Investment comparison

1. What is Investment?

2. Key Investment Considerations
Safety
You get your
money back
You get your money back when you want it
Capital appreciation/dividend/coupen
Liquidity
Returns

3. Your Investment Menu Card
Instrument Return Duration
Recurring/saving
deposit
8.5 % / 4% Short term
Post Office deposit 8.40% Long Term
NSC 8.5% Long Term
KVP 8.7% Long Term
FD’s – Banks 8.50% Long Term
Senoir Citizen
Savings Scheme
9% Long Term
Mutual Funds Market
Linked(50%)
Long Term & Short
Term
Debenture Market Linked(12%) Medium Term
Direct Equity Market Linked(30%) Long Term
Gold Market Linked(5%) Short Term
Real Estate Market Linked(14%) Long Term

4. Cost of money lying …..
Particulars Fixed
Deposits
Savings
Account
Idle
Money
Investment Amount + 100000 100000 100000
Interest earned in 1 year
(@8.5/4% per annum)
+ 8500 4000 ----
Total 108500 104000 ----
Tax on Interest (@30) _ 2550 1200 ----
Impact of Inflation (@5% per
annum)
_ 5000 5000 5000
Value at the end of year 1 100950
+950
97800
-2200
95000
-5000

5. Challenges involved investing directly in
Capital Market
 Time
 Expertise
 Lack of Information

6. Comparative analysis of various investments
Particulars Risk (low 3) Return(high
3)
Capital
Appreciation
(high 3)
Liquidity(hig
h 3)
Weighted
marks(12)
Bank Deposits Low Low Nil High 7
KVP/NSC Low Nil Low High 7
Mutual Fund Moderate High High High 11
Equity Share High Low High High 8
Debentures Low High Nil Low 7
Real Estate Low Nil High Low 7
Gold Low Nil Moderate Nil 5

7. Comparison : Mutual Funds vis-à-vis other asset
classes

8. What is Mutual Fund
 A mutual fund is the trust that pools the savings of a
number of investors who share a common financial
goal.
 Anybody with an investible surplus of as little as a
few hundred rupees can invest in Mutual Funds.
 The money thus collected is then invested by the fund
manager in different types of securities. It reduce risk
as minimum as possible.
 It gives the market returns and not assured returns.

9. Structure of Mutual Fund
Custodian keeps safe custody of the investments (related documents of securities invested).

10. How Mutual Fund works?
A vehicle for investing in portfolio of stocks and bonds

11. Why Mutual Fund?

12. Advantages of Mutual Funds
1.Professional Management
2.Diversification
3.Return
4.Low cost
5.Liquidity
6.Transparency
7.Flexibility
8.Choice of schemes
9.Well regulated
10.Tax benefits

13. Mutual Fund- How to invest in Mutual Funds
Selection Process- 3 step process
Step 1 Identify your
investment needs
1. Investor objective
2. Risk bearing
capability
3. Investible fund
Step 2 Choose the
right mutual fund.
1. Good track record of
Mutual Fund
company
2. Service promptness
3. Operation
Transparency
Step 3 Select the
ideal mix of schemes
1. Select the scheme
to meet all your
investment
objective
2. Choose
combination of
scheme

15. Types of Mutual Fund Scheme
 Basic funds
Open ended mutual fund:
Investor can purchase and sold the fund from mutual fund
company at any time.
Closed ended fund:
Investor can purchase the fund from mutual fund company.
later it transacted through stock exchange.

16. • Growth fund
• Income fund
• Balanced fund
• Gilt fund
• Money market fund
• Index fund
• Fund of fund
• Sector based fund
• Tax savings fund
• Exchange traded fund
Types of Mutual Funds

17. How do make money from a mutual fund?
1. Capital appreciation:
If investor made investment in equity based scheme it will
offer capital appreciation based on company and industry
performance.
2. Dividend Income:
It will have earn dividend income from the shares
3.Coupen Income:
Fund will earn interest from bonds, debenture and money
market securities

18. Mutual Fund Products – Risk / Return Graph
Lo Med Hi
Liquid fund
Money market funds
Gilt & Bond Funds
Income fund
Hybrid fund
Lo Med Hi
Index Fund
Fund of funds
Balanced Funds
Diversified Funds (ELSS)
Sectoral Funds
Debt Equity
>> Risk << >> Risk <<
>>Return<<
>>Return<<

19. Suggested Portfolio based on Risk tolerance
Aggressive Plan Moderate Plan
Conservative Plan
Growth Schemes Income Schemes Balanced Schemes
Money Market Schemes
This plan may suit:
•Investors in their prime earning years and willing
to take more risk
•Investors seeking growth over a long term
This plan may suit:
•Investors seeking income and moderate
growth
•Investors looking for growth and
stability with moderate risk
This plan may suit:
•Retired and other investors who need to
preserve capital and earn regular income

20. Investment in Mutual Fund through SIP & One
time investment
SIP – Systematic Investment Plan
…it is a method of investing a fixed sum, at a regular interval, in a mutual fund.
It is very similar to monthly saving schemes like a recurring monthly deposit / post
office deposit
One time Investment
Investor invest Lump sum amount at one time .

21. Particulars SIP One time
investment
Investment Amount + 100000 100000
Return from investment + 92343 77777
Total 192343 177777
Tax on Income(@)25.125% _ 23201 19541
Impact of Inflation (@5% per
annum)
_ 5000 5000
Value at the end of year 1 64% 164142 53% 153236
SIP and One Time Investment Return comparison(Rs.100000
at 1 year 2014 April to 2015 march)

22. Types of risks associated with Mutual Fund
Investment
Risk is an inherent aspect of every form of investment. For Mutual Fund
investments, risks would include variability, or period-by-period fluctuations in
total return.
Market risk: At times the prices or yields of all the securities in a particular
market rise or fall due to broad outside influences. This change in price is due to
'market risk'.
Inflation risk: Sometimes referred to as 'loss of purchasing power'. Whenever
the rate of inflation exceeds the earnings on your investment, you run the risk
that you'll actually be able to buy less, not more.
Credit risk: In short, how stable is the company or entity to which you lend
your money when you invest? How certain are you that it will be able to pay the
interest you are promised, or repay your principal when the investment matures?
Interest rate risk: Interest rate movements in the Indian debt markets can be
volatile leading to the possibility of large price movements up or down in debt
and money market securities and thereby to possibly large movements in the
NAV.

23. Challenges for mutual fund Industry
• No guarantee for return
• Management of Risk
• Fees and commission
• Investor Education
• Technology Backbone
• Trading limitation
• Loss of control

24. Mutual Fund: How to buy?
Identify ‘What to Buy’
Banks,
Financial Svc.
Cos.,
Brokers,
Individual Agents

25. Mutual Fund: How to redeem?

26. Conclusion
• Indian Mutual Fund have emerged as strong Financial
intermediaries and they play significant role in bringing stability
into the financial system and efficiently collect and allocated the
resources for the development of economy.
• Mutual fund and financial institution contribute 8.7% in GDP, it
utilize 7.71% of household savings and it also offer employment
opportunity to general pubic.
• Finally Investor utilize this opportunity based on their objective
and get reasonable return.

27. THANK YOU