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Financial planning<br />
What is financial planning?<br />It is the process of advising investors on how to manage their finances and investments s...
Common questions<br />What is my income?<br />What is my life expectancy?<br />How many dependents do I have?<br />How muc...
Savings<br />Earnings<br />Expenditure<br />The money you earn<br />
38 yrs<br />22 yrs<br />22 yrs<br />Phase I<br />Phase II<br />Income<br />Phase III<br />Children’s Marriage<br />Child E...
Who am I?<br />
Planning for your child’s education<br />Savings needed per month<br />Cost of engineering degree at IIT<br />Age of<br />...
Risk<br />The chance that an investment’s actual return will be different than expected.<br />The chance or possibility of...
Need based investment strategy<br />
High<br />Art<br />Derivative <br />Products<br />Direct Equity<br />Portfolio <br />Schemes<br />Real Estate<br />Equity ...
Risk hierarchy of mutual funds<br />Equity Funds<br />Balanced Funds<br />Risk level<br />Debt Funds<br />Gilt <br />Funds...
Simple interest<br />Simple interest= PNR<br />	P= Invested amount<br />	N= Period for which money is invested<br />	R= Ra...
Example<br />Miss Kareena invested Rs. 10,000/- which earns a simple interest of 10% p.a. Calculate the total amount recei...
Compound interest<br />Interest earned not only on the principal amount but also on the interest<br />Formula for compound...
Example<br />Miss Kareena invested Rs. 10,000/- which earns a compound interest of 10% p.a. Calculate the total amount rec...
Rs. 808<br />Re. 1 invested for 30 years<br />Rs. 237<br />Rs. 66<br />Rs. 17<br />Rs. 4<br />25%<br />5%<br />10%<br />15...
Why long term investing?<br />The power of compounding<br />Einstein called it the eighth wonder in the world<br />Over a ...
Rs. 425,002<br />The Power of <br />Compounding <br />at work<br />Rs. 241,157<br />Rs. 136,839<br />35<br />40<br />45<br...
But, aren’t investments in equity markets risky?<br />
20.16%<br />14.47%<br />9.74%<br />9.19%<br />7.62%<br />Inflation<br />Bank FD<br />Co. FD<br />Gold<br />Equities<br />O...
It is not possible to spot every trend<br />It is impossible to know when to exit<br />There is a trend born every minute<...
Consistent success in equity requires<br />Being invested<br />Being focused on the long term<br />The ability to understa...
Online mutual funds<br />
Thank You<br />
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Mutual Funds Financial Planning

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Mutual Funds Financial Planning

