Professional Documents
Culture Documents
Diversified , professionally managed portfolio of securities Your investments is pooled along with others investments Benefits derived as those of an institutional investor Risk diversification investing in a pool of funds comprising of 50-60 stocks from various sectors Tax benefits
Why Invest ?
Childrens education / marriage Medical Emergency Retirement Aspirational goals House , Foreign Holiday Other Obligations
Considering inflation @ 5 %
While the value of your savings erodes over time , thanks to inflation
INVESTORS NEED TO SAVE REGULARLY INTO ASSETS THAT CAN BEAT INFLATION TO MEET THEIR FINANCIAL GOALS.
Equity C
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2006
Say , an investor invests INR 10,000 in equities for 10 consecutive years at the lowest levels of the market every year .
Year 1996
1997
1998 1999
3,361
3,893 3,740
2000
2001 2002
5,001
3,604 3,469
2003
2004 2005
3,049
5,591 6,493
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2006
11,280
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MORAL
Market timing doesnt help !!! .. It is the time in the markets that matters
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Lets take an example Anil is a businessman. He is married to Tina who is a housewife. He has a son and daughter , both are in school. Over next couple of years, he desires to follow a savings plan to build wealth for his childrens education/marriage and buy a bigger house. In order to hedge against uncertainties of business , he has been regularly investing in fixed income instruments.
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The lower interest rates over the years have been worrying him. He decides to take the help of Sreeni , financial advisor. After carefully evaluating his financial goals and time required to achieve his financial goals , he advises him to invest in equity mutual funds for following reasons Portfolio diversification Superior returns ( refer slide on cumulative annualized returns for different asset classes for details )
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However, Anil is not comfortable investing into equity mutual funds as they are volatile and therefore risky and avoidable. Sreeni advises Mahesh to register for Systematic Investment Plan (SIP) and make use of volatility in the market rather than get worried and avoid investing in equity mutual funds. Anil is not clear as to how SIP will work to his advantage and requests for more details Sreeni explains as follows :
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Rahul & Viru are two friends. Rahul decides to invest using SIP whereas Viru decides to make lump sum investment.
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The Goal of most investors is to buy when the prices are low, and sell when the prices are high. Sounds simple, but trying to time the market like this is : Time Consuming Risky And almost Impossible A more successful strategy is to adopt Rupee Cost Averaging.
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The markets are volatile : they move up and down in an unpredictable manner. Invest a fixed amount, at regular, predetermined intervals and use the market fluctuations to your benefit. How does it help you : You buy less when the market is up. You buy more when the market is down Overtime the market fluctuations are averaged Most likely you will realize a saving on the cost per unit This may lead to HIGHER RETURNS
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I dont have enough money to invest I am too busy making money to worry about managing it I dont have the time or expertise to follow the market movements and make investments at the right time.
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SIP is an investment program that allows you to contribute a fixed amount (as low as Rs.1000 )in mutual funds at regular intervals.
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Invest regularly and periodically instead of Lumpsum / 1 time investment. For example , if you have Rs. 60000 to invest you can either do a one time investment or alternatively you can spread the investment amount over a period of time say Rs. 5000 every month for 12 months or Rs.10,000 every month for 6 months.
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Thank You
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