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Understanding Investment basics along with benefits of savings and the power of compounding towards financial independence
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First Steps towards FinancialIndependence
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Financial Goal - I
Financial Independence
● Start Early
● Establish clear investment objectives
● Identify your needs at different times of your life
● Prepare an effective investment strategy for each objective
● Decide on how much you can save regularly
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Financial Goal - II
Financial Independence
● Understand your risk taking capacity
● Don't put all your eggs in one basket
● Invest regularly
● Monitor your Investment performance
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Understand your Investment Objectives
Financial Independence
● Capital Growth
● Capital Preservation
● Regular Income
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Making the Right Choice- Understanding the Basics
Financial Independence
● Inflation – and how does it impact returns?
● Nominal Income Vs Real Income
● The Power of Compounding
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Inflation – its impact on you
Financial Independence
Bread that used to cost Rs 7 in year 2000costs Rs 13 in 2012
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Nominal Income Vs Real Income
Financial Independence
Nominal Income is your Return on Investment.It is impacted both by Inflation & Taxes.
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Financial Independence
Return Inflation Tax Real Income02468
10121416 15
9
4.5
1.5
Real Rate of Returns from Investments
Nominal Return is 15% but the Real Return due to the impact of Inflation & Tax is 1.5%
*Assuming CAGR at 15%(Compound Annual Growth Rate).
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Savings - Start Early
Financial Independence
● Let the Power of Compounding work for you
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Benefits of Starting Early- I
Financial Independence
*Assuming CAGR at 15%(Compound Annual Growth Rate).
Savings Maya Max
Start age 25 yrs 30 yrs
Per month Rs 1,000/-
Wealth at age 60* Rs 14,86,08,456/- Rs 7,0,09,821/-
By starting early Maya is able to save double of Max's Wealth.
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Benefits of Starting Early- II
Financial Independence
*Assuming CAGR at 15%(Compound Annual Growth Rate)
Savings Maya MaxPer month Rs 2,000 Rs 9,000
From age 22-37 yrs 37-60 yrs
Amount at age 60* Rs 3,36,96,218 Rs 2,17,48,931
The benefits of starting early combined with the Power of Compounding leads to more wealth in the long run. Max saves more for a longer period and yet accumulates less wealth.
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It's Your Decision
Financial Independence
Plan in advance rather than leave it to chance.
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AbunDanze is enrolled as an AMFI RegisteredMutual Fund Advisor (ARMFA)Under AMFI Registration No.: ARN-13377
Copyright August 2011: Abundanze Wealth Management LLP.All rights reserved.
Website:abundanze.com
Email:[email protected]
