Mutual Fund knowledge centre

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Presentation on Mutual Funds & SIP By Yogesh Bulbule, Money Mantra Investments.

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  • Mutual Fund knowledge centre

    1. 1. Knowledge Centre<br />Curious About Mutual Funds?<br />Presenting an elementary guide that covers all aspects of Mutual Funds & empowers you knowledge so you can take right financial decisions.<br />Come, begin your journey with us.<br />Visit us @ www.MoneyMantraOnline.com<br />
    2. 2. Invest Wisely!<br /><ul><li> Introduction</li></ul>Investing wisely makes your money grow, helping you to meet your financial obligations.<br />To ensure that you get maximum gains from your investments:<br />They must be well planned, keeping in mind your needs & investment objective.<br />You need to take into account the fact that inflation makes everything more costly year after year.<br />You also have to plan for your retirement years…. By which time your regular sources of income may start thinning though your goals & aspirations should not!<br />All it needs is disciplined and regular investing, with clear financial objectives!<br />Visit us @ www.MoneyMantraOnline.com<br />
    3. 3. Introduction to Mutual Funds<br />Visit us @ www.MoneyMantraOnline.com<br />
    4. 4. What are Mutual Funds?<br />A mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. These investors buy units of a particular Mutual Fund scheme that has a pre defined investment objective and strategy.<br />The money pooled by a mutual fund is utilized by the Fund management team to purchase stocks (equity/shares), bonds (debt) or other securities as stated in the investment objective of the scheme.<br />Then the gains or losses which result from the investment process, along with any interest or dividends earned, are passed on to the investors. <br />Thus a mutual fund is the most suitable investment for a common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.<br />Visit us @ www.MoneyMantraOnline.com<br />
    5. 5. What are Mutual Funds?<br />Visit us @ www.MoneyMantraOnline.com<br />
    6. 6. Mutual Funds – An Illustration*<br />For instance, if Ram, Shyam and Sudha all want to invest in equity, they may collect their money in a common kitty. This kitty would represent the mutual fund.<br /> Let’s say Ram had contributed Rs.5000 to the kitty, Shyam gave another Rs.3000 and Sudha put in Rs.2000. This total of Rs.10000 would be invested in various securities by an investment manager.<br /> At the end of one year, if the common kitty of Rs. 10000 becomes Rs.11000, i.e. a profit of Rs.1000, theoretically, Ram’s share in this profit would be Rs.500, shyam’s Rs.300 and Sudha’s Rs.200.<br />*This example is for illustration purpose only, in a mutual fund there may be some expenses as well which would also be distributed proportionately.<br />Visit us @ www.MoneyMantraOnline.com<br />
    7. 7. NAV – The value of the units of a Mutual Fund<br />When you invest in a mutual fund scheme, you will receive a number of units in exchange for the money you invest. In effect, you buy units.<br />The value of these units keeps on changing once the investment manager begins investing the money. It could go up if the value of the overall portfolio goes up, i.e. if the scheme makes temporary profits; or it could go down if the mutual fund scheme makes temporary loss. In fact, it will change on a daily basis on the basis of investments made under the scheme. The value of a unit is called the Net Asset Value or NAV of a scheme.<br />Visit us @ www.MoneyMantraOnline.com<br />
    8. 8. NAV – An illustration<br />Let’s say each unit is worth Rs.10.<br />Ram, who has invested Rs.5000, would receive 500 units^<br />Shyam would get 300 units^ (for Rs.3000) and<br />Sudha would get 200 units^ (for Rs.2000)<br />^Assuming there is no entry load.<br />Visit us @ www.MoneyMantraOnline.com<br />
    9. 9. Four simple reasons why you should invest in Mutual Funds!<br />Visit us @ www.MoneyMantraOnline.com<br />
    10. 10. Putting money in traditional saving instruments limits growth. By investing in mutual funds you can make your money work harder for you and stay ahead of inflation.<br /> Growth<br />Visit us @ www.MoneyMantraOnline.com<br />
    11. 11. Benefit from the expertise of qualified fund managers. These experts, with their experience and research, select stocks with the intent of maximising returns and minimising your risks.<br /> Expertise<br />Visit us @ www.MoneyMantraOnline.com<br />
    12. 12. By spreading investment across different sectors and several companies, mutual funds seek to reduce risk and dependence on any company or sector.<br />Diversification<br />Visit us @ www.MoneyMantraOnline.com<br />
