PRESENTATION ON FINANCIAL WELLNESS

Transcription

1 PRESENTATION ON FINANCIAL WELLNESS

2 I Welcome you all to the family of We believe that wealth is created by knowledge and disciplined approach. Its not rocket science. Just follow basics of investments and you will attain the desired financial goal. We help the investor create wealth, simultaneously protecting his family from any unforseen perils. KEEP IT SIMPLE is our moto. We have seen that, this moto has created miracles for the investors. We at Renuka Investments educate the client about different financial products, the time frame required by the investment product and returns to expect. The language we use is simple and lucid that anyone can understand easily. This presentation is one of the efforts to educate and give brief knowledge of the investment world. YOU DON T HAVE TO BE WEALTHY TO BE AN INVESTOR BUT YOU HAVE TO BE AN INVESTOR TO BE WEALTHY!!!

3 1. Complete Financial Planning. 2. Tax Savings Investment Planning. 3. Pension Planning. 4. Child Education Planning. 5. Life Insurance. 6. Health Insurance. Our Services 7. Special Health Insurance for Senior Citizens. 8. Mutual Funds with Online Portfolio report with individual login id and password. 9. Special Demat for online transactions of Mutual Fund. 10. Innovative Monthly Income Plans. 11. Fixed Deposits from all rated companies and banks. 12. Non-Convertibale Debentures. 13. Tax Free Bonds 14. Bank Approved NA Plots and Pre-launch Offers in an around Pune.

4 FOUR PILLARS OF OUR ORGANIZATION CLIENT FIRST CLIENT WINS I WIN INTEGRITY CONTINUOUS SELF IMPROVEMENT

5 LET US START INSURANCE and INVESTMENT KEEP IT SIMPLE

6 INSURANCE

7 Understanding Insurance To understand the concept insurance, we must learn what is risk and how it can be dealt with. Risk : 1. Volatility of outcome. 2. Worse-than-expected outcomes. 3. Better-than-expected outcomes. How to manage risk? 1. Transferring the risk to another party. 2. Avoiding the risk. 3. Reducing the negative effect or probability of the risk. 4. Accepting some or all of the consequences of a particular risk. What is Insurance? 1. Equitable transfer of the risk of a economic loss, from one entity to another, in exchange for payment. 2. Insurance is a form of risk management. 3. Risk is what insurance companies measure. 4. An insurer is a company taking risk. 5. An insured, or policyholder, is the person or entity buying the insurance policy by giving premiums against transferring risk.

8 The basic types of insurance available are as follows : TERM LIFE INSURANCE HEALTH INSURANCE Types of Insurance PERSONAL ACCIDENT INSURANCE PROPERTY INSURANCE The only thing a man can buy on the instalment plan, on which his nominee won t have to finish the payments after he dies, is life insurance.

9 Any individual runs a risk of a) Premature Death or b) Living too long. Life insurance is product that offers in management of both the risks. Life insurance is contract between insurer and insured. The insurer promises to pay the nominee, the sum of money upon the death of the insured. Term Life Insurance : Term Life Insurance 1. Insurance cover to the individual for the specific term. 2. Term Insurance is life insurance policy which pays your nominee the amount of sum assured in the event of death during the length of term. 3. There is no maturity value at the end of the policy period nor the premiums are returned. 4. The term life insurance are most cheapest form of insurance available. 5. In simple terms, term life insurance is just like your car insurance. 6. Term Life Insurance is purely for risk protection. 7. You need to have term life insurance coverage of at least 12 times of your annual salary. Objective of Life Insurance : The main objective of Life Insurance is policy owner has got 'peace of mind' by paying premiums to the insurance company, in knowing that the death of the insured person will provide financial protection to dependent financial members in the event of untimely death of bread winner.

