Where To Invest In 2012

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Presentation on behaviour of various asset classes and suggested asset allocation for 2012. Portfolio of funds is also suggested.

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Where To Invest In 2012

  1. 1. Stocks BondsWHERE TO INVEST IN 2012? Cash Fixed deposit Gold
  2. 2. EQUITY IS RISKY? 10 years back if you have invested Rs.1000 in Sensex it would be now Rs.4134 at a growth of 15.25% p.a.
  3. 3. EQUITY INVESTMENT RISK 266.88% 260.00% 240.00% 220.00% Sensex - High & Low returns for various rolling 200.00% periods 180.00% 160.00% 140.00% 120.00% 100.00% 80.00% 60.82% 60.00% 40.00% 31.45% 27.40% 20.14% 18.78% 20.00% 0.00% 13.03% 14.27% 16.93% -20.00% -4.71% -2.09% -40.00% 1yr 5yr 10yr 15yr 20yr 25yr -60.00% -46.78% In the longer term the risk in equity investment comes down
  4. 4. LONG TERM EQUITY RETURNS Sensex 20 Year Rolling Returns from 1979 to 2010 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 1979-1999 1980-2000 1981-2001 1982-2002 1983-2003 1984-2004 1985-2005 1986-2006 1987-2007 1988-2008 1989-2009 1990-2010 In the long term equity gives consistent higher returns
  5. 5. HOW TO INVEST IN EQUITY? Direct investing through trading account Equity Mutual Funds Index based ETFs Index Futures & Stock Futures IPO
  6. 6.  1000 2000 3000 4000 5000 6000 0 1-Apr-00 1-Aug-00 1-Dec-00 1-Apr-01 1-Aug-01 1-Dec-01 1-Apr-02 1-Aug-02 1-Dec-02 1-Apr-03 1-Aug-03 1-Dec-03 1-Apr-04 1-Aug-04 1-Dec-04 1-Apr-05 1-Aug-05 I-BEX 1-Dec-05 1-Apr-06 BONDS - FIXED RETURNS 1-Aug-06 1-Dec-06 1-Apr-07 1-Aug-07 1-Dec-07 1-Apr-08 1-Aug-08 1-Dec-08 1-Apr-09 1-Aug-09 1-Dec-09 1-Apr-10 1-Aug-10 1-Dec-10In the last 10 years bonds gave 9.65% returns p.a.
  7. 7. BONDS - RISK & RETURNS Risks  Interest rate risk – if market interest rate moves up bond yields will increase and bond prices will decrease  Credit risk – if corporates default on payments or are downgraded the bond prices will decrease Returns  Capital Appreciation – if market interest rate come down, bond yield will decrease and bond price will increase  Credit Quality – If company rating is upgraded then  Ifbond start reducing interest rate then bond prices will RBI prices will increase move up; good time to invest in bonds!
  8. 8. HOW TO INVEST IN BONDS? Debt Mutual Funds Non Convertible Debentures (NCDs) Corporate Bonds
  9. 9. GOLD – HEDGE AGAINST INFLATION 1600 1400 1200 1000 800 600 400 200 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 US$/Ounce London rate In the last 10 years Gold gave 5.5% returns p.a.
  10. 10. HOW TO INVEST IN GOLD? Gold ETF Gold Savings Fund Gold Futures Gold Coins/ Bars
  11. 11. ASSET ALLOCATION STRATEGY Proper Asset Allocation and Periodic Rebalancing will help to get optimum returns at lower risk
  12. 12. STOCKS AND BONDS
  13. 13. RECOMMENDED ASSET ALLOCATION 2012 •This asset allocation 20% 20% is expected to give average returns of 12.19% during the 20% year. 40% •The risk is 0.042. This Equity Bond Cash Gold means that 98.5% of the time the returns may vary between 26.35% and (-1.98%) on annualised basis.
  14. 14. RECOMMENDED PORTFOLIO Amount Annualised Returns to Invest Allocatio Mutual Fund Scheme in Rs. n% 1 year 3 yearsUTI Bond Fund 8,000 8% 11.50% 4.80%SBI Dynamic Fund 23,000 23% 12.80% 10.10%Canara Robeco Indigo Fund 18,000 18% 15.40% 0.00%UTI Opportunities Fund 18,000 18% -12.60% 26.10%Reliance Gold SavingsFund 15,000 15% 0.00% 0.00%HDFC Childrens GiftSavings Plan 18,000 18% 5.50% 9.00%Total 1,00,000 100%
  15. 15. THANK YOU..!Sanjeev Kumar G CFPCMHead – Financial PlanningJRG Securities Ltdsanjeev.kumar@jrg.co.in

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