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How can we create wealth?

How can we create wealth?. Start Saving Early. The longer you save, the more you make. Save in the Right Asset Class. This will dictate how much wealth you create …. Save Regularly. Even a small amount saved regularly, is good. 5.71 Crores*. 1.33 Crores*. 40 years. 25 years. 60 years.

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How can we create wealth?

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  1. How can we create wealth? Start Saving Early The longer you save, the more you make Save in the Right Asset Class This will dictate how much wealth you create … Save Regularly Even a small amount saved regularly, is good

  2. 5.71 Crores* 1.33 Crores* 40 years 25 years 60 years Starting Early Give time to your investments rather than timing * Constant Savings Note: The above figures are for illustrative purpose only. There is no guarantee that the projection given would materialize.

  3. Equity market (represented by BSE Sensex) has outperformed all other investment avenues Selecting Right Asset Class

  4. Average Purchase cost will be less Rupee Cost Averaging At higher prices - less units At lower prices – more units Automatic Timing Save Regularly Disciplined Investing through Systematic Investment Plans (SIPs) is the ideal way to reduce risk Twin Benefits of Investing Regularly Market Units Purchased Market Units Purchased Falling Market Rising Market

  5. 16.90% 16.02%02% 15.07% Fixed investment athighest sensex valueevery year Fixed investment atlowest sensex valueevery year Fixed investment on 1st day of every month Market timing does not matter over the long term Investing in the BSE Sensex – 25 years Give Time rather than Timing the Equity market Data source: ICRA MFIE

  6. Managing Investor’s Psyche Wrong emotion dominates at wrong time Greed Fear Hope Cycle of Fear, Greed & Hope

  7. SIP : Your companion for all times Returns of SIP of Rs.10000 started from Feb 97 (Investment Amount is Rs. 14.40 lacs) Returns as on 31.10.08 These SIPs have gone through : Technology Bust, 9/11 attacks, Stagnant markets (2000-2003) and current 60% fall in the market

  8. SIP – The best way for investment Case Study • Market hit a high of 5450 in Mar 2000 • Market crashed to lows of 2600 • It took almost 4.5 years for the market to scale back the level of 5400 in Sep 2004. • Let’s see how did the SIP investors fare in that scenario

  9. Investor 1 – Panic Investors These investors had started their SIP of Rs. 2000 in Mar 2000 peak. With the decline in the market they panicked & stopped their SIP in a span of 13 months These investors actually made a loss on their SIPs by stopping it in the downturn…

  10. Investor 2 – Smart Investors These investors had started their SIP of Rs. 2000 in Mar 2000 peak. They continued their SIP and kept on investing in the SIPs. These investors have made phenomenal returns even though market has delivered no return (From 5400 level in Mar 00 to 5400 level in Sep 04

  11. Investor 3 – New Investor These investors started their SIP of Rs. 2000 in Mar 2001, 1 year after the fall in the market Investors who have started SIP in lean period have made fantastic returns

  12. Don’t be afraid of Falls – Stay Long Term, Wealth would be created • Investments of Rs.10000/- becomes Rs.276947/- even after several falls in the NAV during the period of 13 Years. • And finally, with the current correction, it’s NAV has fallen by 50% 3 times over the period of past 14 years. • Even after the current fall, the fund is still delivering a CAGR of 29% widely beating the index which has given 8.3% returns. • The Absolute returns from the fund even after the current fall are staggering 3529.72%. • Equity investments through Mutual Funds deliver 15-20% of returns over Long term. • Bull and bear market cycles are nature of Equity markets and are going to contine in future also.

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