10 Buying term life insurance and investing the difference Buying term life insurance and investing the difference is a concept involving Term Life Insurance and investments strategies that allows individuals to eventually "self Insure" and provides an alternative to endowment policy. Investors making use of the "buy term and invest the difference" concept separate their investments from their insurance by setting aside money every month equal to the premium that a endowment plan would require, then use a portion of this money for the term premium and place the rest in a equity mutual fund or any other investment avenue of his choice.

11 Scenario 1 Mr. ABC age 35 years, working as Senior Manager, has a annual salary of Rs.10 Lacs and has 3 life insurance policies with insurance coverage worth Rs.10 lacs. His family members include wife and 2 kids. Imagine if tomorrow Mr. ABC is no more in this world. What will be financial implications? His wife will get Rs.10 Lacs from insurance company. His wife would keep this money in Bank fixed deposit which will fetch 9% p.a. Now whether Rs.90000/- would be sufficient to meet his annual household expenses and what about his their child future. What would happen to housing loan? The list would be endless... You don t buy life insurance because you are going to die, but because those you love are going to live.

12 Scenario 2 With respect to Scenario 1 the actual required Life Insurance was Rs.1.20 Cr. Mr. ABC age 35 years, working as Senior Manager, has a annual salary of Rs.10 Lacs and has Term life insurance policy with insurance coverage worth Rs.1.20 Cr. His family members include wife and 2 kids. Imagine if tomorrow Mr. ABC is no more in this world. What will be financial implications? His wife will get Rs.1.20 Cr from insurance company. His wife would invest this money in Bank fixed deposit which will fetch 9% p.a. She would receive Rs /- p.a. This would help her to maintain minimum standard of living after her husband's untimely death. With all the EMI and expenses. Life Insurance cannot compensate for emotional loss but surely can compensate for financial loss. FOOD FOR THOUGHT : BUY ADEQUATE TERM INSURANCE!!! BEING UNDER INSURANCE IS A CRIME!!! DO NOT GO FOR MIX OF LIFE INSURANCE AND INVESTMENT PLAN. KEEP THEM SEPARATE. FOLLOW THE CONCEPT OF BUY TERM INSURANCE AND INVEST THE DIFFERENCE.

13 Health Insurance YOUR MEDICAL EMERGENCY SHOULD NOT BE YOUR FINANCIAL EMERGENCY

14 Seven reasons to buy health insurance Health Insurance 1. Because your employer cover is just not sufficient : a. Exponential increase in healthcare costs. b. Check the cost of a week's hospitalized for a regular illness, you'll surely buy a cover immediately. c. You buy a health insurance when you don't need it, because when you need it you may not get it. 2. Because incidence of lifestyle illnesses has increased : a. Sedentary lifestyle has led to increased occurrence of lifestyle disorders involving heart, cancer, lung conditions and stroke, claiming younger lives. 3. Because you are a busy executive : a. Most of us have to travel extensive for work. b. Pressure of Job leads to many diseases. c. There may be waiting period until you have new job. 4. Buying it early means better financial planning : a. Buying it early do not only means cheap but makes better financial sense as well. b. Accidents occur without any warning and an adequate medical cover will ensure that you are covered for emergencies and allow you to invest your hard earned money in long-term investments.

15 5. SAVE TAX : 6. Young buyers get a more comprehensive deal : Health Insurance a. Of course you also save tax for paying the premium. Under section 80D, the current ceiling for that is Rs.15,000 annually. For senior citizens, this deduction is higher, and is Rs. 20,000. b. 80D limit is often left initialized by many and keep thinking about how to save taxes. a. Buying health insurance at a young age ensures there is no scope for preexisting diseases as you will be covered early, and any diseases diagnosed later will be covered automatically. 7. Buying early means you'll enjoy full benefits when you need: a. There are waiting periods from 2-4 years for certain surgeries, special treatments, preexisting illness coverage, etc. If you buy it now, when do not need it immediately, it would mean you would have served the requisite waiting periods and be able to claim all full benefits later. b. Also, you can earn No Claim Bonus if the you continues with the same policy year on year.

