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    Fidelity's: Top Tips

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    mandar Lawande
    The document provides a 10-point beginner's guide to successful investing with Fidelity. Some of the key tips include: starting early to benefit from compound interest; keeping emergency cash reserves; understanding your risk tolerance; diversifying investments across asset classes and funds; investing regularly through rupee cost averaging; and periodically reviewing investments to ensure they still match personal circumstances. The guide emphasizes that time in the market is more important than trying to time the market, and investors should take a long-term view to ride out short-term ups and downs.

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    Fidelity's: Top Tips

    Uploaded by

    mandar Lawande
    78 views24 pages
    The document provides a 10-point beginner's guide to successful investing with Fidelity. Some of the key tips include: starting early to benefit from compound interest; keeping emergency cash reserves; understanding your risk tolerance; diversifying investments across asset classes and funds; investing regularly through rupee cost averaging; and periodically reviewing investments to ensure they still match personal circumstances. The guide emphasizes that time in the market is more important than trying to time the market, and investors should take a long-term view to ride out short-term ups and downs.

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    The document provides a 10-point beginner's guide to successful investing with Fidelity. Some of the key tips include: starting early to benefit from compound interest; keeping emergency cash reserves; understanding your risk tolerance; diversifying investments across asset classes and funds; investing regularly through rupee cost averaging; and periodically reviewing investments to ensure they still match personal circumstances. The guide emphasizes that time in the market is more important than trying to time the market, and investors should take a long-term view to ride out short-term ups and downs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    78 views24 pages

    Fidelity's: Top Tips

    Uploaded by

    mandar Lawande
    The document provides a 10-point beginner's guide to successful investing with Fidelity. Some of the key tips include: starting early to benefit from compound interest; keeping emergency cash reserves; understanding your risk tolerance; diversifying investments across asset classes and funds; investing regularly through rupee cost averaging; and periodically reviewing investments to ensure they still match personal circumstances. The guide emphasizes that time in the market is more important than trying to time the market, and investors should take a long-term view to ride out short-term ups and downs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    The key takeaways are the importance of starting to invest early to benefit from compound interest, keeping emergency funds in cash, diversifying investments, and regularly reviewing your portfolio.

    If you start investing early, you have more time for your money to grow through compound interest, which can result in significantly higher returns over the long run compared to starting later. The earlier you start, the less you may need to invest each month to achieve your financial goals.

    Your investments should match your risk tolerance and appetite for risk. More aggressive investments like equities carry higher risk but also higher potential returns over the long term. You need to understand how much volatility you can tolerate in your portfolio.

    Beginners Guide

    Fidelitys

    Top

    Tips

    for successful investing

    1. Start early
    the sooner you invest, the more time your money will have to grow. If you delay, you will almost certainly have to invest much more to achieve a similar result.

    THE DIFFERENCE TIME CAN MAKE


    If you started investing Rs 5,000 a month on your 40th birthday, in 20 years time you would have invested Rs 12 lakhs. Growing at an average of 7% a year, it would be worth Rs 25,52,994 when you reach 60. If you started investing ten years earlier, your Rs 5,000 each month would add up to Rs 18 lakhs over 30 years. Assuming the same average annual growth of 7%, you would have Rs 58,82,545 on your 60th birthday more than double the amount you would have received if youd started ten years later! The bottom line - your investments gain most from compounded interest when you have time on your side.

    2. Keep some cash aside


    it is always a good idea to have some money set aside in case of emergencies. Enough to cover three months living expenses is often a rough guide to how much you need. And make sure you can withdraw it when you need to, without penalties.

    WHY YOU MIGHT NEED YOUR MONEY AT SHORT NOTICE:


    making a major purchase taking an unplanned holiday for an emergency such as sudden hospitalization

    3. Ask yourself how much risk you can take


    there is no point having a stock market investment if you are going to lose sleep every time share prices go through a rough patch. Its vital that you are realistic about your appetite for risk an Investment Adviser may be able to help you decide how much risk you can tolerate.

    "In many ways, the key organ for investing is the stomach, not the brain. What is your stomach going to do when an investment your brain selected declines for a year or two?"
    Peter Lynch, Research Consultant, Fidelity Management & Research LLC and former Fund Manager of Fidelity Magellan Fund

    4. Bear in mind that inflation will eat into your savings


    returns on risk-free cash investments may sound respectable, but when you subtract the current rate of inflation you may not be so impressed. For significant long-term growth you need to make your money work harder.

    INFLATION THE TICKING TIME BOMB


    If you have Rs 10,000 in a savings account earning 3% interest each year, in 20 years time, your savings would be worth Rs 18,061. Thats a return of just over 80%. However, if inflation is about 7%, Rs 18,061 would only be worth Rs 4,668 in todays terms!