    13. 13. You can start your investing journey via a Systematic investment Plan (SIP)* in equity mutual funds with as little as Rs.1000 per month (and Rs.500 in Equity Linked Savings schemes).<br />Affordability<br />Visit us @ www.MoneyMantraOnline.com<br />
    14. 14. Other Benefits ofMutual Funds<br />Transparency<br />Liquidity<br />Tax Benefits<br />Regulated by SEBI<br />Visit us @ www.MoneyMantraOnline.com<br />
    15. 15. Types of Funds<br />Open ended Funds do not have a fixed maturity period. These are open for entry & exit on any transaction day at the prevailing NAV.<br />Open ended<br />Funds<br />Close ended funds have a stipulated maturity period. These schemes are open for subscription / entry only during a specified period at the time of their launch. Some close ended schemes provide an exit option before the maturity on stipulated dates charging some exit load.<br />Close ended<br /> Funds<br />Visit us @ www.MoneyMantraOnline.com<br />
    16. 16. Types of Funds<br />Equity / Growth Funds invest in shares or equity of companies with a potential for growth and capital appreciation. They invest in well-established companies where the company itself and the industry in which it operates are thought to have good long term growth potential.<br />Equity<br />Funds<br />Debt Funds or fixed income funds invest in government or corporate securities / bonds that offer fixed rates of return. The goal of fixed income funds is to provide current income consistent with the preservation of capital.<br />Debt<br /> Funds<br />Visit us @ www.MoneyMantraOnline.com<br />
    17. 17. Types of Funds<br />Hybrid or balanced Funds invest in a combination of both equity and debt. They seek long-term growth of capital by investing in equity as well current income from the debt companies.<br />Hybrid<br />Funds<br />Liquid or Money Market Funds provide a very high stability of principal while seeking a moderate to high current income. They invest in highly liquid, virtually risk-free, very short term debt securities of agencies of the Indian Government, Banks and corporations and Treasury Bills.<br />Money<br />Market<br />Funds<br />Visit us @ www.MoneyMantraOnline.com<br />
    18. 18. Types of Funds<br />Monthly Income Plans are suitable for those who want a steady & regular income on their investments very similar to the MIS (Monthly Income schemes) of post offices. But here the monthly income is not guaranteed though the Mutual Fund companies try to maintain a regular dividend policy for these schemes.<br />MIP<br />Monthly Income Plans<br />ELSS popularly known as Tax Saving Funds invest predominantly in equities. They offer deduction from gross total income to the investors, at present, under section 80C of the Income Tax Act. The investment made to any ELSS scheme is eligible for deduction up to Rs.1 lac every financial year & every purchase transaction is strictly locked in for a period of 3 years.<br />ELSS Equity Linked Saving Schemes<br />Visit us @ www.MoneyMantraOnline.com<br />
    19. 19. Options Available<br />Growth<br />Dividend<br />Dividend Payout<br />Dividend Reinvest<br />Visit us @ www.MoneyMantraOnline.com<br />
    20. 20. Things to consider while choosing the fund<br />Is the fund’s investment objective same as yours?<br />What is the funds investment strategy?<br />How has the fund performed?<br />Who is the fund manager, & since when he’s managing the fund?<br />Knowing the risk, and managing it!<br />Visit us @ www.MoneyMantraOnline.com<br />
    21. 21. Time is Money<br />
    22. 22. When they say time is money,they must mean Systematic Investment Plan<br />SIP<br />Smart Investors’ Preference<br />Visit us @ www.MoneyMantraOnline.com<br />
    23. 23. Little By little, You can Achieve a lot!<br />Visit us @ www.MoneyMantraOnline.com<br />
    24. 24. Child’s Marriage<br /> Child’s Education<br /> Housing<br /> Child’s Birth<br /> Marriage<br /> 22 yrs 38 yrs 15-20 yrs<br /> Age-22 yrs Age – 60 yrs<br />Human Life Cycle<br />Phase1<br />Phase 2<br />Phase 3<br />Education<br />Earning Years<br />Post Retirement Yrs<br />Visit us @ www.MoneyMantraOnline.com<br />
    25. 25. Phase II: The most challenging Phase<br />Rent, Electricity, Telephone<br />Meet current recurring expenses Child’s education, Child’s marriage<br />Annual Holiday with family…..<br />House<br /> Build Capital Assets<br />Car<br />Retirement ; Contingencies<br />Make provision for<br />illness, Accidents, etc.<br />Do you save and invest so that your dreams turn into reality<br />?<br />
    26. 26. It is critical, Yet Most Don’t Do It!<br />I will Start From Next Month. I don’t have money to save.<br />The returns are hardly worth the effort. I don’t have the requisite skills.<br />The paper work is too tedious. The alternatives are not exciting enough.<br />Visit us @ www.MoneyMantraOnline.com<br />