16 Facts of Health India Indian President Pranab Mukherjee drew attention to the healthcare emergency India faces, at AIIM, as 1. 80% of medical costs are paid out-of-pocket 2. Healthcare debts plunge 40 million Indians into poverty every year. Only 2% of working population have bought their own health insurance policy. Diabetes is fast gaining the status of a potential epidemic in India with more than 62 million diabetic individuals currently diagnosed with the disease. Million new cases being reported every year, cancer seems to be tightening its grip on India. Experts say the incidence of the killer disease is expected to rise five-fold by 2025.

17 Personal Accident Insurance Personal accident cover is designed to provide financial help if a person have a serious accident or injury, or if he suffers a fatal accident. Objective of Personal Accident insurance is to minimise your income loss. Personal Accident Covers Death, Permanent / Partial Disabilities arising out of accident. Weekly financial compensation upto maximum of Rs.15,000/- is available arising out of partial disabilities. Rs.50 Lac personal accident insurance cover would cost you Rs.16/- per day.

18 Personal Property Insurance Many of us do not cover our house property. Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance. If you have opted for home loan they cover your home till your loan repaying term only to cover their loan amount. In Gujarat only 5% of householder had house property insurance. But after earthquake all realized importance of property insurance. Today 75% Gujarat house property is insured.

19 INSVESTMENTS

20 Most of us innately know that saving and investing are not the same, but do we understand the difference? Because clarity in this distinction can greatly impact one s financial well being, realizing these difference is vital. The key is in two words: risk and liquidity. Savings Difference between Savings and Investments 1. Funds that must be liquid (available) whenever you need them. 2. To have it for a specific purpose within a short time frame. 3. Primary concern is to secure your capital. 4. Typically for an emergency or a short-term goal. 5. Opportunities to grow your money are limited. 6.You can save your money in savings account, money market funds etc. Investments 1. For wealth building. 2. Not needed for many years. 3. Yes, investments do involve little risk, but, investments also yield much greater returns. 4. When you're investing, you give your assets the potential to grow over time. 5. You typically reinvest your interest, dividends, and capital gains earned. 5. Left alone long enough to ride out the turbulence of the stock market. 6. Specially for Child s Education/Marriage, Retirement, Long term Financial Goals. 7. You can invest your money in Equity Mutual Funds, NCD, etc. Time : The difference between investing and savings is really quite simple. 1. If you are going to need the money in the near future, save it. 2. If you aren t going to touch the money for a longer time frame, invest it. The trick is defining this time frame.

21 Understanding Inflation, GDP and Growth (Wealth Creation) Inflation : Inflation can mean either an increase in the money supply or an increase in price levels. When it comes to inflation, the question on many investors' minds is: "How will it affect my investments? This is an especially important issue for people investing in fixed a fixed income. Rs.100/- INVESTED + 8% ROI Rs.108/- RETURN - 8% INFLATION Rs.100/- RETURN So, in the above case the returns made in 1 year is zero, as inflation has eaten up the returns. Rs.100/- INVESTED + 8% ROI Rs.108/- RETURN - 10% TDS Rs RETURN - 8% INFLATION Rs RETURN Also if we consider the tax implications on the interest earned, than we have lost our capital too. The time value of money is very very important. The illustration shows how the money is losing its purchasing power. Value of Rs. 1 Lac 2014 Rs Rs Rs Rs Inflation 8%

22 Understanding Inflation, GDP and Growth (Wealth Creation) GDP : Gross Domestic Product. The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. At present it is around 6% Growth : Any investment product which earning the returns above inflation is growth. That means your money has not depreciated. But it has grown with time and has not lost its purchasing power. Look at the illustration below. Rs.100/- INVESTED + 8% ROI Rs.108/- RETURN + 6% GDP Rs.114/- RETURN In the above illustration it shows that money has grown with 14%. So your money has not depreciated but it has grown with time. The illustration shows how the money has not lost its purchasing power but has grown too. For long term investors who want to create wealth for pension, child education etc the growth rate should be around 12-15%. The only investment which sums Inflation & GDP is Equity. For that you need to plan your investment accordingly with Equity Mutual Fund. Value of Rs. 1 Lac 2014 Rs Rs Rs Rs Growth rate of 14% p.a

