People D'nt Know What They D'nt Know

By :- Mr. Mukesh Kumar

Branch Head – NJ Wealth Advisors
Amritsar ,Tarantaran ,Gurdaspur, Pathankot

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 Financial Planning
 Long Term Goals
– Investing for higher education of childern where the money required
after 10-15 years.
– Investing for marriage of their childern where the money required
after 15-20 years.
– Planning for retirement and to meet expenses for 25-30 years after
retirement.
 Short / Mid Term Goals
– Purchasing a flat after 5 years with accumulated funds worth 10-20
Lacs and balance with a loan.
– Saving to buy a car after 3 years.
– Protecting the family through adequate insurance (Life/Health).
– Savings to have an Family Holiday.
– Managing Debt and Cash flows -
– Investing in Fixed Incomes for wealth preservation in tax efficent
manner.
 Achieve Short / Mid Term Goals
For Short/Mid term goals investor invests in fixed income products
While investing in Fixed Income Products we look for....

 Preceived Safety
 Need for Liquidity
 Return of Capital

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 Achieve Short / Mid Term Goals

Why one should invest for Fixed Income Investments in Mutual Funds ?
 Product for All Investment Horizon
 1 day / 1 week / 1 month / 1 year & onwards.
 Liquidity & Flexibity.
– ATM facility , Mobile Application are avaliables, SIP is possible, Small
amounts can be invested.
• Higher return from bank FD
– Short/Long term bonds funds give higher return from bank FD.
• Safety of principal as well as capital apprication.
– No investment in equity or gold as all money is invested in fixed income
securities.
• Taxation Benefit to MNI & HNI
– Long Term Tax Slab @ 20% with Indexation

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 Financial Planning

Financial planning simply arranging finances kepping in mind the

financial goals,
Let's look at few of them.....
Assuming: Current Age
Self : 35 yrs Child: 5 yrs
Child Education : 18 yrs
Higher Education : Current Cost Future Cost
Engineer : Rs. 15 Lacs Rs. 52 Lacs
Medical : Rs. 25 Lacs Rs. 86 Lacs
Foreign Study : Rs. 40 Lacs Rs. 1.38 Crore
Child Marriage : 25 yrs
Current Cost Future Cost
Marriage : Rs. 25 Lacs Rs.97 Lacs
Retirement: : 60 yrs (Self)
Current Cost Future Cost
Monthly House Hold Expense : Rs. 25,000 Rs 1,35,686
Retirement Kitty : Rs. 3.5 Crores
Assuming Edu Inflation 10% & Other Inflation 7%,
Returns on Retirement Kitty – 8%, Life Expectancy-85 yrs
 Are we on Track to Achieve the
Critical Goals in our Lives?

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 Creating Wealth

If a person can save Rs.5,000/- per month

How much will be his wealth when
he needs money for his child's higher education?

Assuming:
Current Age: 5 yrs. Higher Education Age: 18 yrs.
Invests in an Asset class which give returns of 8%

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 At the time of his child's higher education
his wealth would be

Rs.13.5 Lacs
Amount Required: Rs. 52 Lacs. Amount he have: 13.5 Lacs, Shortfall: 38.5 Lacs

To cover the shortfall he will look for Education Loan, which is liability on child

Amount Invested: Rs. 7.8 Lacs. ,

Note: The above figures are for illustrative purpose only. There is no guarantee that the projection given would materialize.
 Creating Wealth

If a person can save Rs.10,000/- per month

What will be his wealth when he retires?

Assuming:
Current Age: 35 yrs. Retirement Age: 60 yrs.
Invests in an Asset class than gave returns of 8%

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 At Age 60 his wealth would have been

Rs. 92 Lacs
Amount Required: Rs. 3.5 Crores.. Amount he accomulated: 92 Lacs,
Shortfall: almost 4 times required what he has accomulated.

To cover the shortfall he will look for Childerens or Donation

Amount Invested: Rs. 30 Lacs. Times amount gets rolled over: 3.

