a quick guide to systematic investment plan -...

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

A quick guide toSystematic Investment Plan

India Growth Story

2

Invest in the future!

Invest in the change we believe in...

India Financials – A Snapshot

• Savings Rate:- Around 28%

• Young Population

• GDP Growth rate:- Between 5-7% At this rate India GDP expected to be at ` 4.5 trillion very soon

• Per Capita now:- ` 1017

• Expected 2020:- ` 3213

3

Indian Economy

• Long term:- Bright prospects

• Demographics, Income growth & ‘India’ story

4

ROE Trend

India

BRIC

World

EM

Asia Pacex - Japan

0%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

5%

10%

5%

20%

25%

We simply attempt to be fearful

when others are greedy and to

be greedy only when others

are fearful.

Warren Buffett

5

1 year forward P/E of Sensex

6

25,000

20,000

15,000

10,000

5,000

May-910

5

10

15

20

25

30

35

40

45

May-94 May-97 May-00 May-03 May-06 May-09 May-12

Sensex(RIIS)Roll P/C

7

Healthy Savings

Indians areamongst

the highestsavers inthe world

France11.1%

Germany10.7%

Japan6.3%

UK5.5%

USA1.4%

Hou

seho

ld S

avin

gs R

ate

A C

ompa

riso

n

Savings – An Indian Religion

8

Current share of Household Savings

*Contractual savings comprisesLife Insurance,Provident & Pension Funds

Bank FDs43%

Small Savings18%

Shares & Debentures1%

Cash10%

ContractualSavings*28%

Investors does not seem to use equities to create long term wealth

Individual Investor: Savings Profile

9

10

Inflation is the Enemy

Understanding Inflation

11

Inflation Rate8%*

` 6,805after

5 years… ` 4,631after

10 years… ` 2,145after

20 years…

` 10,000 today will

be worth …

` 993after

30 years

Impact of inflation on monthly expenses of ` 30,000 today

Value of ` 100,000 over time

Inflation @ 8%

30,000 44,080

95,165

1,39,829

Today 5 years 15 years 20 years

100,000

68,058

31,524 21,454

Today 5 years 15 years 20 years

Value of Money over time

12

Investors need to beat Inflation

13

Rules of Investing

Mr. Smart

Per month saving `5, 000

`75 Lacs `2.25 Cr

`15, 000

@ 8% p.a.*

How much would theyhave after 30 years

Mr. Intelligent

Rule1: How much you save makes a difference

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The more you save the more your wealth will be!

Mr. Smart


`75 Lacs

`15, 000

@ 8% p.a.*


Mr. Intelligent

Mr. Smart will need to invest `12,700 p.m.to match the early starter

Mr. Smart Mr. IntelligentMonthly investment 7,500

20 Years

8%

18.00 Lakh

44 Lakh

5,000

30 Years

8%

18.00 Lakh

75 Lakh

Investment period

Rate of return

Total investment

Value at the end of the invt. term

Rule 2: Make time work for you!

15

The more you delay your start – the more you have to invest later to catch up

Mr. Smart


`75 Lacs `3.5 Cr

`15, 000

@ 8% p.a.* @ 15% p.a.*


Mr. Intelligent

This is for illustration purposes only. Calculations are based on assumed rate of return and actual return on your investments can be more or less than what has been used in this illustration. *Compounded monthly, all figures are rounded.

Rule 3: Boost your savings – Invest Right!

16

Earning the right return will help you to create more wealth

This is for illustration purposes only. Calculations are based on assumed rate of return and actual return on your investments can be more or less than what has been used in this illustration. *Compounded monthly, all figures are rounded.

Mr. Smart Mr Intelligent

Monthly investment 5,000 15,000

Investment period 20 Years 30 Years

Rate of return 8%* 15%*

Value at the end of the investment term 30 lacs 10.5 crore

Invest more!

Invest long-term!

Invest in right products to maximise returns!

Summary…

17

18

Asset Classes

Equities outperform other asset classes over the long term

Source: IIFL, Internal; *1-3 year deposit rate; ^excluding dividends; data as at end FY2011

WPI Inflation Bank FD* BSE Sensex^

Cumulative annualizedreturns: 1982 to 2011

6.75%

8.96%

2.08%

16.75%

9.37%

Growth

Real Growth

Performances of Various Asset Classes

19

Individual Investors are scared of…

The Downside Risk in Equities

The Risk of Market Volatility

The Risk of Market Timing

20

21

Does Timing Work?

Market timing does not matter over the long term

Data source: ICRA MFIE

16.02% 16.90% 15.07%

Fixed investment athighest sensex value

every year

Fixed investment atlowest sensex value

every year

Fixed investment on1st day of every month

Investing in the BSE Sensex – 25 years

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23

Power of Compounding – 8th Wonder of the World.