23 What is Mutual Fund? Investing is probably something you simply do not have the time or knowledge to get involved in. This is why investing through mutual funds has become such a popular way of investing. Quite simply, a mutual fund is a mediator that brings together a group of people and invests their money in stocks, bonds and other securities. Professional Management : 1. Each fund's investments are chosen and monitored by qualified professionals at low cost. 2. That portfolio could consist of stocks, bonds, money market instruments or a combination of those. Fund Ownership : Understanding the Mutual Funds 1. As an investor, you own shares of the mutual fund. 2. Mutual funds permit you to invest small amounts of money. 3. You can benefit from being involved in a large pool of cash invested by other people Income and Dividends are Distributed amongst the Investors Investor Pool Their Money Income and Dividends are Generated Fund Manager Invest the money in Stocks, Bonds 4. All shareholders share in the fund' s gains and losses on an equal basis, proportionately to the amount they've invested. Spreading risk : 1. A mutual fund usually spreads the money in companies across a wide spectrum of industries. 2. This not only diversifies the risk, but also helps take advantage of the position it holds. Transparency and interactivity : 1. Mutual funds clearly present their investment strategy to their investors. 2. Regularly provide them with information on the value of their investments. 3. Complete portfolio disclosure of the investments made by various schemes along with the proportion invested in each asset type is provided.

24 1. Each mutual fund scheme has its own objective that determines its assets allocation and investment strategy. 2. These are classified according to their maturity period, or investment objective. 3. Open ended funds - where investors may invest or redeem at any point in time. 4. Close ended funds - where investors can invest only during the initial launch period known as the NFO (New Fund Offer) period. Different Types of Mutual Funds Income/Debt Schemes Hybrid Funds Debt Oriented Money Market Funds Objective of Investment Equity Funds Hybrid Funds Equity Oriented Equity Linked Savings Schemes (ELSS) Tax Savings Fund u/s 80C 5. Mutual funds classified according to their investment objective range from Equity Funds (with substantial risk), to Money Market Funds (which are very safe).

25 First step towards Wealth Creation : Section 80C Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. One must plan investments well and spread it out across the various instruments specified under this section to avail maximum tax benefit. The total limit under this section is Rs 1.50 Lacs. Assessee will be eligible for deduction of Rs. 1,50,000/- Under section 80C of the Income Tax act from A.Y or FY Market Linked ELSS SMART INVESTORS 2% ULIP PPF NSC Tax Savings instruments under 80C Fixed Income INFRA BONDS TAX SAVINGS Fds Sr. CITIZEN SAVINGS SCHEMES EPF NABARD BONDS REGULAR INVESTORS 98% Endowment LIFE INSURANCE PRM. Others HOME LOAN PRINCIPAL CHILDREN S TUITION FEES Decide where you want to make the investments, be a smart investor and start investing right from the beginning of the financial year from April. This way, you would make informed decisions.

26 ELSS : Equity Linked Savings Scheme for Wealth Creation ELSS is a type of diversified equity mutual fund which is qualified for tax exemption under section 80C of the Income Tax Act. Why one should invest in ELSS? An opportunity to grow your money by investing in the equity market. Long-term capital gains from these funds are tax free in your hands. The lock-in period is only 3 years. You can also opt for a Dividend Payout option, thereby realizing some potential gain during the lock-in period. You can invest through a Systematic Investment Plan and bring discipline to your tax planning

27 SIP : Systematic Investment Plan Benefit 1 SIP : SYSTEMATIC INVESTMENT PLAN A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save regularly. Its just like a recurring deposits with post office or bank where you put small amount every month, except the amount is invested in mutual funds. Become A Disciplined Investor 1. Being disciplined - It s the key to investing success. 2. With the Systematic Investment Plan you commit an amount of your choice (minimum of Rs. 1000) to be invested every month in one of mutual fund schemes. 3. Think of each SIP payment as laying a brick. One by one, you ll see them transform into a building. 4. You ll see your investments accrue month after month. 5. It s the perfect solution for irregular investors.

