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Aspirations◦ Home/Car/Holidays
◦ Luxuries
Retirement – No pension, More life expectancy
When will I have enough money to fulfill my dreams and not worry about future !!!
Fixed Income/Interest ◦ FD◦ EPF/PPF◦ Bonds
Real Estate ◦ Land/Residential/Commercial
Debt◦ Mutual Funds
Equity◦ Stocks◦ Mutual Funds
Commodities◦ Gold/Silver◦ Others
Credit card◦ Usurious rates 2.5/3 per month ~ 36 % per annum
◦ Interest on whole outstanding amount even if partially paid
ULIP is a mix of Investment + Insurance◦ Charges
◦ Stories
Mutual Funds◦ Classes & Categories
◦ Splitting hair !!
Safe & guaranteed returns
Fixed Deposit – Tax but guaranteed, No Limit!!
EPF/PPF – Tax Fee but Limit!!◦ Psychological factor
Bonds
NCDs
FD – Retail banks, Cooperative, NBFCs
Cooperative banks with higher Interest◦ High risk
◦ Deposit only upto 1 lakh is insured
Better invest in NBFC with good credit rating
Capital Gains but Risk!
STCG is taxed but LTCG is tax-free!
Instrument - Debt Mutual Funds◦ Liquid
◦ Income
◦ MIP
◦ Gilt
First best known investment to Indians
Plot, Residential, Commercial
Immovable, highly localized
No market, No price discovery
Mostly speculative as less number of participants
Handsome returns in last decade but will it last???
Second best investment known to Indians
Unproductive asset, mainly ornamental
Price is inversely proportional to economic growth
Is it time to buy / sell???
Equity means ownership
Owning part of a business like a partnership
Routes◦ Private Equity
Venture/Angel Funding/PE Investors
◦ Public Equity
Funded by general public (*)
Raise capital for◦ Entrepreneurs
◦ Job creation
◦ Participation for general public
Governed By◦ SEBI
High Risk, High Rewards !!
Returns are lumpy
Best returns as compared to any broad-based asset classes
Capital Appreciation + Dividends
LTCG & Dividends are tax-free!!
Stories◦ 10k invested in Infosys in IPO is > 1 Crore in 1993
◦ 2008 Financial
Routes – Mutual Funds, Direct Equity
Types◦ Large/Mid/Small◦ Hybride – Equity + Debt◦ Thematic
Things to Look for◦ AMC – Asset Management Company◦ AUM – Asset Under Management◦ Expense ratio◦ Entry / Exit Load◦ Lockin period◦ Benchmark Index◦ Fund Manager
Risk Category
Pros◦ Diversified investment, so moderate gain/loss
Cons◦ Difficult to understand underlying business
◦ May not be enough for risk taker investor
Directly investing into stocks
Need to have strategy
Need to understand markets
Need to evaluate, understand the company
Pros◦ Highly rewarding
◦ Relate to the business, company
Cons◦ Volatile
◦ Could be highly destroying
Fundamental Analysis◦ Balance Sheet◦ P&L statement◦ Result statements◦ Industry, Economic outlook◦ Dividend history◦ Promoters
Technical Analysis◦ Identify chart patterns◦ Useful to time the entry/exit
Use fundamentals to evaluate company, use technical analysis to enter/exit
Place to buy/sell equities
Primary Market - IPO
Secondary Market◦ Trade in already listed stocks
Stock Exchanges◦ BSE/NSE
◦ Pune has a stock exchange !!
Brokers◦ Consultants
◦ Online – ICICIDirect, Sharekhan etc.
Inflation◦ CPI – Consumer Price Index
◦ WPI – Wholesale Price Index
Depreciation◦ Time value of money
◦ Even cash is depreciating
◦ Opportunity cost
Growth◦ GDP – Gross Domestic Product
Inflation is inversely proportional to Growth
Try to invest early in basket of High (Equity), Medium (Mutual Funds), Low (Fixed Income) return assets while minimizing risk
Conservative – Fixed Income & Debt
Slight appetite for Risk – Fixed Income/Debt + Equity (MF)
Risk appetite, not interested, Low Networth –Equity MF
Risk appetite, not interested but HNI category – PMS
Risk appetite & interested – Direct Equity + Equity MF
Timed◦ Buy on dips
SIP (Systematic Investment Plan)◦ Recurring
◦ Available for all “Liquid” asset classes
Single view of your assets, liabilities, investments, expenses called as Portfolio◦ Links to online bank, trading, loan, deposit
accounts
◦ Include offline assets like land, house, gold etc.
Examples◦ ICICIBank Money Manager (powered by Intuit)
◦ Perfios, Mprofit
Nobody’s interestedWhy?◦ Detrimental to Financial Industry◦ Its like CSR
Financial Advisors◦ Its like finding a good teacher/mentor
Half-hearted attempts by govt agencies like Stock markets, SEBI etc.Watch this short film (An Idiot by IDFC) https://www.youtube.com/watch?v=vU1l1TB7GzI
Get a Demat Account & Trading account for self/family like ICICIDirect or FundsIndia
Apply to IPOs, Bonds
Start SIP into some MFs
Slowly dabble into equities
Keep track of your investments