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Aagam Holdings Private Limited
Financial Learnings For Salaried Employees
By Manoj Doshi
Cell: +91 94297 87872E-mail: [email protected]
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
9
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...
