Embed Size (px)
Citation preview
Back to basic……
Plan Today… For Better Tomorrow
My dad had one pair of shoes and used it
for five years. I have five pair of shoes and
use it for one year.
In today’s wired world people connect less
emotionally more electronically.
High stress level.
Life is not easy…..
People change the basic principal
EARN – SAVE = SPEND
and now……
Life is not easy …
EARN – SPEND - EMI = ???
Life is not easy …
Don’t confuse with
“Spending for Life”
Or
“Life for Spending”
Why do we save? • It is important to save from our earnings in order to accomplish
our financial goals.
• Car • Home• Foreign vacation• Children education • Children ‘s Marriage • Retirement corpus • Contingencies
Why Planning
Financial Planning provides you with a blueprint which
helps you realize all your dreams in life in a very
systematic and planned manner without causing you any
sleepless nights.
What comes First ?
Why Protection First ?
• Protection – Non Material and Material Wealth
Non-material wealth consists of you and your near and dear ones.
There could be instances of job loss, migration, illness, disability,
accidents, and death. We need to have a strategy to deal with
these eventualities.
Protecting material wealth is also important. This consists of a
house, an office, a shop, other real estate, a car or other vehicles
of transport, Jewellary etc.
How much cover is enough ?
What are Different types of Cover ?• Life Insurance
• Term Plan• Endowment Plan• ULIP Plans
• Health Insurance
• Mediclaim• Critical Illness Benefit• Permanent Disease
Early you start, less you pay.
INVESTMENT PLANNING
WEALTH ACCUMULATION
• One of the biggest hurdles in wealth accumulation is borrowing.
Further taking a loan on one hand and making an investment on
the other hand is like pouring water into a bottom less jar.
• Therefore, the first step in wealth accumulation is to control
debt.
• After paying off debts the focus then shifts on investments,
based on the financial goals.
Where to Invest First ?
• Mutual Funds SIP
• Real Estate
• Bank Fixed Deposit
• Direct Equity
• Gold
• Govt. Schemes
Confused …
Million Dollar Question
Person
• Amitabh Bacchan
• Lata Mangeshkar
• Sachin Tendulkar
• Saniya Nehwal
Profession
• Cricket
• Badminton
• Actor
• Singer
INVESTMENT PLANNING
Investment Avenues Equity
• Direct Equity• Equity Mutual funds Debt• Debt Mutual Fund• Fixed Deposits• Recurring Deposit• Bonds Alternate• Gold• Property
Asset Classes
23
1.Domestic Bank FD rates for less than 1 crs with SBI for 10 yrs 2. S&P BSE Sensex index data as on 16 May 2014 3. 5 years CAGR returns of Value Research Bond Index as on
16 May 2014 4.Mutual Fund Returns of Large cap (Value research categorization ) category CAGR 10 yrs as on 16 May 2014. 5. Report by global real estate consultancy firm Jones
Lang LaSalle (JLL) 6.Gold returns based on $ value of AM fixation by LMBA, 10 yrs CAGR as on 12 May 2014.
The returns mentioned are of various instruments having different characteristics and risk in 10 years category. Investors should consult their financial
advisors before taking any decision of investment. Past Performance may or may not sustain in future.
Returns (CAGR%)
Asset Returns (as on - 31 Dec 2013)
1 Year 5 years 10 years 15 years
Gold -3.9% 16.8% 15.4% 13.10%
10 Yr treasuries - 4.7% 2.8% 4.9% 7.8%
Bank F D 8.5% 8.3% 7.3% 7.6%
Property assets 7.1% 5.4% 16.0% 11.4%
Equities 10.8% 18.6% 15.3% 15.3%
CAGR in WPI Index
7.0% 7.9% 6.6% 5.9%
Avg inflation 6.3% 7.1% 6.6% 5.9%
Asset Class - Gold
• Gold is wealth preserving asset not a wealth-
accumulating asset. We buy and hold gold
bullion to preserve wealth.
• Gold is not a bad investment, and gold is not
a good investment. Gold is not a investment
at all, Gold is alternate currency.
