risk appetite and risk tolerance and then invest in suitable investment avenues
• Stick to your asset allocation
• Do not speculate or time markets
For Internal Use Only / Not for Distribution to the Public
Some key take away points!
18
• Never use contingency funds to invest
• Do not rule out inflation factor while investing
• Never invest with borrowed funds
• Know your investment product well
• Select an unbiased advisor
• Diversify
• Track and review your investments
For Internal Use Only / Not for Distribution to the Public
we now invite you to test your learning by taking up this simple quiz
(and win exciting prizes!)
Lets Do A Short Quiz!
19
For Internal Use Only / Not for Distribution to the Public
1) While investing wisely, one should indulge in trading and timing the markets
A. True
B. False
2) Inflation bug should not be ruled out in investment planning
A. True
B. False
3) Which of the following results in rupee-cost averaging?
A. Lump sum investing
B. Systematic Investment Plans
C. Ad-hoc investing
D. All of the above
Quick Quiz
20
For Internal Use Only / Not for Distribution to the Public
4) The cost of investing should preferably be:
A. Low
B. High
C. Medium
D. Does not matter
5) Tracking investments refers to:
A. Reviewing your investments
B. Monitoring investments
C. Review and monitoring investments
D. None of the above
Quick Quiz
21
For Internal Use Only / Not for Distribution to the Public
6) Risk tolerance is done taking into account which of the following:
A. Income
B. Expenses
C. Nearness to financial goals
D. All of the above
Quick Quiz
22
For Internal Use Only / Not for Distribution to the Public
© 2014 Franklin Templeton Investments. All rights reserved.
Thank You For Participating!
23
For Internal Use Only / Not for Distribution to the Public
© 2014 Franklin Templeton Investments. All rights reserved.
Mutual Fund Investments Are Subject
To Market Risks, Read All Scheme
Related Documents Carefully.
24
For Internal Use Only / Not for Distribution to the Public
© 2014 Franklin Templeton Investments. All rights reserved.
FTI PPT 4:3 01/14
Franklin Templeton Asset Management (India) Pvt. Ltd.
Indiabulls Finance Centre, Tower 2,
12th and 13th floor, Senapati Bapat Marg,
Elphinstone (W)
Mumbai 400013
Tel (91-22) 6751 9100
Fax (91-22) 6639 1281
www.franklintempletonindia.com
Caveat (Arial Narrow 10pt.)
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