investment awareness program ver. 4

7/31/2019 Investment Awareness Program Ver. 4

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We Start early everyday

8:30 am leave home

an hour to office

10 hours of high stress environment another hour to get back home...

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Ageing Parents

Loving spouse

Growing Children

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4

A house of our own

A car

Good education for children

A financially independent retired life


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How much can you make in 27 years

by just investing Rs.10,000 initially in

any of financial instruments ?

Take a wild guess ???

Let us look at the real example


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In 1981 company declared 1:1 bonus = you have 200 sharesIn 1985 company declared 1:1 bonus = you have 400 sharesIn 1986 company split the share to Rs. 10 = you have 4,000 sharesIn 1987 company declared 1:1 bonus = you have 8,000 shares

In 1989 company declared 1:1 bonus = you have 16,000 sharesIn 1992 company declared 1:1 bonus = you have 32,000 sharesIn 1995 company declared 1:1 bonus = you have 64,000 sharesIn 1997 company declared 1:2 bonus = you have 1,92,000 sharesIn 1999 company split the share to Rs. 2 = you have 9,60,000 shares

In 2004 company declared 1:2 bonus = you have 28,80,000 sharesIn 2005 company declared 1:1 bonus = you have 57,60,000 shares

Any guess about the company and present valuation ?


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Rs. 350 Cr.+&The company is WIPRO and there are

many more.CIPLA

Investment of Rs. 10,000 in 1979 will fetch Rs. 120 cr.+INFOSYS

Investment of Rs. 10,000 in 1992 will fetch Rs. 2 cr.+

RANBAXYInvestment of Rs. 1,000 in 1980 will fetch Rs. 2 cr


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Your investment ought to beat the inflation !!!

Money in savings account + 1,00,000

Interest earned in 1 year (@3.5 perannum)

+ 3,500

Value after 1 year = 1,03,500Tax on Interest (@30.9%) - 1,081

Impact of Inflation (@6% per annum) - 6,000

Effective Value at the end of year 1 = 96,419

You effective loss of Value = 3,581

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http://www.inkcinct.com.au/Web/CARTOONS/2008/2008-004--inflation-and-the-economy.jpg


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10 Of 37

0

50

100

150

200

Milk Petrol Pluses Movie

Cost in Rupees in Year 2000


Expected Price in Year 2020

0

50000

100000

Shirt Child School Fee Vacation




0

1000000

2000000

3000000

4000000

Car Medical treatment House / Flat





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Do you know Rs.5,000 saved through Bank /PO RD

account or through a Mutual Fund SIP would grow

how much?

Monthly

Deposit Rs.

Amount

after 5 years

Amount

after 10

years

Rate of

Interest or

Return

Bank or PORecurring

Deposit

5,000 3,69,833 9,20,822 8% p.a.

Equity MF

SIP

5,000 4,61,246 14,82,357 16% p.a.


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Reasons for Investing

Concept of Risk and Return

Prudent Investment PracticesPower of Compounding

Assets AllocationInvestment Options

Mutual FundSystematic Investment Plan (SIP)

ULIPsEquitiesNew Pension Scheme (NPS)

Criteria for Choosing investment

Pre-requisite for investing


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Investing can help beat inflationInflation: A rise in the general level of pricesIf inflation is 6%, your investment should earnmore than 6%

Investing can create/increase your Wealth

You can achieve your financial goals for variousreasons including a good retired life

You can get out of Financial Bondage/Debt Trap


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Every investment is a trade off between Risk and ReturnoRisk: chance that investments value will decrease

oReturn: profit made on investment

oGenerally, higher the risk, higher the return, but prudentinvestment strikes a balance

Use Diversification to reduce riskoSpread risk among many types of investments

oMutual Fund, Equities, Life Insurance, FDs, real estate,Gold

o Even further diversification among each category possible

oUnder worst case scenario, Not all investments will be bad at

the same time


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Age

Income

Savings / Investing

Kid 2

Kid 2s

College

Kid 2s

Marriage

Car

House

Marriage

Kid 1

Kid 1s

College

Kid 1s

Marriage

Emergencies????