• Traditional means of storing wealth in India
Asset Class – Gold Monetization Scheme
• Good investment option for Gold Investor
and a perfect alternate of Gold ETF.
• Earn 1% guaranteed return TAX FREE.
• Option to take maturity in any form –
Physical Gold or Value.
• Will not ask for Source of Funds
Asset Class - Real Estate • Sense of security
• High returns
• Legal & Title Issue
• Illiquid
• Rental (sometimes) yield is low - 2% - 3%
• Small amounts cannot be invested
• Return diminishes with estate taken on loan
• Ancillary transactional costs range from 10–13 %
Asset Class – Debt
• Fixed Deposits, Bonds, Debentures etc.
• Debt Mutual Fund
• Fixed Returns, Secured feeling
• Net of Tax Returns 6-7%
• Never creates wealth in longer run
• Good for Capital Preservation and not for Wealth Creation
Govt. Schemes and Returns
For all Bank Account Holders aged between 18 and 40 years
Monthly pension will be based on the contribution, when one joins at the age of 18 by contributors.
One can avail life long pension of
Rs. 42 to Rs. 210 per month
Rs. 1,000 to Rs. 5000 from the age of 60 years
Atal Pension Yojna-Advantages
Subscribers of APY will get monthly pension at the age of 60 years. If someone joins at the age of 18 years and contributes Rs.42 till he reaches 60 years, then monthly pension received would be Rs. 1,000.
Pension amount will range from Rs.1,000 – Rs. 5,000.
Auto-debit facility will also be provided. With this monthly contribution would be automatically debited from the subscriber’s account.
In case of death of the pensioner (father), the monthly pension would continue to be paid to the wife. And to the child (if both father and mother die).
Asset class - Equity
• To earn higher returns - Slowly
• Tax efficient
• Only asset class that can beat inflation in long term
• Wealth creator
• Principal not protected or guaranteed
• Volatile in nature
• Investors loose money only due to two reasons – Greed & Fear
Importance of Equity allocation- A HEDGE AGAINST INFLATION
Source: Bloomberg; Returns are CAGR. Past Performance may or may not sustain in future
10 year returns of various asset shows that equity, in the long term, has outperformed other assets.
37
CAGR % returns (as on 18th Oct 13)
35 year - 16.28 % CAGR
Apr 14
CAGR % returns (as on 21th May 14)
Equity Investment through Mutual Fund
• Professional Management• Diversification• Return Potential• Low cost • Liquidity• Transparency • Tax efficient• Flexibility
Systematic Investment Plan (SIP)
SIP is investment of a fixed sum at periodic intervals for a particular period .
Advantages of SIP
• Eliminating the need of timing the markets
• Rupee cost averaging
• Benefits of power of compounding
• Inculcates disciplined habit of saving
Need of SIP
• To maintain discipline investments.
• To facilitate planning for accumulation of a corpus.
39
Monthly transfers
Monthly/Quarterly/weekly transfers
A SIP of Rs. 5,000 invested per month @8% expected return till the age of 60.
The Advantage of starting early. And investing regularly
Assuming returns of 12% p.a. for illustration purpose only
Essentials of Financial planning
• Don’t keep any funds idle
• Plan for goals and start saving towards your goal.
• If you are not working for your goals you are working for some one else goals
• Look for tax efficiency while investing
• Don’t collect wrong assets
• As you eat regularly, work regularly, so you need to invest regularly also.
• Review your investment plans at least annually to keep in sync with your changing needs & incomes.
While Investing
Focus on goals and not on market
Focus on Time in and not Timing
Don’t blame your wealth level to destiny if you do not nurture , it will not grow.
Equity market is place to earn higher returns- Slowly
Ensure your lifestyle should not your biggest liability.
Basic is beautiful.
Saving and splurging gives you same pleasure only the order changes.
Donate generously
Just for you….
“Investment is a boring activity . It
is better to get bored and be
wealthy than to get excited and
end poorly. “
Your opinion ?