28 Benefit 2 Reach Your Financial Goal SIP : SYSTEMATIC INVESTMENT PLAN 1. Mutual Fund SIP is a perfect tool for people who have a specific, future financial requirement such as funds for Child s Education, Child Marriage, Pension Plan etc. 2. By investing an amount of your choice every month. 3. The table below illustrates how a little every month can go a long way. TARGET YEAR 5 YRS 10 YRS 15 YRS 20 YRS DREAM AMOUNT Rs. 1 Cr. Rs. 1 Cr. Rs. 1 Cr. Rs. 1 Cr. MONTHLY SIP REQUIRED CAGR 12 % 15 % 15 % 15 % / / /- 7550/-

29 Benefit 3 Take Advantage of Rupee Cost Averaging SIP : SYSTEMATIC INVESTMENT PLAN 1. Most investors want to buy stocks when the prices are low and sell them when prices are high. 2. But timing the market is time consuming and risky. 3. A more successful investment strategy is to adopt the method called Rupee Cost Averaging. Month NAV Amount Units Amount Units Jan 14 Feb 14 Mar 14 Apr 14 May14 Jun 14 Rs Rs Rs Rs.8.00 Rs Rs.6.00 Rs Rs.7.00 Rs.8.50 Rs Mr. A Rs.1000 Rs.1000 Rs Mr. B Total Rs Rs Mr. A s average unit price is Rs.6000/ = Rs Value of his investment is x Rs.12 = Rs Mr. B s average unit price = Rs Value of his investment is 600 x Rs.12 = Rs As seen in the table, by investing through SIP, 1. You end up buying more units when the price is low and fewer units when the price is high. 2. However, over a period of time these market fluctuations are generally averaged. 3. The average cost of your investment is often reduced. 4. At the end of the 6 months, Mr. A has more units than Mr. B, even though they invested the same amount. 5. That s because the average cost of Mr. A units is much lower than that of Mr. B. 6. Mr. B made only one investment and that too when the per-unit price was high.

30 SIP : SYSTEMATIC INVESTMENT PLAN Actual past performance of SIP in ELSS Fund Rs /- Scheme Name Monthly Investment Amt Rs. Investment Period Total No. of Months ICICI Pru Tax Plan - Gr. Rs.12500/- 19/08/1999 To 31/03/ Scheme Name Monthly Investment Amt Rs. Investment Period Total No. of Months HDFC TaxSaver - Gr. Rs.12500/- 19/03/1996 To 31/03/ Total Amt Invested Rs /- Total Amt Invested Rs Total Units Purchased Total Units Purchased Value of Investment as on 19/03/2014 Rs. 1,25,08,367/- Value of Investment as on 19/03/2014 Rs. 2,48,58,033/- Return On Investment ELSS 21.30% CAGR Return On Investment ELSS 21.27% CAGR PPF Return Rs. 47,31,897/- PPF Return Return On Investment PPF 8.84% CAGR Return On Investment PPF 8.56% CAGR ELSS HAS GIVEN 2.64 TIMES OF PPF VALUE ELSS HAS GIVEN 3.77 TIMES OF PPF VALUE Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is no guarantee of future result.

31 FINANCIAL PLANNING 1.A Financial Planning is the process of taking holistic view of the financial needs. 2. Finding the appropriate solution to achieve the financial goals. 3.Financial plan is the roadmap, which is to be followed sincerely to reach the desired destination. 4.Financial goals includes retirement planning, funding children s education, buying a property/house, buying a car, foreign trips etc. 5. It also includes analyzing one s insurance needs at various stages of life. 6.It also includes which financial products suits you, what are risk and return ratios, and does it comply with inflations, tax implications etc. 7.After the investment is made, monitoring the plan and re-balancing the portfolio is the most important part. 8.Well, from above obvious reasons, anyone who has financial goals, needs to take a path of financial planning.