  1. 1. Financial planning<br />
  2. 2. What is financial planning?<br />It is the process of advising investors on how to manage their finances and investments so as to help them achieve their financial goals.<br />An excellent financial advisor can do good to people like any doctor.<br />
  3. 3. Common questions<br />What is my income?<br />What is my life expectancy?<br />How many dependents do I have?<br />How much risk can I take i.e. what is my risk appetite?<br />What is risk and return trade off?<br />Who am I?<br />
  4. 4. Savings<br />Earnings<br />Expenditure<br />The money you earn<br />
  5. 5. 38 yrs<br />22 yrs<br />22 yrs<br />Phase I<br />Phase II<br />Income<br />Phase III<br />Children’s Marriage<br />Child Education<br />Housing<br />Children<br />Marriage<br />Over 25 - 30 yrs<br />Earning Years<br />Retirement<br />Age<br />Birth & Education<br />60 yrs<br />Financial planning for the future<br />
  6. 6. Who am I?<br />
  7. 7. Planning for your child’s education<br />Savings needed per month<br />Cost of engineering degree at IIT<br />Age of<br />child<br />return of 20% p.a.<br />return of 15% p.a.<br />At the age of 17 (Rs.)*<br />Today (Rs.)<br />719<br />1,199<br />1,010,894<br />2,00,000<br />0<br />1,196<br />1,671<br />627,687<br />2,00,000<br />5<br />2,275<br />2,719<br />3,89,743<br />2,00,000<br />10<br />8,293<br />8,689<br />242,000<br />2,00,000<br />15<br />* assuming inflation @ 10%p.a.<br />
  8. 8. Risk<br />The chance that an investment’s actual return will be different than expected.<br />The chance or possibility of loss. <br />The greater the amount of risk that an investor is willing to take on, the greater the potential return.  <br />
  9. 9. Need based investment strategy<br />
  10. 10. High<br />Art<br />Derivative <br />Products<br />Direct Equity<br />Portfolio <br />Schemes<br />Real Estate<br />Equity Funds<br />Balanced<br />Funds<br />Small <br />Savings<br />Debt Funds<br />Insurance<br />RBI Bonds<br />Bank <br />Deposits<br />Gold<br />Low<br />High<br />RETURN<br />RISK<br />Investment options<br />
  11. 11. Risk hierarchy of mutual funds<br />Equity Funds<br />Balanced Funds<br />Risk level<br />Debt Funds<br />Gilt <br />Funds<br />Money Market Funds<br />Returns<br />
  12. 12. Simple interest<br />Simple interest= PNR<br /> P= Invested amount<br /> N= Period for which money is invested<br /> R= Rate of return<br />
  13. 13. Example<br />Miss Kareena invested Rs. 10,000/- which earns a simple interest of 10% p.a. Calculate the total amount received after 2 years.<br /> Total amount received = amount invested + interest earned<br /> = 10000 + 2000<br /> = 12000<br />= PNR<br />= 10000 x 2 x 0.10<br />= 2000<br />Simple interest<br />
  14. 14. Compound interest<br />Interest earned not only on the principal amount but also on the interest<br />Formula for compound interest : <br />FV = PV (1+R)n<br /> Compound interest = FV - PV<br /> FV= Future value<br /> PV= Present value<br /> R= Rate of return<br /> n= Number of compounding periods<br />
  15. 15. Example<br />Miss Kareena invested Rs. 10,000/- which earns a compound interest of 10% p.a. Calculate the total amount received after 2 years and the amount of compound interest earned<br /> FV = PV (1+R)n<br /> = 10000(1+0.10)2<br /> = 12100<br /> Hence compound interest = FV – PV<br /> = 12100- 10000<br /> = 2100<br />
  16. 16. Rs. 808<br />Re. 1 invested for 30 years<br />Rs. 237<br />Rs. 66<br />Rs. 17<br />Rs. 4<br />25%<br />5%<br />10%<br />15%<br />20%<br />Effect of compounding<br />
  17. 17. Why long term investing?<br />The power of compounding<br />Einstein called it the eighth wonder in the world<br />Over a long period of time it makes your money grow exponentially<br />Lets look at three investors each investing Rs. 25,000 till they turn 60 at 12% p.a.<br />One invests at the age of 35<br />Second invests at the age of 40<br />Third invests at the age of 45<br />
  18. 18. Rs. 425,002<br />The Power of <br />Compounding <br />at work<br />Rs. 241,157<br />Rs. 136,839<br />35<br />40<br />45<br />Power of compounding<br />
  19. 19. But, aren’t investments in equity markets risky?<br />
  20. 20. 20.16%<br />14.47%<br />9.74%<br />9.19%<br />7.62%<br />Inflation<br />Bank FD<br />Co. FD<br />Gold<br />Equities<br />Over a 20 year Tenure<br />Investment performance<br />
  21. 21. It is not possible to spot every trend<br />It is impossible to know when to exit<br />There is a trend born every minute<br />Money made in one trend is likely to be lost in another<br />“Patience is the companion of wisdom” -- Anonymous<br />Success and consistency are not the same<br />
  22. 22. Consistent success in equity requires<br />Being invested<br />Being focused on the long term<br />The ability to understand that companies grow over a long period of time. However all companies face tough times, squeezed margins, lower profits and crises<br />Resisting greed and overcoming fear<br />
  23. 23. Online mutual funds<br />
  24. 24. Thank You<br />

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