The document discusses strategies for long-term wealth creation through investments. It emphasizes the importance of systematic investment plans (SIPs) in mutual funds to take advantage of rupee cost averaging. A case study shows how an SIP investment in SBI Magnum Tax Gain Fund over 9 years grew much more than a lump sum investment, demonstrating the benefits of disciplined long-term investing through SIPs. The key lessons are to invest in equity funds for long-term returns, understand inflation and risk tolerance, and take a broad view with a focus on returns, risk, liquidity and simplicity.

1. Investments and Growing Wealth
By : Manish Chauhan
http://www.jagoinvestor.com

2. Agenda
­ Importance
­ Some Good Mutual Funds with Example
­ Understanding Inflation and Risk­appetite
­ Products Available
­ Advantages of SIP and Why it makes Sense for salaried People
­ Case Study with SBI Magnum Tax Gain (G) Mutual Fund
­ Learnings and Main Points to Remember
OBJECTIVE : At the end of the session the main objective is to make people understand
1. How to develop an atitude for long term Wealth Creation.
2. Understanding why systematic and desciplined approch towards investing is important
and rewarding .

3. Importance
­ Retirement
­ Children Education and Marriage
­ Other Future Goals
­ Financial Freedom

4. Mutual Funds and Returns
Investment of Rs 10 lac becomes
SBI MAGNUM (93)
Since Launch : 15.36 ( 85 Lacs)
HDFC Tax Saver (96)
Since Launch : 29.32 (2.32 Crores , 1 year back it was 5.22 Crores)
Reliance Growth (95)
Since Launch (93) : 24.18 (1.67 Crore)
DSPBR Top 100 (2003)
Since Launch : 29.14 (46 Lacs)
Also , there is no tax on the profits (after 1 year)
Top funds at : http://www.valueresearchonline.com/toprated.asp

5. Understanding Inflation and Risk­apetite
Inflation Eats away your Money . Your Bank FD will return around 6­7% return
after tax , Thats equal to average Inflation rate ,which means you dont get
"return ON money" , you actually get just "return OF money" , Your Long term
Returns Must be atleast 5­6% above Inflation and tax , else you are not
maximising your money , you are just saving it , and people who leave it in the
savings account are actually loosing it . Inflation is the termite of Money , You wont
see it , and wont feel it , but its eating it away slowly ...
Risk Appetite is the maximum loss , after which your mind , body and your soul
says "ooch!! No more" and your Psychological pain is at the maximum . Dont take
risk more than that !! .
Longer the time frame , lesser the risk !!

6. Products Available
Equity Diversified Mutual Funds : Track Record High Returns over long term ,
Extremelly tax efficient .
Balanced Mutual Funds : For people who want to take less risk than Diversified
Mutual Funds .
ULIPs : Only for Long Term investors and smart people who can use switching at
right time with discipline and under the importance of Asset Allocation . The best
one as per my view is IDBI FORTIS WealthAssurance , Excellent Structure !
PPF : Very Important for long term , 100% secure debt portfolio . Can not be
used in Legal proceeding too .
Pension Plans (ULPP's) : Can be used for Retirement . Same structure as
ULIPS for Investments .
Jeevan * : Please , I dont like them !!

7. Advantages of SIP
­ Disciplined Approach
­ Friendly with budget . Small money goes each time.
­ No tension of Market Timing .
­ Only way of investing in Markets for some one who has no
idea "how markets work" .

8. Case Study with SBI Magnum Tax Gain SIP
SBI Magnum Tax Gain : One of the best and most respected Mutual funds (ELSS) till
date . Started in 1993 .
Lets look at the NAV for this Mutual fund from Jan 2000 to Mar 2009 for each quarter
(Jan , Apr , Jul , Oct for each year)
Example (year 2000)
Ajay and Robert wants to Invest Rs 10 lacs in Mutual Fund .
Ajay invests Rs 10 Lacs lumpsumin the start.
Robert will invest his money in parts every quarter (3 months) , He is not concerned with
the NAV up or Down .
Ajays' Worth : 20 Lacs
Robert's Worth : 29 lacs

9. NAV and Percentage Change

10. Growth of Money from Jan 2000 to Mar 2009

11. IV Ratio = (Current Value of your Investment)/Investment
If 100 invested grows to 150 , IV Ratio = 1.5 , If 100 invested grows to 75 , IV Ratio =
0.75
IV Ratio is the measure of how well your investments are Doing.

12. Learnings and Main Points to Remember
­ Equity for Long Term and Debt for Short Term .
­ Dont take more Risk than you can Digest , else it will hurt badly someday .
­ SIP is best in all the markets other than Exploading Markets (which you cant
predict and happens very less) .Even while taking your money out from
investments ,do it in installments , its called SWP concept, available with Mutual
Funds .
­ Have a broad and long term view on any product . (Jeevan Astha)
­ Learn things and take your own decisions .
­ Look for 4 important things in any product : Returns , Risk , Liquidity ,
Simplicity

13. Additional Readings
5 Elements : http://www.jagoinvestor.com/2008/10/5­elements.html
Pillars of Success : http://www.jagoinvestor.com/2008/10/pillars­of­success.html
Power of Compounding and Early Investing : http://www.jagoinvestor.com/2008/01/power­of­
compounding­and­early.html
Creating Long term Wealth : http://www.jagoinvestor.com/2008/08/creating­weatlh­we­are­going­to­
discuss.html
Diversification of Portfolio : http://www.jagoinvestor.com/2008/04/what­is­diversified­portfolio­and­
how.html
How to do your own Financial Planning : http://www.jagoinvestor.com/2008/05/factors­to­consider­
while­doing.html
Early Investor , Smart Investor : http://www.jagoinvestor.com/2009/02/early­investor­smart­
investor.html
How to choose a Mutual Fund :http://www.jagoinvestor.com/2009/01/what­to­look­for­while­
choosing­mutual.html
Portfolio Rebalancing : http://www.jagoinvestor.com/2008/07/portfolio­rebalancing­today­i­am­
going.html

14. Q&A's
Q&A