32 RETIREMENT PLANNING Life at Golden Years, should be full of joy, happiness, comfort, grace and above all one should be able to do things he or she likes more. Like foreign countries, we do not have any social security to look after our retirement. Without proper retirement planning, life can be cruel and miserable. For day to day expenses, one will have to ask from their children or will have to keep on working for money. Retirement rest on two pillars, HEALTH and WEALTH. One has to have enough Health Insurance plan to fund medical emergencies and should be practical while planning for retirement pensions. TIME is the most important asset we have for retirement planning, and we have to use it to its full potential.

33 IMPORTANT POINTS FOR RETIREMENT PLANNING 1. MOST IMPORTANT : Retirement planning should start from the day you start earning, as asking rate would be less. 2. Choose the investment tool which will beat inflation. 3. Increase investment as your income grows. 4. EQUITY MUTUAL FUNDS ARE BEST TO BUILD RETIREMENT KITTY. 5. Start an SIP in a mutual fund and automate the process by giving an ECS mandate to your bank. In this way, your retirement planning will stay on track. 6. If your horizon is years, you can invest % savings in diversified Equity Mutual Funds. 7. As you approach retirement, you can start liquidating from Equity and park them in Debt Mutual Funds. 8. All Private Sector employee will not have pensions after retirement. 9. Inflation is a major factor for retirement planning. 10. Blindly taking any Life Insurance Endowment plan will ensure the agents retirement but not yours. 11. For some contributing towards your EPF or PPF account means retirement savings. Which is not true. You will have to calculate the required corpus. 12. FOCUS HARD : Keep your retirement investments separate from short- and medium-term goals such as buying a house or children's education. Be clear that the corpus you are building is to be touched only after you stop earning.

34 EXAMPLE FOR RETIREMENT PLANNING Consider the Person of age 30 Years. He wishes to retire at his age of 60 years. 1. Calculate the amount he will need at retirement a. His present average monthly expense = Rs p.m. or Rs. 6 Lacs p.a. b. Let avg inflation be 7%p.a. c. Your annual expenses at the time of retirement will be : Rs Lacs p.a. Let's assume life expectancy till 85, that is, 25 years after retirement. Consider his investments earn 8% annually, and inflation is 6% post retirement. The total corpus in this case should be : Rs Cr. How to reach 9.21 Cr. in 30 years? YEAR Retirement Corpus 30 YRS Rs Cr. MONTHLY SIP REQUIRED CAGR 8 % 10 % 12 % 15 % 65000/ / / /-

35 CHILD EDUCATION PLANNING Parents have big dreams for their child, are very much possessive about their career. Making those dreams to reality requires proper investment planning. The early you start the better. At every milestone, payouts are required, and more so when it comes to higher education. In higher education, huge amount of money is required and if we are unprepared, the child is deprived of graduation of his choice. It can easily seen from the table below, cost of higher education as on today, and cost of higher education as on year Education inflation is taken as 12% p.a. Post Graduation Doctor Engineering CA Fashion Designing Approx Cost as on 2014 Rs. 15 Lacs Rs. 10 Lacs Rs. 5 Lacs Rs. 6 Lacs Approx Cost as on 2030 Rs. 91 Lacs Rs. 61 Lacs Rs. 30 Lacs Rs. 36 Lacs

