Perspective on Investing. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Transcription

1 Perspective on Investing Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

2 Questions that needs to be addressed What, when, how do I buy? What is better : buy,hold or trade? I always seem to buy when the market has peaked, is there a better way? Are the market level relevant? What factors determine returns?

3 Are you saving or investing? What do we invest for? Goals : Education, Marriage, Holidays, Leisure, Car,Retirement Income comes from professions & investment returns

4 Profession vs. Investments PROFESSION INVESTMENTS INCOME CREATION/ ACCUMULATION OF WEALTH NURTURE/ PRESERVATION OF WEALTH

5 Profession vs. Investments PROFESSION INVESTMENTS INCOME YOU KNOW BEST TRUST YOUR ADVISOR TO KNOW BEST

6 Consider the rising cost of living Planning a wedding today Wedding at the Taj Planning a wedding for your child in 20 years Wedding at the Taj Guests: 500 Guests: 500 Price per plate: Rs. 2,000 Price per plate: Rs. 6,414 Decoration: Rs. 10,00,000 Decoration: Rs. 32,07,135 Other Expenses / Gift, etc: Rs. 15,00,000 Other Expenses / Gift, etc: Rs. 48,10,703 Total Expenses Rs.35,00,000 Total Expenses Rs. 1,12,24,838 The above table is an example only for illustration purposes, purely to explain the effect of compounding on investments over a long term. The growth rate of the investment is Assuming 6%.

7 Household expenses on the rise Inflation will further shrink your buying power! A Loaf of Bread 1 Litre Carton Milk 1 Kg Apples Year Amount Year Amount Year Amount 2000 Rs Rs Rs Rs Rs Rs * Rs * Rs * Rs * Rs * Rs * Rs. 257 The above table is an example only for illustration purposes, purely to explain the effect of compounding on investments over a long term. The growth rate of the investment is assumed at 15%.

8 Yesterday s luxuries are becoming today s necessitie Products previously thought as luxuries are the norm today Items 1991 Today Cable T.V No Yes LCD T.V No Yes Mobile No Yes Washing Machine No Yes Microwave No Yes Car No Yes

9 Can we ignore the planning for the future? Marriage Child House Child s Education Child s marriage Retirement Our financial planning should be ready to take care of our life cycle goals/needs.

10 What drives us to invest? Greed/Fear News, hot tips, gut feelings? Macro economics or global scenarios? Political environment?

11 Creating Long term Wealth : What really matters? 5 95 of the returns Relative performance % of peer funds of the returns Asset Allocation % Ability to handle emotional & financial stress Monitoring & tracking your portfolio periodically

12 Importance of asset allocation Asset Allocation Benefits of asset allocation Diversify investment across the asset classes May reduce overall risk like equities, debt, cash, real estate etc. May improve your chances to earn more A common sense investment strategy Possibility of consistent returns over time Tailored to your needs & goals keeps you focussed on the goals

13 Asset Allocation: Need based strategy Stocks Capital Growth Risk:Medium to High Period: 3 to 5 years Growth Funds Bond Debentures Income Risk:Medium to Low Period: 3 to 5 years Income/Bond Funds Company Fixed Deposits Money Market Funds Short-term deposits/government Paper Capital Preservation Risk: Low to Medium Period: Less than 1 year

14 Asset Allocation: Need based strategy Age Group Age Group % 15.00% 75.00% 15.00% Age Group % 50.00% Age Group Above 60 yrs 20.00% 25.00% 50.00% Income (Bonds) Growth (Equity) 35.00% 45.00% 25.00% The above content is an example only for illustration purposes, please contact your financial adviser. Liquidity (Banks)

15 Making Asset Allocation work Periodic Review Example Years to goal Equity Allocation % Today 10 70% After 5 yrs 5 60% After 7 yrs 3 40% After 9 yrs 1 10% Periodic Rebalancing Example Equity Funds Income Funds Profile & objective based allocation 70% 30% Bull market fluctuation 80% 20% 70% 30% Rebalance The above content is an example only for illustration purposes, please contact your financial adviser.

16 What really matters? where you invest When you invest When you start How you invest What are the returns you earn

17 Where to invest? Equities can outperform other asset classes over time Crisil Composite Average Annual Bond Fund Index Inflation (WPI) Gold* BSE Sensex* 3 years -7.05% 14.67% 8.97% 2.30% 8.88% 5 years 5.38% 7.82% 8.28% 4.71% 8.50% 7 years 10.91% 8.79% 8.13% 4.71% 8.13% 10 years 14.65% 15.62% 6.90% 5.49% 6.75% Source: Bloomberg, RB, AMFI. Returns are as on 31st August, 15 and are calculated on CAGR basis. Fixed Deposit

18 When to invest? 1.8 Sell Sell Sell Buy Sell Buy Buy The above content is an example only for illustration purposes, please contact your financial adviser.

19 When you invest? The Expense of Timing the Market (Consistent & Continuous Investment a Smart Strategy) 14% 12.91% 12% 10% 8.04% 8% 6% 4.93% 4% 2.15% 2% 0% -0.41% -2% -4% -6% -4.74% Investing on all Days Missed 5 Best Days Missed 10 Best Days Missed 15 Best Days Missed 20 Best Days Missed 30 Best Days Source: Internal Calculations. Data from 31st August 2005 to 31st August, 2015

20 Its time in market that matters.

21 How you invest Cycle of market emotions should not rule you... EXUBERANCE Has been one of my best investment decisions... Markets are on a roll. EXCITEMENT Should be a temporary correction I can withstand this, things should turn around... RELIEF ANXIETY FEAR I ve finally recovered my principal. but should i exit now? Should i have exited when I was making money Once i recover my pricipal I ll exit Will the market ever go up? How long will this correction last? HOPE PANIC RELIEF

22 When to start Starting early can make a diference to your wealth The above content is an example only for illustration purposes, please contact your financial adviser. The growth rate of the investment is 10%.

23 What are the returns you earn The returns you earn over time can make a difference Rs.4.97 Crores Rs.2.67 Crores Rs.1.20 Crores 8% 12% 15% Value at age 60 of Rs.100,000 invested every year at age 30 upto 58 at different rates of returns The above content is an example only for illustration purposes, please contact your financial adviser. The growth rate of the investment is 8% 12% 15%.

24 To put it in perspective Where you invest: Equities can outperform other classes over time When you invest: Time in the market and not market timing matters! How you invest: Avoid market emotions and market noise When you start: Starting early can help in the long-run

25 Disclaimer The information used in the presentation has been obtained from sources published by third parties. While such publications are believed to be reliable, however, neither the AMC, its officers, the trustees, the Fund nor any of their affiliates or representatives assume any responsibility for the accuracy of such information. CRMF, its sponsors, its trustees, CRAMC, its employees, officers, directors, etc assume no financial liability whatsoever to the user of this document. Mutual Fund Investments are subject to market risk. Investors are requested to read the Scheme related documents carefully before investing. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

26 THANK YOU