Birth and

Education

0 25 60Working Life75 +Retired Life

????

Retirement

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Define your financial goalsoMust be measurable

Know your present statusoTo make a goal you need to know where youGo slowly

oDue diligence: Do your research first

Follow throughoDont plan forever and never act upon it

oDont leave too much money in emergency fund


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Seek good investment adviceoEngage a Professional Financial advisor

oDont listen to cousins friends roommate

Know your limits (Risk Profiling)oKnow how much you can afford to risk

oYour current assets, attitude, age etc affects your risk

tolerance

Understand fundamental conceptsoPower of Compounding

oAssets Allocation

o

Rule of 72


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Preeti started investing at the age of 25. She invested

Rs.10,000 each year for ten years and then she stopped

contributing

Rohit started investing at the of age 35 and then invested

Rs.10,000 each year for 25 years

Let us see how it impacts their accumulation

25 30 35 40 45 50 55 60

76.9 lacs

24.6 lacs

25 year old Preeti invests

Rs.10000 annually for

10 years and stops. Shedoes not withdraw any money.

Rohit begins investing

at 35 a similar amount

of Rs.10000 annually.

He invests for the next

25 years and he too does

not withdraw any money.

Start now!18


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Diversifying your money in different type ofinvestment category

oMutual Fund

oEquities

oULIPs

oBonds

oPost Office Schemes

o

Commodities (Gold)oReal Estate

Establishing a well-diversified portfolio may

allow you to avoid the risks associated with

putting all your eggs in one basket.


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Approx. Years to Double = 72/ Rate %

72 / 12% = 6 Years

[Actual Time is 6.12 Years]

Quick! How long does it take to double Rs. 5,000

at a compound rate of 12% per year (approx.)?


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Traditional :oFixed Deposits

oMoney in Saving Account

oPPF

oRecurring Deposit

oNSC/Kisan Vikas PatraoLife Insurance: Endowment/Money back

Modern :oMutual Fund

oEquities/StocksoLife Insurance specially ULIP

oNew Pension Scheme (NPS)

oCommodities

oFutures and Options


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Modern Investment Options like Mutual Fund, ULIP, Equitiesare transparent about where your money actually goes and its

growth

These are safe and regulated by various bodies

Returns in these instruments are likely to be higher due toprofessional management

Most of these provide high liquidity in case of need

Fair chances of beating inflation (proven historically)


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Mutual Fund is an instrument where a number ofinvestors contribute to form a common pool of money.

This pool of money is invested in accordance with apre-determined objective.

The ownership of the fund is thus joint or Mutual

and the fund belongs to all the investors in the sameproportion as the amount of contribution made byeach one of them.


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Provide the services of experienced and skilled professionals backed bya dedicated research team

Enable efficient risk management by diversifying across a wide varietyof sectors and companies

Less expensive vis--vis direct investment in equities as they seek toreap the benefits of economies of scale

Performance and other investment details of individual schemes are

disclosed on a regular basis , hence, transparent

Facilitate investment of small amounts in a number of schemes to suitthe investors risk - return framework

Liquidity : You can withdrawn when you need funds


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A vehicle for investing in portfolio of stocks and bonds

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The Formula For Creating Wealth

Start Early Invest Regularly Create Wealth

+

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It simply means investing FixedAmount every month

A method of investing regularly to benefit from thestock market volatility

The first step that may take you a long way towards

achieving your financial goals and objectives andcreating an Ocean of Wealth.


