SMALL SAVINGS HIGH RETURNS FROM SHORT TERM INVESTMENT

Faculty Name : Mr. Vishwanathan

PRESENTER’s NAME PRESENTER’s ID

Bhavana Battu E130031000126

Karthik Goud E130031000148

Raj Sekhar E130031000127

Silambarasan Elango E130031000132

Which is the best product you will advise your savings bank customer, who is saving Rs.5000/month in her savings a/c. She wants to go for International Trip on Jan 2015. Suggest Best products based on today’s economic scenario that gives good returns.

Suggest Investment plan suitable for Mrs. Sridevi

Scenario :-

Mrs. SriDevi can save Rs.5000/month.

She dreamt to have an International Trip on Jan 2015. Suggest best Investment plans , which will give good returns on Jan 2015, And make her “Dream Come True”.

AGENDA:-1. Factors to be considered

2. Available Options

3. Recurring Deposits

4. Power of Compounding

5. Mutual Funds

6. Debt Market Instruments

7. Systematic Investment Plan (SIP)

8. Power of Diversification

9. Best of Best in SIP

10. Conclusion

IMPORTANT FACTORS :-

Periodic Investment.

Type of Customer.

Customer’s opinion on market.

Current progress in Market.

Options Considering the factors :- Short Term, Periodic Investment. We have below appropriate options .

Recurring Deposit.

Mutual Funds.• Debt Instruments.• Systematic Investment Plan.

Recurring Deposits

- Facilitates the Customers with an opportunity to Build up their Savings through ”Regular Monthly Deposits” of Fixed Sum over a Fixed period of Time.

Latest news on Interest Rate:-

Lakshmi Vilas Bank has revised interest rates on some domestic term deposits. for deposits of maturity one year, the interest rate has been revised to 10% from 9.5% earlier.

RBI hikes repo rate to 7.5%....

The Reserve Bank of India raised repo rate or the rate at which it lends to banks by 25 basis points to anchor inflation and inflationary expectations. The repo rate is increased to 7.5% from 7.25% with immediate effect.

Power of Compounding

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

With

draw0

10000

20000

30000

40000

50000

60000

70000

80000

90000

Accumulated Amount

Accumulated Amount

Mutual Fund

Mutual fund is a mechanism for pooling the resources by issuing Units to the investors and investing funds in Securities .

Mutual fund issues units to the investors ( Unit Holders ) in accordance with quantum of money invested by them.

The Profits or Losses are shared by the Investors in proportion to their investments.

source: www.sebi.gov.in

Available Options :

• Debt Instruments ( Bonds & Equity Shares)

• Systematic Investment Plan ( SIP )

Debt instruments:

BONDS

In simple terms, organizations borrow funds by issuing debt securities named bonds, having a Fixed maturity period (more than one year) and pay a specified rate of interest (coupon rate) on the principal amount to the holders.

EQUITY

Equity is the ownership interest of investors in a business firm. Investors can own equity shares in a firm in the form of common stock or preferred stock. Equity ownership in the firm means that the original business owner no longer owns 100% of the firm but shares ownership with others.

Systematic Investment Plan

A way of investing regularly in Mutual Fund Schemes. Units are allotted at the Net Asset Value existing on the day of investment.

Net Asset Value ( NAV )

NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 20 each to the investors, then the NAV per unit of the fund is Rs.20.

Who Excels now ?Franklin India Bluechip FundAxis Equity FundReliance Top 200 FundBirla Sun Life Frontline Equity Fund

CRISIL (Credit Rating Information Services of India Limited ):-

- a global analytical company providing ratings, research, and risk and policy advisory services.

- evaluates the credit worthiness of a debtor, especially a business (company) or a government. The evaluation is made by a credit rating agency of the debtor's ability to pay back the debt and the likelihood of default.

Blue Chip Funds: Stock of a large, well-established and financially sound company that has operated for many years.

A blue-chip stock typically has a market capitalization in the billions, and is generally the market leader or among the top three companies in its sector.

Few of the Top Holding Companies:-

Infosys Ltd. Bharti Airtel Ltd. ICICI Bank Ltd. Reliance Industries Ltd.

Franklin India Bluechip Fund PerformanceLast 6 Months:

This Month:

Franklin India Bluechip Fund Performance

Investment Date Amount (Rs) Purchase Price ( NAV )

Units Purchased

01-10-2013 5000 32.07 155.9089

01-11-2013 5000 32.01 156.2012

01-12-2013 5000 31.98 156.3477

01-01-2014 5000 32.87 152.1144

01-02-2014 5000 32.55 153.6098

01-03-2014 5000 33.45 149.4768

01-04-2014 5000 33.89 147.5361

01-05-2014 5000 34.18 146.2844

01-06-2014 5000 35.27 141.7635

01-07-2014 5000 35.9 139.2758

01-08-2014 5000 36.23 138.0072

01-09-2014 5000 35.76 139.821

01-10-2014 5000 36.9 135.5014

01-11-2014 5000 37.29 134.0842

01-12-2014 5000 37.65 132.8021

Total Units Purchased 2178.735

Withdrawing on 30-12-2014

Each Unit costs 37.59

Actual Amount deposited 75000Return 81898.63Return percent 109.2

Net Return Percent 9.2

Axis Equity Fund

Last 6 Months:

This Month:

Axis Equity Fund

Investent Date Amount (Rs) Purchase Price ( NAV ) Units Purchased

01-10-2013 5000 10.07 496.5243297

01-11-2013 5000 10.01 499.5004995

01-12-2013 5000 10.98 455.3734062

01-01-2014 5000 11.87 421.2299916

01-02-2014 5000 10.55 473.9336493

01-03-2014 5000 10.45 478.4688995

01-04-2014 5000 12.89 387.897595

01-05-2014 5000 12.18 410.5090312

01-06-2014 5000 12.27 407.4979625

01-07-2014 5000 13.9 359.7122302

01-08-2014 5000 12.23 408.8307441

01-09-2014 5000 12.76 391.8495298

01-10-2014 5000 11.9 420.1680672

01-11-2014 5000 12.29 406.8348251

01-12-2014 5000 12.65 395.256917

Total Units Purchased 6413.587678

Withdrawing on 30-12-2014

Each Unit costs 12.49

Actual Amount deposited 75000

Return 80105.71

Return percent 106.8

Net Return Percent 6.8

Advantages of Diversification

If we Diversify the investment amount between Franklin India bluechip Fund and Axis Equity Fund. And if few portion with Recurring deposits also. Chances of Neutralising the risk will be a Great Plus.

Recommended to Split the Investment amount. And Invest in 2 or 3 facilities. In case of “ Bad performance “ by one of the Fund, other will help you out.

Conclusion:Low Risk: Recurring Deposit Medium Risk: Systematic Investment Plan

High Risk: Bonds & Shares

Referencessebi.gov.in

rbi.org.in

economictimes.indiatimes.com

moneycontrol.com

crisil.com

frankintempletonindia.com

wikipedia.com

Queries ?

Thank You !!!