Did you know ? If your current monthly expenses are Rs. 30,000/- p.m, after 20 years you will require Rs. 80,000/- p.m to maintain the same lifestyle
Assuming inflation rate of 5%
Did you know ? An education degree for your child which currently costs Rs. 10 lakh will cost Rs. 21 lakh after 15 years.
Assuming inflation rate of 5%
Individual Investor Needs: Investment Goals
• All individuals need to save for
– Retirement – Child’s education / marriage – Medical emergency – Other family obligations
Every individual has one or more of the above goals
Individual Investor: Life Stages
Earnings Consumption Savings
22 27 Young Independent Young Married
40 Middle Age
60 Retirement
All individuals have a finite period to save for their investment goals
Value of Money over time
Impact of inflation on monthly expenses of Rs. 30,000 today Value of Rs. 100,000 over time
Performance of Various Asset Classes
Cumulative annualised returns 1980-2004
15.6%
10.3% 6.7%
8.9%
5.7% 3.55% -1.1%
Inflation
Gold Growth
Bank FDs Real Growth
BSE Sensex
Equities outperform other asset classes over the long term
Individual investors are scared of ….. The Downside Risk in Equities The Risk of Market Volatility The Risk of Market Timing
What else makes a material impact on investments in equity ?
Investing in the BSE Sensex – 25 years
Returns are from 1981- Dec 2005
16.90% 15.07%
16.02%
Fixed investment at highest sensex value every year
Fixed investment at lowest sensex value every year
Fixed investment on 1st day of every month
Market timing does not matter over the long term
The Power of Compounding
Debt Instrument Monthly investment Assumed annualised return Final corpus Rs. 5,000
BSE Sensex Scenario A Rs. 5,000
BSE Sensex Scenario B Rs. 5,000
10% Rs. 43 lakh
15% Rs. 89 lakh
20% Rs. 1.9 crore
From Jan 1, 1984 to Dec 31, 2004 – a 21 year period
Summary
Investors needs to save regularly and invest those savings in higher return assets to create wealth
Long Term Systematic Monthly Investment in equity schemes is ideal for this
How Do You Achieve Your Financial Goals
• Retirement • Child’s education - international • Family commitments - medical emergency, etc
Retirement Planning
Monthly Household Expenses 83,579 Retirement corpus required to meet post retirement expenses. (if invested at 7%)
1.4 crore
30,000
Inflation 5%
Monthly investment needed to meet post retirement expenses 21 Yrs at 12% at 15% 12,583 8,083 5,090
Today
At the time of retirement
at 18%
Child’s Education
Educational Degree
34,20,000 20,00,000
Inflation 5%
Monthly investment needed to achieve this goal at 12% at 15% 12,456 10,166 8,237
11 Yrs When your child actually goes for this degree
at 18%
Present
Child’s Marriage
43,70,000 Monthly investment needed to achieve this goal 20,00,000
Inflation 5%
at 12% at 15% 16 Yrs at 18%
7,509 5,466 3,925
Present
When marriage actually takes place
So What Are The Benefits Of Investing Through A Systematic Investment Plan !
Benefit : 1
• The Benefit of Long Term Equity Investment
– Equities give superior returns among all asset classes over the long term – Mutual Fund has a track record of consistent good performance relative to index.
Benefit : 2
• The Benefits of Systematic Monthly Investment
– Takes out the risk of market timing – Adds the benefits of the power of compounding and rupee cost averaging
Benefit : 3
• Flexibility
– You can choose from a wide array of schemes – You can decide to keep invested amounts in an earlier scheme & invest future SIP instalments into a new scheme
Benefit : 4
• Added Convenience
– Auto debit facility across major cities in India – Regular account statements – Redemption request directly credited into your bank account
Make your investment goals a reality Start a S.I.P. today !
A Rupee Saved Is A Rupee Earned - A Long Journey Begins With A Small Step