Objective of the PresentationWhat is MF ?

How MF works ?Why invest in MF ?

How do you make money from mutual fund ?SIP and its power and benefits

How much should a MF be allocated in a portfolio

What is a Mutual Fund ?

.

Things which are “Mutual” in a Mutual Fund

Trust

Pool of Money

Investment Objectives

Risk & Returns

Mutual Fund is a Trust that Pools the Savings of a number of Investors,

having a common Financial Goal, and is collectively managed by an

Asset Management Company according to stated investment objectives.

How Mutual Fund works?

Why Mutual Fund ?Portfolio Diversification

TransparencyLiquidity

ConvenienceFlexibility

Low InvestmentMarket linked Returns

Return PotentialLow Cost

Professional ManagementReduction in Risk

Choice of SchemesWell Regulated

Tax Benefit

Buying a Mutual Fund is like buying a small slice of a big Pizza

Education Earning Years

Phase I Phase II Phase III

Age- 22 yrs Age- 60 yrs

MarriageChild birth

Child’s Education

Child’s Marriage

Housing

22 yrs 38 yrs 10- 20 yrs

Human Life Cycle

60Retirement

40Middle Age

27Young Married

22Young Independent

Individual Investor: Life Stages

EarningsConsumptionSavings

All individuals have a finite period to save for their investment goals

Value of Money over timeImpact of inflation on monthly expenses of Rs. 30,000 today

Value of Rs. 100,000 over time

At inflation of 5%

Investors need to beat inflation

30,00038,288

62,368

79,599

Today 5 years 15 years 20 years

100,000

78,353

48,10237,689

Today 5 years 15 years 20 years

Instrument Tax Benefit Return Duration

EPF √ 8.65% Long Term

PPF √ 8 % Long Term

NSC √ 8 % Long Term

FD’s – Banks & Post Office √ 7 % – 8 % Short Term

Senior Citizen Savings Scheme

√ 8.5 % Long Term

Mutual Funds √ Market Linked Long Term & Short Term

ULIP √ Market Linked Long Term

NPS (New Pension Scheme) √ Market Linked Long Term

Direct Equity √ Market Linked Long Term

Gold √ Market Linked Short Term

Real Estate √ Market Linked Long Term

10

Terminologies Demystified…Asset Allocation

Diversifying investments in different assets such as stocks, bonds, real estate, gold ,

cash in order to minimize risk.

Fund Manager The individual responsible for making

portfolio decision for a mutual fund, in line with fund’s objective.

Fund Offer Document Document with investment objectives, risk

factors, expenses summary, how to invest etc.

Terminologies Demystified (contd.)Dividend

Profits given to the investor from time to time.

GrowthProfits ploughed back into scheme. This causes the NAV to rise.

NAV

Market value of assets of the scheme minus its liabilities.

How do you make money from a mutual fund?1. Capital appreciation:

As the value of securities in the fund increases, the fund's unit price will also increase. You can make a profit by selling the units at a price higher than at

which you bought

2. Coupon / Dividend Income:

Fund will earn interest income from the bonds it holds or will have dividend income from the shares

How do you make money from a mutual fund?3. Income Distribution:

The fund passes on the profits it has earned in the form of dividends

DisclaimerAs the value of securities in the fund increases, the fund's unit price will also increase. You can make a profit by selling the units at a price higher than at

which you bought. Although Mutual Fund does not guarantee the same.

A Systematic Investment Plan (SIP) is an investment plan that allows an individual to invest regularly a fixed amount at a specified frequency say, monthly or quarterly

>> A Recurring Deposit in Mutual Funds

Systematic Investment Planning (SIP)

•It is a method of investing regularly to benefit from the stock market volatility and take the benefit of Rupee Cost Averaging.

•Convenient and Hassle-Free - Automatic investments, one-time instruction.

•Forced Saving : Small amount invested every month to become a huge sum after some years.

•Light on the wallet.

•Become a disciplined Investor – Setting aside and invest a fixed sum of money.

• It is the small drops that make an ocean - Your money earns more money for you – Compounding Effect

• Relieves you of the last minute pressure• Slow and steady wins the race - SIP helps wins over Lump sum in Volatile

Markets• Reduces the risk of investing at the wrong time - By investing in the markets

without taking a call on what is the ‘Right’ time.• Investing a fixed sum at fixed intervals we can bring down the average cost

per unit. This is called Rupee Cost Averaging.• SIP takes care that your average price works out to be lower than the price

you would have paid at the market peak (illustrated in the chart)

Start Early : SIPStarting Age Total Amount Saved Value at the age of

60

25 4,20,000 23,09,175

30 3,60,000 15,00,295

35 3,00,000 9,57,367

40 2,40,000 5,92,947

......the sooner you start, makes a difference!

KBC – Kaise Banoge Crorepati ?

Scenario 1 : A Child is born (be it a Girl or a Boy)……Celebrate her / his birth by starting a SIP of Rs.3000/=

pm…….They will be Crorepati at the age of 25 (assuming the return of 15% pa)Scenario 2 :

Start a savings of Rs.4000/= pm, the chances of becoming a Crorepati is much more, even @ 14%

Scenario 3 : Rs.4500/= would be required to make you a Crorepati @ 13%

Scenario 4 : You have to put Rs. 5000/= ina SIP if we assume @ 12%

THINK BIG !!!

Summing Up…… Mutual Funds are the best way to en-cash the upside potential of Equity Markets A Long-term horizon is important for successful investing in Equity Funds. While equity

investments may be volatile in the short-term, they have the potential to deliver superior returns over a period of time.

Trying to time the market is a good idea, but only in hindsight. It’s the time one gives an investment that matters, and not timing.

The decision to sell must be clearly based on a specific need. Start Early & Investing regularly through SIP can help stabilize long term returns and

create Wealth. Harness the power of compounding by choosing Growth option

Thanks