1. Financial Planning

2. Fundamentals don’t change

3. Being rich = Money + time

4. Salary 50000
Investment 5000
Rate of return 14%
Years 30
Total investment 18,00,000
Portfolio value 27,785,278

5. 0
Graph
0
000
0
₹ 30
0 0
000
0
₹ 20
000
0 00
₹ 10
₹ 0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30

6. Year Your age Total saved excluding interest Interest earned Total saved including interest
0 25 INR 0 INR 0 INR 0
1 26 INR 60,000 INR 4,550 INR 64,550
2 27 INR 120,000 INR 18,137 INR 138,137
3 28 INR 180,000 INR 42,026 INR 222,026
4 29 INR 240,000 INR 77,660 INR 317,660
5 30 INR 300,000 INR 126,682 INR 426,682
6 31 INR 360,000 INR 190,968 INR 550,968
7 32 INR 420,000 INR 272,653 INR 692,653
8 33 INR 480,000 INR 374,175 INR 854,175
9 34 INR 540,000 INR 498,309 INR 1,038,309
10 35 INR 600,000 INR 648,222 INR 1,248,222
11 36 INR 660,000 INR 827,524 INR 1,487,524
12 37 INR 720,000 INR 1,040,327 INR 1,760,327
13 38 INR 780,000 INR 1,291,323 INR 2,071,323
14 39 INR 840,000 INR 1,585,858 INR 2,425,858
15 40 INR 900,000 INR 1,930,028 INR 2,830,028
16 41 INR 960,000 INR 2,330,782 INR 3,290,782
17 42 INR 1,020,000 INR 2,796,041 INR 3,816,041
18 43 INR 1,080,000 INR 3,334,837 INR 4,414,837
19 44 INR 1,140,000 INR 3,957,464 INR 5,097,464
20 45 INR 1,200,000 INR 4,675,659 INR 5,875,659
21 46 INR 1,260,000 INR 5,502,801 INR 6,762,801
22 47 INR 1,320,000 INR 6,454,143 INR 7,774,143
23 48 INR 1,380,000 INR 7,547,073 INR 8,927,073
24 49 INR 1,440,000 INR 8,801,414 INR 10,241,414
25 50 INR 1,500,000 INR 10,239,762 INR 11,739,762
26 51 INR 1,560,000 INR 11,887,878 INR 13,447,878
27 52 INR 1,620,000 INR 13,775,131 INR 15,395,131
28 53 INR 1,680,000 INR 15,935,000 INR 17,615,000
29 54 INR 1,740,000 INR 18,405,649 INR 20,145,649
30 55 INR 1,800,000 INR 21,230,590 INR 23,030,590

7. “Compound interest is the 8th wonder of the world”
“He who understands it, earns it ... he who doesn't ... pays it.”

8. Salary 50000
Investment 5000
Rate of return 14%
Years 20
Total investment 12,00,000
Portfolio value 65,81,731

9. Salary 50000
Investment 5000
Rate of return 14%
Years 10
Total investment 6,00,000
Portfolio value 13,10,456

10. Investing Early - example 1
Rs. 3246 p.m. @ 12%
vijay 1 crore
30 yrs 11.7 lacs
Rs. 10871 p.m. @ 12%
Ajay 1 crore
Its way too early 20 yrs 26 lacs
for me to save
Rs. 44636 p.m. @ 12%
Sanjay 1 crore
Its way too early I will save when 10 yrs 26 lacs
for me to save I have less expenses

11. Investing Early - example 2
Rs. 1000 @ 12%
vijay 36 lacs
30 yrs 3.6 lacs
Rs. 1500 @ 12%
Ajay 54 lacs
10 yrs 20 yrs 1.8 lacs

12. Investing Early - example 3
Rs. X for 30 years at 12%
86%
15
yrs
14%

13. Investing early lowers your burden later

14. Investing Early
No. of years of
contribution at the end % of corpus generated Total corpus
of 30 yr. period
0 100.0% 1.76 crores
5 97.6% 1.72 crores
10 93.4% 1.65 crores
15 85.7% 1.51 crores
20 71.7% 1.26 crores
25 46.2% 0.81 crores
Rs. 5000 @ 12%
It doesn’t matter much if you don’t invest in
later years

15. Investing Early - example 4
26 yrs old 30 yrs 3.5 crore
50000
1 5000
15000
10 yrs 10 yrs 10 yrs
10000
2
30 yrs
14000 no investment
3
10 yrs 20 yrs

16. Investing Early
investments made in early years contribute the
most

17. Investing Early
Years without
Amount required per % increase in investment
contribution at the end
month to reach the same corpus
of tenure
0 5000 0.00%
5 5120 2.41%
10 5350 7.01%
15 5830 16.6%
20 6980 39.6%
25 10830 116%
29 43100 762%
Save a few more bucks early

18. SIP of Rs. 1000 p.m.
Last few years contribute the most
Choice of investment asset matters a lot

19. How to start investing?

20. life insurance
≠
investment

21. ISSUES WITH ULIPs

22. AVOID THESE
ULIPs
Whole life insurance plans
Money back insurance plans
Pension/retirement plans
Child future plans
Any insurance cum investment product

23. online term insurance

25. Things to consider
Current liabilities
Future goals of your dependents
provide regular day-to-day expenses

26. tips while buying
buy before your next birthday
try to diversify
buy early in life for longer tenure