Note: The above figures are for illustrative purpose only. There is no guarantee that the projection given would materialize.
Return of Different Asset Class in India
Return of Different Asset Class Worldwide
 EQUITY FOR WEALTH CREATION

SENSEX HAS CREATED 330 TIMES

WEALTH IN 39 YEARS
Years YEAR END SENSEX 1 year 3 years 5 years 7 years 10 years 12 years 15 years
1 31 Mar 80 129 29% 31 Mar 79
2 31 Mar 81 173 35% 100.00
3 31 Mar 82 218 26% 30%
4 31 Mar 83 212 -3% 18%
5 31 Mar 84 245 16% 12% 20%
6 31 Mar 85 354 44% 18% 22%
7 31 Mar 86 574 62% 39% 27% 28%
8 31 Mar 87 510 -11% 28% 19% 22%
9 31 Mar 88 398 -22% 4% 13% 13%
10 31 Mar 89 714 79% 8% 24% 18% 22%
11 31 Mar 90 781 9% 15% 17% 21% 20%
12 31 Mar 91 1168 50% 43% 15% 25% 21% 23%
13 31 Mar 92 4285 267% 82% 53% 43% 35% 34%
14 31 Mar 93 2281 -47% 43% 42% 22% 27% 24%
15 31 Mar 94 3779 66% 48% 40% 33% 31% 27% 27%
16 31 Mar 95 3261 -14% -9% 33% 35% 25% 26% 24%
17 31 Mar 96 3367 3% 14% 24% 25% 19% 24% 22%
18 31 Mar 97 3361 0% -4% -5% 23% 21% 21% 20%
19 31 Mar 98 3893 16% 6% 11% 19% 26% 17% 21%
20 31 Mar 99 3740 -4% 4% 0% -2% 18% 18% 20%
21 31 Mar 00 5001 34% 14% 9% 12% 20% 23% 19%
22 31 Mar 01 3604 -28% -3% 1% -1% 12% 14% 13%
23 31 Mar 02 3469 -4% -2% 1% 1% -2% 13% 14%
24 31 Mar 03 3049 -12% -15% -5% -1% 3% 8% 15%
25 31 Mar 04 5591 83% 16% 8% 8% 4% 2% 15%
26 31 Mar 05 6493 16% 23% 5% 8% 7% 9% 15%
27 31 Mar 06 11280 74% 55% 26% 17% 13% 10% 16%
28 31 Mar 07 13072 16% 33% 30% 15% 15% 12% 8%
29 31 Mar 08 15644 20% 34% 39% 23% 15% 14% 14%
30 31 Mar 09 9709 -38% -5% 12% 16% 10% 9% 6%
31 31 Mar 10 17528 81% 10% 22% 28% 13% 13% 12%
32 31 Mar 11 19445 11% 8% 12% 19% 18% 15% 12%
33 31 Mar 12 17404 -10% 21% 6% 15% 18% 11% 12%
34 31 Mar 13 18865 8% 2% 4% 8% 20% 15% 11%
35 31 Mar 14 22386 19% 5% 18% 8% 15% 17% 13%
36 31 Mar 15 27957 25% 17% 10% 9% 16% 20% 12%
37 31 Mar 16 25342 -9% 10% 5% 15% 8% 13% 14%
38 31 Mar 17 29620 17% 10% 11% 8% 9% 13% 15%
Probability of Loss 12/38 6/36 3/34 3/32 1/29 0/27 0/24
Probability of Loss (%) 31.58% 16.67% 8.82% 9.38% 3.45% 0.00% 0.00%
 EQUITY IS NOT RISKY IN LONG TERM

No risk in equity if you hold equity investment like

PPF ,Gold and Real Estate
 EQUITY IS NOT RISKY IN LONG TERM

No Risk for more than 10 years investment in Equity (

Sensex )

But do we invest in Sensex ???

We are investing in Equity through Mutual Funds.

Let's see how Equity MF minimize your Risk & Create

Wealth
 EQUITY MF – WEALTH CREATION

Rs.1 Lakh Lumpsum Investment

10 Year 15 Years 20 Years
Avg. Fund Value ( Rs.) 372,025 1,470,962 4,138,635
Times (X) 3.72 14.71 41.39
Return (%) 14.0 19.6 20.5
No of Equity Funds 124 48 20
Data As On 30th June 18

