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Wealth Creation Through Market Volatility

by PowerMF on Dec 01, 2009

774 views

Discipline: An Efficient Way to Benefit From Market Volatility

Discipline: An Efficient Way to Benefit From Market Volatility

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Wealth Creation Through Market Volatility — Presentation Transcript

Discipline: An Efficient Way to Benefit From Market Volatility
What Rs.1000 a month get you?
- A dinner with the family
- (or)
- A movies with the family
- (or)
- One weekend trip to a local town for you
- (or)
- Make you a millionaire
Don’t believe? It is possible!!!
- The Simple Rule of Compounding:
- Rule:
- “ Earlier you invest, earlier it starts earning returns.”
- Corollary:
- “ Earlier you get returns, earlier the return gets returns.”
Formula for Wealth Creation
- There is a simple well known formula for wealth creation
- FV = PV (1+ r) n
The more you save, makes a difference The sooner you start, makes very big difference PV n r The more you earn, makes a difference
Power of Compounding
Where to Invest? (1980-2005:Source RBI)
- Equity markets are considered risky, owing to its volatility
- While it offers the opportunity to get high returns, there is also a possibility that you will get negative returns
- However, history has shown that the returns get normalized over a longer period
Equity markets are risky!?
Will volatility work for you?
- It is possible to make the volatility work in your favor
- The most often used ways are high risk activities of trading and churning
- However, there is efficient way, which is called ‘Rupee Cost Averaging’
Rupee-Cost-Averaging
- It is a simple way of optimizing one's earnings by systematic investment
- You put a fixed amount every month to buy units regardless of what their Net Asset Value (NAV) is
- This automatically ensures that you get more units when the price is down and less when they are up
- This effectively reduces your overall average cost of investing in the units of a scheme
What it takes to be a Millionaire?
Amount Required to be invested Monthly to become a Millionaire Years 25% 20% 15% 30 12.50 43.60 145.00 20 149.00 323.00 670.00 10 1920.00 2,680.00 3650.00 5 8550.00 9850.00 11300.00
Has SIP actually worked so far?
Scheme Months Returns Curr. Value (Rs.) Reliance Growth-Ret(G) 168 29.70% 2,413,627 HDFC Equity(G) 179 26.65% 2,253,199 Franklin India Prima(G) 191 22.31% 1,769,441 Reliance Vision-Ret(G) 168 26.37% 1,709,291 Franklin India Bluechip(G) 191 19.57% 1,286,352 HDFC TaxSaver(G) 161 24.64% 1,235,331 HDFC Capital Builder(G) 190 19.33% 1,230,450 HDFC Top 200(G) 158 24.84% 1,181,307 ICICI Pru Power(G) 181 20.27% 1,168,628 Tata Equity Opportunities(G) 163 22.15% 1,013,323
Thank You
- Email me : [email_address]
- Follow me on twitter @funduvishy
- Become my fan on Facebook
- Follow my blog : http://blog.powermf.com
- Manage your Mutual Fund Investments Online on http://PowerMF.com