36 POINTS TO REMEMBER FOR CHILD EDUCATION PLANNING 1. Avoid buying Child Insurance Plans. 2. Invest in a SIP of diversified mutual fund portfolio and a term insurance plan. 3. Set a required target amount, tenure, expected returns and start SIP. 4. Are you saving for your daughter's education? Or for your son's marriage? It is best to define your goals and segregate the investment for each goal. 5. Don't invest in a long-term fixed deposit for your daughter's education when she is just a toddler. The money that is not going to be touched for a long period should ideally be in equity mutual funds. When do parents start savings? 62.90% You lose out on the power of compounding if you start late 20.20% 9.20% 4.90% 2.80% Before Child Birth 0-2 Years 4-7 Years 8-11 Years over 12 Years

37 MISCELLANEOUS

38 POINTS TO REMEMBER What is Earning FOR CHILD per Share EDUCATION (EPS)? PLANNING 1. EPS Avoid is amount buying of Child earnings Insurance per each Plans. outstanding share of a company. 2. It indicates how much money a company is making for its shareholders. Invest in a SIP of diversified mutual fund portfolio and a term 3. insurance EPS indicates plan. company's profitability. 4. There are three types of EPS. 3. Set a required target amount, tenure, expected returns and start SIP. a. Trailing EPS is previous years EPS and is actual EPS reported. 4. Are b. you Current saving EPS for is your present daughter's year's EPS and education? is based on Or estimates. for your son's marriage? c. Forward It is best EPS to is define next year's your projected goals and EPS segregate based on estimates. the investment for each goal. 5. EPS of Sensex is sum of all EPS based on the free float factor of the 30 stocks in 5. the Don't index. invest in a long-term fixed deposit for your daughter's education 6. when EPS of Sensex she is has just grown a toddler. from Rs. The 44 in money 1991 to that 1173 is in 2013 not going with growth to be of touched 19% p.a. 7. for The a Current long period EPS is should Aprrox Rs.1350 ideally be with in Sensex equity at mutual funds. 8. Merely looking at Sensex and considering it to be overvalued is a wrong judgement. When do parents start savings? 9. Its EPS which is driving the Sensex and not the otherwise. Stop following the heard. Follow the EPS, stay invested % a. Dividing Sensex by EPS gives you PE of 19. Fairly Valued % c. Considering the 9.20% PE of 19, the Sensex 4.90% can be in % Before Child Birth 0-2 Years You lose out on the power of compounding if you start late b. Considering 15% Growth YOY for next 5 years, EPS would be Rs.2700 in d. Considering the PE of 15, the Sensex can be in Years 8-11 Years over 12 Years

39 MAGIC OF SIP : BELIEVE IT OR NOT Mr. A had taken a home loan of Rs 10 Lac for 20 Years & simultaneously started investing Rs 1,000 per month towards SIP (Systematic Investment Plan) in SBI Magnum Tax Gain Scheme Here, Mr. A had added just Rs.1000/- to his EMI & built a corpus equal to his total home loan repayment amount... Instead of paying Rs 10,665 as an EMI, He had spared Rs 11,665 (Rs 10,665 of EMI & Rs 1,000 for SIP)... Just imagine!!!!!!!!! here his entire Home Loan (principal & total interest paid) is totally reimbursed by adding just a small amount of regular savings for a long term via SIP...magic works. SMART WAY TO FINANCIAL PLANNING HOME LOAN Rs. 10 LACS SBI MAGNUM TAX GAIN EMI Rs /- DURATION 20 YEARS HL ROI 11.50% TOTAL AMT. PAID Rs.25,59,600/- SIP Rs. 1000/- DURATION 20 YEARS YIELD ACTUAL 20.25% TOTAL INVESTED Rs.2,40,000/- AMT. RECEIVABLE Rs.27,28,154/- First EMI & SIP date - 10th July 1994 Last EMI & SIP date is 10th June 2014 Summary :- For all home loan holders - there must be a SIP of at least 0.10% of Home Loan Amount to nullify the loan burden at the maturity to the extent of available gain... Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is no guarantee of future result.