Equity Mutual Fund Created Multifold Wealth for

Investors in Long Term.
 Equity Mutual fund- No Risk in Long Term
MF Average Rolling Returns (Lumpsum Investment)
Years Year End 1 Yr 3 Yr 5 Yr 7 Yr 10 Yr 12 Yr 15 Yr
0 31 Mar 94
1 31 Mar 95 28.04%
2 31 Mar 96 -16.06%
3 31 Mar 97 -15.94% -11.49% CONSISTENT LONG TERM
4 31 Mar 98 23.84% -7.43% WEALTH CREATION
5 31 Mar 99 65.80% 18.75% 8.10%
6 31 Mar 00 68.73% 48.66% 16.36%
7 31 Mar 01 -39.06% 16.69% 10.14% 3.44%
8 31 Mar 02 24.26% 6.61% 19.08% 5.89%
9 31 Mar 03 5.31% -7.97% 15.34% 11.05%
10 31 Mar 04 140.07% 46.15% 24.89% 29.09% 13.74%
11 31 Mar 05 40.88% 52.31% 21.19% 31.66% 16.61%
12 31 Mar 06 79.75% 82.26% 50.98% 33.71% 28.80% 20.07%
13 31 Mar 07 6.21% 38.79% 46.33% 25.71% 32.07% 19.23%
14 31 Mar 08 18.91% 31.36% 50.10% 38.67% 31.54% 25.24%
15 31 Mar 09 -37.78% -7.78% 14.54% 25.64% 19.54% 22.79% 13.38%
16 31 Mar 10 106.51% 14.97% 23.71% 38.41% 22.37% 28.23% 17.98%
17 31 Mar 11 8.78% 11.62% 11.87% 23.61% 29.86% 24.05% 22.08%
18 31 Mar 12 -4.36% 28.89% 9.54% 17.03% 26.56% 18.68% 23.97%
19 31 Mar 13 4.01% 2.57% 6.65% 8.21% 26.49% 24.24% 22.61%
20 31 Mar 14 22.84% 6.84% 22.26% 10.48% 18.29% 24.15% 20.37%
21 31 Mar 15 50.86% 24.36% 14.79% 14.29% 19.13% 28.00% 19.75%
22 31 Mar 16 -5.91% 20.28% 11.56% 21.31% 11.66% 18.39% 23.41%
23 31 Mar 17 27.47% 21.77% 18.16% 13.24% 13.73% 17.45% 23.65%
24 31 Mar 18 10.16% 9.69% 19.54% 13.48% 12.88% 12.76% 24.10%
Probability of Loss 6/24 4/22 0/20 0/18 0/15 0/13 0/10
Probability of Loss (%) 25% 18% 0% 0% 0% 0% 0%
Average Return (%) 25.6% 20.4% 20.8% 20.3% 21.6% 21.8% 21.1%

Probability of loss is zero for more than 5 years of investment

 Why Mutual Funds?
NAV of various MF
Particulars Date Levels PE ratio EPS Reliance Kotak HDFC DSPBR Sundaram
Growth 50 Equity Equity Equity Sel. Focus
Sensex 24 Oct 02 2908.05 12.58 231.16 26.87 10 19.87 11.87 9.68

Sensex 24 Oct 03 4757.37 17.10 278.21 55.67 18.65 41.68 24.01 18.09

Sensex 24 Oct 08 8701.07 10.63 818.54 201.51 51.6 105.29 73.9501 51.21
Absolute Returns (%) 2002 - 2008 199.21 254.09 649.94 416.00 429.89 523.00 429.03

Absolute Returns (%) 2003 - 2008 82.90 194.22 261.97 176.68 152.62 208.00 183.08

CAGR (%) 2002 - 2008 20.04 23.46 39.91 32.25 28.27 35.65 32.00

CAGR (%) 2003 - 2008 12.83 24.09 29.34 20.51 20.62 25.23 23.14
If invested 2002 299206 749944 516000 529894 623000 529029
Rs.100000 than the
value shall be 2003 182897 361972 276676 252615 308000 283085

From 2002 to 2008, Sensex went up by 199% but the funds have gone in the range of
389% to 649% in absolute terms. Earnings of Sensex went up so did the Price. This is
where the OPPORTUNITY lies. Right now Equities are at hefty discount.
 SIP – TRUE WEALTH CREATOR

Rs.10,000 SIP Investment

10 Year 15 Years 20 Years
Investment ( Rs.) 1,200,000 1,800,000 2,400,000
Fund Value ( Rs.) 2,702,037 6,084,679 22,331,321
Return (%) 15.32 14.61 18.73
No of Equity Funds 124 48 20