    27. 27. Getting rich is simpler than you think!!<br />Illustration Rs.1000/- invested regularly for 30 years<br /> Rs.69 lakhs<br /> Rs.21 lakhs<br /> Rs.10 lakhs<br />6% p.a.<br />10% p.a.<br />15% p.a.<br />Even small amounts invested regularly grow substantially over long term if you choose the right product.<br />
    28. 28. The Formula of creating wealth<br />Start Early<br />Invest Regularly<br />Create Wealth<br />Visit us @ www.MoneyMantraOnline.com<br />
    29. 29. Start Early!<br />YouYour Colleague<br /><ul><li>Current Age: 25 yrs Current Age: 25 yrs
    30. 30. Start : Today Starts : At age 30
    31. 31. Invest : 5 yrs Invest : 20 yrs
    32. 32. Amount : Rs.1000 pm Amount : Rs.1000 pm
    33. 33. Redemption at age 60 years Redemption at age 60 years </li></ul> 62 57<br /> You start Your Twin <br /> investing You stop starts investing 15 14<br /> investing<br /> 4 <br />0.0 0.0 0.93 0.0 2.8<br /> Rate of Return assumed @ 15% pa;<br />Delays could severely affect your wealth creation goals!<br />Total Investment<br />You – Rs.60,000<br />Your Twin- Rs.2,40,000<br />
    34. 34. Invest Regularly<br />MYTH : Timing is essential to generate high returns<br />Reality : It is the time in the market & not timing that matters.<br />A & B Invested a fixed amount<br />In BSE Sensex annually for 25 yrs<br />Data Source: Birla Sunlife<br />Is it worth the risk or tension?<br />Who can time the markets to perfection? <br />Not even the experts can!!<br />The Result<br /> 15%<br /> 17%<br />A: On the worst day to buy<br /> (highest sensex each yr) <br /> B: On the best day to buy<br /> (lowest sensex each yr)<br /> Visit us @ www.MoneyMantraOnline.com<br />
    35. 35. <ul><li>It is the small drops that make the ocean!!
    36. 36. Relieves you of the last minute pressure.
    37. 37. Reduce the risk of investing at the wrong time.</li></ul>Difficult to predict the market and know when is the right time.<br /><ul><li>Slow and steady wins the race</li></ul>E.g. split your sec 80C investments into smaller amounts and invest every month.<br /><ul><li>As the time passes by the gap between “cost increase due to inflation” and your “investment growth” will only widen.</li></ul>We earn regularly; We spend regularly!<br />Shouldn’t we also invest regularly?<br />Invest Regularly<br />?<br />Visit us @ www.MoneyMantraOnline.com<br />
    38. 38. Create Wealth<br />You can become a crorepati !<br /> Benefit from the power of Compounding – Saving a small sum of money regularly in equity mutual funds can make your money work with greater power and can have a significant impact on wealth accumulation. That’s the underlying principle of the power of compounding. <br />But you need to START EARLY! Look at the example below – <br /> Even a seemingly small 5 year delay can cost your ‘crorepati’ tag.<br />Visit us @ www.MoneyMantraOnline.com<br />
    39. 39. Similar to a Recurring Deposit with a bank.<br />Method of investing a predetermined amounts of money regularly to benefit from the stock market volatility.<br />Light on wallet<br />As low as Rs.1000/- per month<br />Small amounts invested regularly become a sizeable sum over the period.<br />Convenient and hassle free<br />Automatic investments, one time instruction.<br />Systematic Investing<br />Visit us @ www.MoneyMantraOnline.com<br />
    40. 40. What is SIP?<br />systematic investment plan (SIP) is method by which you can invest in mutual funds in small and periodic installments. In fact you can invest as low as Rs. 1000/- on a monthly basis. Moreover you can also select the tenure of the installments. The minimum tenure is six months. But we recommend a minimum investment tenure of 3 years for better cost averaging effect & benefit from long term investing.<br /> SIP gives you a lot of flexibility and is very convenient way of building a large corpus over a period of time. <br />Visit us @ www.MoneyMantraOnline.com<br />
    41. 41. SIP reduces ‘market timing’ risks<br />SIP allows you to buy more units when markets are down & less when market moves up<br />As a result of the above, the average cost of investment is less than the average price. This way you can manage to reduce the cost of entry.<br />Average Price is average of all NAV’s = Rs.9.95<br />Avg. cost is the cost incurred to buy units (24000/2538.91=Rs.9.45<br />
    42. 42. Benefits of SIP<br />Inculcates a financial discipline<br />Averages out the cost of investment.<br />Reduces the market mis-timing risk<br />Compounds the returns & helps achieve your goals easily.<br />Light on the wallet<br />Visit us @ www.MoneyMantraOnline.com<br />
    43. 43. Thank You!<br />Presented By: Yogesh Bulbule, Bcom, MBA Finance,<br />Financial Planner at Money Mantra Investments.<br />Visit us @ www.MoneyMantraOnline.com<br />

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