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4772.50500

205100

1010100

812.50100

520100

425100

Units boughtPurchase

Price

Systematic

Investing

5065500

520100

1010100

205100

1010100

520100

Units boughtPurchase

Price

Systematic

Investing

4480500

425100

520100

520100

1010100

205100

Units

bought

Purchase

Price

Systematic

Investing

Fluctuating Markets Declining Markets Rising Markets

Avg NAV : Rs 13.00 (65/5)

Avg. Unit Cost : Rs 10.00

(Rs 500/50)

Avg. NAV : Rs 14.50 (72.50/5)

Avg. Unit Cost : Rs 10.64 (Rs

500/47)

Avg. NAV : Rs 16.00 (80/5)

Avg. Unit Cost : Rs 11.36 (Rs

500/44)

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Life InsuranceTerm

Insurance

Endowment

Plans

Unit Linked

Insurance Plans

(ULIPs)

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A policy, which provides for life insurance where the policy value at any time variesaccording to the value of the underlying assets at the time. Investors can also take a SIP

route of investment. ULIP distinguishes itself through the multiple benefits that it

provides to the consumer. The plan is a one-stop solution providing:

Investment and Savings Life protection

Flexibility

Adjustable Life Cover

Tax benefit (as per Section 80C of Income Tax Act)

Transparency

Options to take additional cover against- Death due to accident

- Disability

- Critical Illness

- Surgeries


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Potential to significant increase in value over longerperiod (say 5-7 years)

High risk-high return

Choice to select a company you target

Can be purchased through IPO or secondary market

Demat Account required


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Defined contribution based pension system. Step towards universal social security system to protect the elderly against

economic deprivation. Would provide the citizens a means of livelihood or

means to supplement income after the age of 60 years.

Variety of investment options where subscribers can decide where to invest:

E Class: Investment in Equity market instruments. Invest in Index funds replicating the portfolio of BSESensex or NSE Nifty 50 index.

G Class: Investment in Government securities like GOI bonds and State Govt. bonds

C Class: Investment in fixed income securities other than Government Securities

Compulsory to Government employees w.e.f. 01/01/2004

PFRDA set up by the Government of India would administer the NPS.

All Indian citizens between 18 60 years of age and who are KYC compliant

can join.

There are two types of accounts where one is mandatory (from where

withdrawal before the age of 60 not allowed) and the other is optional

(where subscriber can withdraw before the age of 60 years)


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HighModerateHighModerate to HighMutual Funds

LowHighModerateLow to HighReal Estate

ModerateModerateHighModerateGold

LowLowHighLow to ModerateLife Insurance

ModerateLowHighModeratePPF

HighLowHighLow to HighBank Deposits

ModerateModerateHighModerate to HighBonds

Low to highHighLowModerate to HighEquity

LiquidityVolatilitySafetyReturn

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1. Safety *

2. Liquidity : easy to get money out

3. High Return *

4. Growth in value that exceeds inflation

5. Reasonable /low purchase price (initial cost)

6. Tax benefit

7. Low Transaction cost/charges

8. Identify the Sectors fast growing (or expected ) in the Indian Economy

* Degree of safety /return sought may vary as per risk profile at given point


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Risk Profiling: Assessment about risk taking

attitude /ability of investor to decide suitable

type of investment

Statutory Requirements

o

KYCoPAN


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The first step to creating a financial planCan range from the simple to complex

An art not a science

Ideal first plan is simpleIt is not static and evolves with change in

circumstances

Broadly, your profile could be of Aggressive,

Moderate or Conservative Investor

As outcome of this opportunity, we would inform you your risk

profile as assessed by us


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In order to prevent identity theft, identity fraud, money laundering,terrorist financing etc, RBI has directed all banks and financial institutions

to put in place a policy framework to know their customer before opening

any account, known as KYC

Mandatory details required under KYC norms are*Proof of identity *Proof of address

All financial transaction of over Rs.50,000 require KYC compliance

Unique ten digit alpha numeric code generated by Indian Income TaxDepartment

Required by anyone who wish to conduct any kinds of financialtransaction

It remain same, during your life time, irrespective of any change in yourcontact details

We can help in completion of your KYC/PAN formalities as part of Investor Awareness Program


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Companies behind this Program

Niveshak Mpowered Pvt. Ltd. promoted by

SPA Capital Services Ltd. & Acsys Software

(India) Pvt. Ltd.

IDBI Asset Management Ltd, which was set up

with a mission to bring stock market

prosperity to common man is the sponsor of

this Investment Awareness Program initiative

IDBI Bank

IDBI Nifty Index Fund39 Of 37


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investment awareness program ver. 4

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