Data As On 30th June 18

SIP MAKES YOU

CROREPATI !!
 SIP -NO RISK IN LONG TERM
Average Rolling Returns – SIP Investment
Years Year End 1 Yr 3 Yr 5 Yr 7 Yr 10 Yr 15 Yr
0 31 Mar 98
1 31 Mar 99 100.75%
2 31 Mar 00 93.87%
3 31 Mar 01 -39.95% 4.57%
4 31 Mar 02 49.73% 5.15%
5 31 Mar 03 -0.69% 6.34% 9.98%
6 31 Mar 04 102.25% 64.42% 36.26%
7 31 Mar 05 51.19% 60.33% 44.31% 36.05%
8 31 Mar 06 88.46% 68.99% 62.11% 45.15%
9 31 Mar 07 10.71% 35.53% 46.78% 41.53%
10 31 Mar 08 -11.73% 19.30% 34.18% 40.45% 33.90%
11 31 Mar 09 -32.27% -19.84% 0.28% 16.67% 20.08%
12 31 Mar 10 55.06% 22.80% 19.24% 26.09% 30.32%
13 31 Mar 11 2.56% 24.56% 15.46% 19.13% 28.39%
14 31 Mar 12 3.35% 6.12% 9.24% 10.98% 21.10%
15 31 Mar 13 1.07% 1.28% 8.95% 7.96% 15.18% 21.37%
16 31 Mar 14 35.78% 14.46% 11.16% 11.30% 13.67% 20.79%
17 31 Mar 15 35.30% 33.64% 22.03% 20.57% 17.23% 23.49%
18 31 Mar 16 -4.60% 15.16% 15.43% 13.84% 13.21% 20.66%
19 31 Mar 17 25.53% 15.74% 19.68% 16.76% 15.64% 19.80%
20 31 Mar 18 -0.33% 12.57% 16.35% 16.44% 15.75% 17.06%
Probability of Loss 6/20 1/18 0/16 0/14 0/11 0/6
Probability of Loss (%) 30% 6% 0% 0% 0% 0%
Average Return (%) 28.3% 21.7% 23.2% 23.1% 20.4% 20.5%
Average rolling return of 7 selected equity mutual fund schemes for period Mar 1998 to Mar 2018
Monthly SIP on 10th of every month considered
 SIP - NO RISK IN LONG TERM

Average rolling return of 7 selected equity mutual fund schemes for period Mar 1998 to Mar 2018
Monthly SIP on 10th of every month considered
 SIP – Smart Investor Preference

If some one had done SIP of Rs. 10000/- from 10th Jan, 2008 to 10th Jan, 2013.
Total Investment Value
Investment As on 10th Jan, Annualised
Name of Scheme Amount 20013 Return (CAGR)
Birla Frontline Equity Fund 6,10,000 8,83,120 14.65%
HDFC Top 200 Fund 6,10,000 8,80,360 14.52%
Kotak Midcap Fund 6,10,000 8,95,450 15.20%
L&T Special Situation Fund 6,10,000 8,97,982 15.18%
Reliance Equity Opp. Fund 6,10,000 10,24,510 20.66%
SBI Magnum Global Fund 6,10,000 9,55,020 17.80%
10 Jan 08 10 Jan 13
NSE NIFTY 6,156 5,968 -0.62%
BSE SENSEX 20,582 19,663 -0.91%

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 Every single opportunity counts in Equity

1 lac every year since 1996 in PPF

PPF = 67 lacs

3 Lac invested once in ELSS in 1996 = 4.28 Crore

As on 31st Aug 2018

 Helping You To Achieve Your Financial Goals

Child Education - Saving years: 15 yrs

Education Target SIP Amount

Engineer 52 Lacs 8500 PM
Medical 86 Lacs 14,000 PM
Foreign Study 1.38 Crore 22,500 PM
Amount Actually paid: 15.30 Lacs (for 8500 PM)

Child Marriage - Saving Years: 20 yrs

Target : Rs. 97 Lacs

SIP Amount: Rs. 7,500
Amount Actually paid: 18 Lacs

Assuming returns of 15%. GAP figures are rounded off .

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Note: The above figures are for illustrative purpose only. There is no guarantee that the projection given would www.njfundz.com
materialize.
 Helping you achieve your goals in life …

Retirement - Saving years: 25 yrs

Target : Rs.1,35,686 Per Month

SIP Amount: Rs. 8500 Per Month

Amount Actually paid: 25.50 Lacs

Small monthly investments of few thousand rupees can help you Achieve
your goals & Relax in life!

Assuming pre retirement returns of 15% and post retirement return of 12%.

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 What to do in a financial plan?

Identify Financial Goals in Today Cost

Calculate required amount in future to achieve goals.

Start Saving Early

The longer you save, the more you get benefit of compounding

Save in the Right Asset Class

Maintain a balance of different assets classes in your portfolio

Save Regularly
Even a small amount saved regularly, create big benefits in future

Review Your Financial Plan

As goals, risk appetite and product ojective can change