Financial learning for salaried employees

Aagam Holdings Private Limited

Financial Learnings For Salaried Employees

By Manoj Doshi

Cell: +91 94297 87872E-mail: doshi.manoj@gmail.com

Learning Areas

1) Understanding Liquid Funds

2) Alternative to Bank Fixed Deposits

3) Need for Investment in Equity

4) Power of Compounding in Investment

5) Early Start of Investing

6) Insurance is not a Saving and Investment Tool –

Concept of Term Plan

Alternatives to Bank Fixed Deposits

Fixed Deposits with Housing Finance Companies of Bank

(Ex. Always HDFC Limited Provides 0.5% higher Rate than HDFC Bank)

Fixed Maturity Policy offered by Various Mutual Funds for Three Years or More due to Tax Advantage

Need for Equity…. to counter InflationInvestment Options & Returns

Need for Equity…. to counter InflationInvestment Options & Returns

ICICI

Year 1 Year 20

BANK FIXED DEPOSITS

EQUITY MUTUAL FUND

Year 1 Year 20

GOLD

Year 1 Year 20

Year 1 Year 20

Rs.21,911/- After Inflation

Rs.67,275/- Before Inflation

Rs.26,533/- After Inflation

Rs.1,63,665/- Before Inflation

Rs.38,697/- After Inflation

Rs.6,415/ - Before Inflation

Rs.3,585/ - After Inflation

Rs.56,044/- Before Inflation

Rs.10,000

Rs.10,000

Rs.10,000

Rs.10,000

Investment Options For Long Term

Cash

Fixed Deposit/PPF/Post/Recurring

Gold

Real Estate

Equity - Equity Mutual Fund

Why Equity Mutual Fund?

Potential to earn relatively high returns 

High liquidity 

Investors can start with amounts as less as Rs. 1000

Money is handled by professional fund managers

Risk Diversification – Invest in 30-40 stocks from various

sectors

Efficient post-tax returns as Long term capital gains (over 1

year) are tax exempt 

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Common reasons for not investing in Equity

I don’t have enough money to invest

I don’t have time as Principal Sir makes me too busy

I feel Equity Investment is as good as Gambling

I don’t have the expertise to follow the market

movements and make investments at the right time.

SYSTEMATIC INVESTMENT PLAN is the only answer to all reasons.

What is SIP ?

SIP is a Fixed investment at fixed intervals for a long time.

SIP can be compared to a Recurring Deposit type of

investment.

SIP reduces cost of holding by– You buy more & more when the market is down– You buy less when the market is up– Over time the market fluctuations are averaged– This leads to HIGHER RETURNS

Fights Two main Enemies of Equity Investment – Greed &

Fear For long-term wealth creation through equity market you

need discipline and long term time horizon which are inherent features of SIP

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Condition for SIP Investment Look for a long term commitment

Never Stop Investing when market is down

SIPs generate returns over a long period of time;

they do not give results immediately. One has to

be patient while investing in SIPs and be prepared

to give it some time to fructify.

Why...? (Need for Savings)

Emergency (Medical, Layoff, Unnatural Death)

Other – To Finance Large Expense

(House, Marriage etc..)

– Comfortable life at retirement

– To Enhance Lifestyle...etc.

Where..? Solutions to Need

For Emergency:

Six Months Salary into Liquid Funds

For Medical- Easy Liquidity Available till money

received from Mediclaim

In Lay off -routine financial need to be taken care of

till sufficient time

Term Plan from Income of Above (If required)

Child Marriage

CarChild Education

Dream House

Retirement

For Other: Investments for Long Terms with Maximum Saving

Power of Compounding

Rs. 1000/- per month SIP (Rs. In Lacs)

Age at Start

25 30 35 40 45 50

Investment upto Age

of 60 4.20

3.60 3.00 2.40

1.80

1.20

10% 37.96 22.60 13.26 7.59 4.14 2.05

12% 64.31 34.95 18.79 9.89 5.00 2.30

15% 146.77 69.23 32.44 14.97 6.69 2.75

Start Investment at Early Age

Ex-1 Ex-2 Ex-3

Saving Start Age 25 30 40

Per Month SIP 5000 5000 15000

Saving till age of 60 35 Years 30 Years 20 Years

Total Instalment 420 360 240

Total Amt. Saved 21,00,000 18,00,000 36,00,000

Maturity Amount 7,33,85,000 3,46,16,000 2,24,58,000

Assumptions : Return assumed @ 15% CAGR

Start Saving Early

The longer you save, the more you make

Save in the Right Asset ClassThis will dictate how much wealth you create …

Save Regularly

Remember a little every month, month on month, goes a long way

Questions...?

Thank You...