40 DEBT FUNDS - TAX EFFICIENT ALTERNATE TO FD DEBT FUNDS : Debt Mutual Funds mainly invest in a mix of debt or fixed income securities such as Treasury Bills, Government Securities, Corporate Bonds, Money Market instruments and other debt securities of different time horizons. Gilt fund, monthly income plans (MIPs), short term plans (STPs), liquid funds, and fixed maturity plans (FMPs) are some of the investment options in debt funds. Apart from these categories, debt funds include various funds investing in short term, medium term and long term bonds. A debt fund provides a steady but low income relative to equity. It is comparatively less volatile. # Inflation considered at the rate of 7% for calculation of indexed cost of investment in both one year and three year scenario. ^ indicates highest tax Bracket. Investment Amount Assumed Net Yield (p.a) Tenor (Months) Maturity Interest/Long Term Capital Gain Indexed Cost of Acquisition # Gain/(Loss) Tax Rate ^ Tax on Interest on FD/ Capital Gains on MF Post Tax Income Post Tax Rate LESS THAN 36 MONTHS FD Debt Funds MORE THAN 36 MONTHS FD Debt Fund with Indexation / / / /- 10% 10% 10% 10% 24 m 24 m 36 m 36 m / / / /- N.A. N.A. N.A. N.A. N.A. N.A / / / / /- (TAX FREE) 10596/- (TAXABLE) 30.90% 30.90% 30.90% 20.60% (INDEXATION) 6489/- 6489/ (TAX TO PAID) (TAX TO PAID) 14511/ / % 7.01% 7.11% 9.40% * All redemptions/maturities in debt schemes that happen on or after July 11, 2014 and the investments has not completed 3 years has to be treated as short term capital gains. The yields used are assumed and used only to show the Tax efficiency these are not indicative of any returns. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is no guarantee of future result.

41 TARGET 1 CR. POWERFUL INVESTMENT IDEAS FOR POWERFUL MINDS TARGET YEAR 5 YRS 10 YRS 15 YRS 20 YRS DREAM AMOUNT Rs. 1 Cr. Rs. 1 Cr. Rs. 1 Cr. Rs. 1 Cr. MONTHLY SIP REQUIRED CAGR SIP 12 % 15 % 15 % 15 % / / /- 7550/- COMBINATION MONTHLY SIP + LUMPSUM CAGR SIP 12 % 15 % 15 % 15 % 92500/ / /- 5650/- LUMPSUM Rs LACS 6.20 LACS 3.00 LACS 1.52 LACS Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is no guarantee of future result.

42 WE PROVIDE ONLINE TRACING OF FUNDS

43 INVESTMENTS QUOTES An investment in knowledge pays the best interest. - Benjamin Franklin If you aren't thinking about owning a stock for ten years, don't even think about owning it for ten minutes. - Warren Buffett In investing, what is comfortable is rarely profitable. - Robert Arnott "How many millionaires do you know who have become wealthy by investing in savings accounts?

44 INVESTMENTS QUOTES To be an investor you must be a believer in a better tomorrow. -Benjamin Graham The individual investor should act consistently as an investor and not as a speculator. - Ben Graham Know what you own, and know why you own it. -Peter Lynch Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas. - Paul Samuelson

45 INVESTMENTS QUOTES The four most dangerous words in investing are: 'this time it's different. - Sir John Templeton We don t have to be smarter than the rest. We have to be more disciplined than the rest. Although it s easy to forget sometimes, a share is not a lottery ticket it s part-ownership of a business. If investing is entertaining, if you re having fun, you re probably not making any money. Good investing is boring.

46 INVESTMENTS QUOTES - Warren Buffett Your health is a long-range investment that will pay-off when you need it most. Someone s sitting in the shade today because someone planted a tree a long time ago. The Stock Market is designed to transfer money from the Active to the Patient. Only buy something that you d be perfectly happy to hold if the market shut down for 10 years. It is not necessary to do extraordinary things to get extraordinary results.

47 THANK YOU FOR YOUR VALUABLE TIME CM NIKHIL KHATIWALA, CERTIFIED FINANCIAL PLANNER MOBILE : renukainvestments@yahoo.com