27. BEST ASSET CLASS?

28. INVESTING
Ultra-short Time Horizon (< 1 Year)
- Cash on Hand
- Bank Savings Accounts
- Liquid & Ultra-short term debt funds
Short Time Horizon ( 1- 3 Years)
- Short term Debt Mutual Funds
- Bank Fixed Deposits
Medium Time Horizon (3-5 Years)
- Bank Fixed Deposits
- Debt Mutual Funds
- Medium term Gilt Funds
Long Time Horizon (> 5 Years)
- Gold
- Equity (Stocks)
- Equity Mutual Funds
- Real Estate

29. Different Asset Classes
Asset type Returns post inflation Taxable Pros Cons
Cash -6% No Liquid. Safe No growth
Saving a/c -2 to 0% Above 10,000 Liquid. Safe. No growth. Taxable
Fixed deposit 1 - 3% Above 10,000 Hedge against inflation. Safe Lock-in. Taxable
7 years lock-in, partial
PPF 2.6% No Extremely safe
withdrawal
8.7 or 6 years lock-in.
KVP or NSC 2.16% No Safe
Offline
Debt MFs 1-3% Yes Liquid. Better than FD. No growth. Taxable
As good as liquid. Safe. Non Returns only in long
Gold -1 to 4% No. Gold ETF - Yes
taxable. term
Non-liquid. Fixed.
Real estate 6-9% Yes High returns. Maintenance costs.
Taxes.
Liquid. Best for long term
Equity 8-9% > 1 yr. - No
wealth creation.
Unsafe in short run

30. Is Equity really risky?

31. When you invest in Equity, you are a partner

32. Learning from history

33. Learning from history

34. Learning from history

35. Learning from history
Investment
1 yr 2 yrs 3 yrs 5 yrs 7 yrs 10 yrs 15 yrs
tenure
Total positive
22 20 24 23 23 21 16
instances
Total
30 29 28 26 24 21 16
instance
% positive
73% 69% 86% 88% 96% 100% 100%
instance

36. Learning from history
100.00%
75.00%
50.00%
25.00%
0%
1 yr 2 yrs 3 yrs 5 yrs 7 yrs 10 yrs 15 yrs
% positive instance

37. Learning from history

38. Learning from history
Investment
1 yr 2 yrs 3 yrs 5 yrs 7 yrs 10 yrs 15 yrs
tenure
Best return 101% 59% 51% 43% 37% 31% 26%
Worst return -51% -22% -14% -2% -3% 3% 7%

39. Learning from history
150.0%
112.5%
75.0%
37.5%
0%
-37.5%
-75.0%
1 yr 2 yrs 3 yrs 5 yrs 7 yrs 10 yrs 15 yrs
Best return Worst return

40. Learning from history
Tenure 1 yr 2 yrs 3 yrs 5 yrs 7 yrs 10 yrs 15 yrs
Best return 101% 59% 51% 43% 37% 31% 26%
Average of 5 best 85% 52% 46% 39% 30% 27% 22%
Worst return -51% -22% -14% -2% -3% 3% 7%
Average of 5 worst -27% -13% -3% 1% 3% 6% 12%

41. Equity is risky in the short run and quite
safe in the long run

42. Debt is safe in the short run and quite risky
in the long run

43. Real estate vs. Equity

44. Misconceptions related to Real estate
Real estate prices always rise
It gives better returns than any other form of asset

46. Reality vs. Equity
Long term real estate returns are 14% CAGR
(valid for Mumbai).
If you add rental yield of 2-3%, then the total returns are 16-17% CAGR. 20% tax after indexation
The Sensex returned 18% from base 100 in 1978.
If you add dividend yield of 1.5%, then you get 19.5% CAGR
5000 p.m. 17% 19.5%
20 yrs 84 lacs 1.44 cr
30 yrs 4.2 cr 10.2 cr

47. Investing in equity

48. Should you invest in stocks directly?

49. How to go about investing in equity?
Invest in Equity MFs
Invest via SIP
Don’t be a MF collector

50. Investing in MFs
2 Large cap funds
1 Large + Mid cap fund
1 Equity tax planning
1 debt fund
Top stock Top sector Top 3 sector Large cap +
Funds Top 10 stocks Large Cap
exposure exposure exposure Mid cap
96% money in 85% in 49
2 funds 5.52% 24.5% 52.8% 37% 74 stocks stocks
97% money in 81% in 59
5 funds 4.67% 21.07% 46% 34% 111 stocks stocks
98% money in 80% in 60
10 funds 5.7% 21% 46.5% 37% 131 stocks stocks

51. Choosing an MF
valueresearchonline.com

52. Expense ratio is important in long run
Rs. 100,000 at 12%

53. Buying an MF
- KYC compliance (PAN, POI, POA)
- fundsindia.com
- Approach the AMC
- Open a Demat account

54. Few tips about saving and investing
Start with goals in mind
Short term - upgrade to sedan in 2 years
Long term - start a restaurant after 20 years
Save first spend later
Automate

55. Automate
30% 10%
Future goals Salary account Retirement
Setup SIP in mutual fund
Goal 1 Goal 2 60%
Goal 3
Expense account
All your regular
expenses

56. Don’ts
Get into wrong products for Tax saving
Keep paying for endowment/ULIPs
Not have emergency funds
Buy stocks on the basis of tips given by others
Shop for things you don’t need

57. If you were to take away single thing from this presentation
Start investing early

58. Two sites you should refer to:
www.jagoinvestor.com/archives
www.investmentyogi.com
Example taken from this book
Jagoinvestor - Changing your relationship with money