ExpectedReturn

9% 1,121,122 1,830,743 2,941,784

15% 3,243,530 6,923,280 14,677,180

18% 5,737,253 14,113,585 34,578,806

25 Yrs. 30 Yrs. 35 Yrs.

Amt. in `

Example : SIP of `1000/- p.m.

24

Table Illustrating the power of compounding (Assumed rate of return: 12% p.a.)

Monthly Investment(`)

12% return per annum

5 years 10 years 15 years 20 years 25 years

2,000 1.65 Lakh 4.65 Lakh 10.09 Lakh 19.98 Lakh 37.95 Lakh


10,000 8.25 Lakh 23.23 Lakh 50.46 Lakh 99.91 Lakh 1.90 Crore

15,000 12.37 Lakh 34.85 Lakh 75.69 Lakh 1.50 Crore 2.85 Crore

20,000 16.50 Lakh 46.47 Lakh 1.01 Crore 2.00 Crore 3.80 Crore


50,000 41.24 Lakh 1.16 Crore 2.52 Crore 5.00 Crore 9.49 Crore

The above table is for illustration purpose only and not an indication of the performance of any of the schemes of UTI Mutual Fund.Calculations are based on assumed rate of return and actual return may be more, or less.

Source : Internal

Invest Systematically to Benefit from the Power of Compounding

The Power of Compounding: Illustration A

25













Source : Internal


The Power of Compounding: Illustration B

26













The Power of Compounding: Illustration C

27

Source : Internal


28

Rupee Cost Averaging

• Takes the guesswork out of “timing” the market

• Involves investing a set amount of money at regular intervals over a long period of time

• You automatically buy more units when prices are lower and fewer units when prices are higher

Total Investment `12,000, total no. of units purchased 1206.82 Average cost per unit 9.94 < 10

Lower average cost per unit over time

Benefit of SIP - Rupee Cost Averaging

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Example for illustration purpose only

Month Amount Invested`

Purchase Price`

No. of unitspurchased

1 1000 10 100.00 2 1000 9 111.11 3 1000 10 100.00 4 1000 11 90.91 5 1000 12 83.33 6 1000 10 100.00 7 1000 09 111.11 8 1000 08 125.00 9 1000 11 90.9110 1000 09 111.1111 1000 10 100.0012 1000 12 83.33

Magic of SIP

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You started from 20000 & ended at 20000 but

generated CompoundedReturn of 27%

Your monthly Investment ofRs.1000 (Total `36000) turned

into `54000

Sensex20000

Jan 2008

Sensex20000

Dec 2010

Sensex15000

Sensex15000Sensex

9000March2009

REGISTERED OFFICE: UTI Tower, 'Gn' Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400051. . Phone: 022 – 66786666. STATUTORY DETAILS: UTI Mutual Fund has been set up as a Trust under the Indian Trust Act, 1882. SPONSORS: State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation of India (liability of sponsors limited to `10,000/-).

INVESTMENT MANAGER: UTI Asset Management Co. Ltd. (Incorporated under the Companies Act 1956). TRUSTEE: UTI Trustee Co. (P) Ltd. (incorporated under the Companies Act 1956).

RISK FACTORS: All investments in Mutual funds and securities are subject to market risks and the NAV of the units issued under the scheme may go up or down depending upon the factors and forces affecting the securities market. Past performance of the Sponsor / Mutual Fund / Scheme(s) / AMC is not necessarily an indication of future results and may not necessarily provide a basis for comparison with other investments. All Mutual Funds and Securities investments are subject to market risks and there can be no assurance or guarantee that the objectives of the scheme will be achieved. Statements/Observations made are subject to the laws of the land as they exist at any relevant point of time. Growth, appreciation and income, if any, referred are subject to the laws of the land as they exist from time to time. The name of the scheme does not in any manner indicate either the quality of the scheme, its future prospects or returns. The scheme is subject to risks relating to Credit, Interest Rates, Liquidity, Securities Lending, reinvestment risk , default risk and Investment in Overseas Markets, Trading in debt and equity derivatives (the specific risk could be Credit, Market, Illiquidity, Judgmental error, Interest rate swaps and Forward rate agreements), investment in securitised papers and scheme specific risk. Please contact the nearest UTI Financial Centre, Chief Representative or AMFI/ NISM certified UTI MF Independent Financial Advisor for a copy of the Key Information Memorandum cum Application Form and Scheme Information Document. Please read the Scheme Information Document carefully before investing.

Web site: www.utimf.com

Registrar: M/s Karvy Computershare Pvt. Ltd. Narayani Mansion, H. No. 1-90-2/10/E, Vittalrao Nagar, Madhapur, Hyderabad - 500 081. Tel.: 040 – 23421944 to 47, Fax: 040 - 23115503, Email:[email protected]

Benefit of SIP - Rupee Cost Averaging

31

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS,

READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

TOLL-FREE: 1800 22 1230 “UTIMF” to 5676756 [email protected] www.utimf.com | SMS

a quick guide to systematic investment plan -...

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