    5. Think carefully about how long you will be investing for


    only look at the stock market if you are prepared to put your money away for five or ten years, or perhaps even longer. If you are likely to need your money any sooner, keep it in a lower-risk investment so there is less chance of a fall in value just before you make a withdrawal.

    If youre going to need money within the near future to put a down payment on a house the stock market is not the place to be. You can flip a coin over where the market is headed over the next year. But if youre in the market for the long haul five, ten or twenty years then time is on your side and you should stick to your longterm investment plan.
    Peter Lynch, Research Consultant, Fidelity Management & Research LLC and former Fund Manager of Fidelity Magellan Fund

    6. Spread your money across a range of investments


    its rarely a good idea to have all your eggs in one basket. Depending on your goals and attitude to risk, you will probably want to spread your money across different types of investment equities, bonds and cash. You may also want to diversify within each of these categories. An equity fund, for example, will invest your money in a variety of companies but you may want to ensure you have a range of industry sectors too.

    ADVANTAGES AND DISADVANTAGES OF THE VARIOUS ASSET CLASSES


    CASH ADVANTAGES
    High security and liquid Interest will always be paid

    BONDS ADVANTAGES
    Fixed interest paid regularly

    EQUITIES ADVANTAGES
    Equities can increase

    significantly in value
    Can outperform other

    asset classes over the long term

    CASH DISADVANTAGES
    Interest rates vary Best rates often have restrictions May not beat inflation

    BONDS DISADVANTAGES
    Bond issuer may default

    EQUITIES DISADVANTAGES
    Equities can also fall

    on interest payments
    Value of a bond may fluctuate

    significantly in value
    Difficult to predict what

    will happen in the short term

    7. Invest regularly
    investing regularly can be a great way to build up a significant lump sum. You will also benefit from what is known as rupee cost averaging. This means that, if you are investing in a mutual fund, over the years, whether the market goes up or down, you will pay the average price for units.

    THE POWER OF RUPEE COST AVERAGING

    The table compares the returns achieved by a lumpsum investor and someone who saves the same amount every month for six months. The regular saver finishes with an investment that is worth more than the lump sum investors after six months even though the starting price, finishing price and average price are exactly the same. Check the figures yourself!

    LUMP SUM INVESTOR


    Month 1 2 3 4 5 6 Unit Price(Rs) 20 18 14 22 26 20 Amount invested(Rs) 60,000 60,000 20 3,000 60,000 Units bought 3,000 -

    REGULAR SAVER
    Amount invested(Rs) 10,000 10,000 10,000 10,000 10,000 10,000 60,000 19 3,110 62,200 Units* bought 500 556 714 455 385 500

    Total invested (Rs) Average price paid (Rs) Total number of units bought Value of investment after six months (Rs)

    This example uses assumed figures and is for illustrative purposes only. * Fractional units ignored

    8. Choose your funds carefully


    you should select investments based on your personal circumstances and goals. If you are investing in a mutual fund, dont opt for the flavour of the month, unless you are sure it will be right for you in the future. Dont assume all funds investing in Indian equities are the same look at what a fund invests in and check if you are comfortable with its investment style and objectives.

    FASHIONS COME AND GO


    Specialist industry sector funds have been fashionable recently, but are they a good idea? The table below shows the performance of four industry sectors over the past seven years. Youll see, no sector did consistently well every single year.

    Source: Verity Analytics

    9. Remember that time not timing is the key to successful investing


    when planning an investment, it can be tempting to wait for the market to drop. But you run the risk of missing out on the rises that often occur in the early days of an upward trend. In Fidelitys experience, even the experts cannot time the market consistently well. It is better to choose an investment that you feel confident about and take a long-term view, so that you have time to ride out any ups and downs.

    A FEW DAYS CAN MAKE ALL THE DIFFERENCE


    Compounded Annualised Returns March 2000 - March 2010 We have looked at the returns from both actively managed funds and the BSE Sensex 30 between March 2000 and March 2010. Our analysis shows that missing just a few of the best days can significantly affect investment performance.

    Source: Verity Analytics. Compounded annualised returns from 31/03/2000 to 31/03/2010. Figures are based on the combined average performance of the 10 largest open-ended diversified equity funds (as at 31/03/2010) having a track record of over 10 years. Past performance may or may not be sustained in the future.

    10. Review your investments


    a portfolio that is right for you at one point in your life may not be quite so suitable a few years later. Your investments need to adapt to changes in your circumstances, such as getting married, having children or starting a business. Its also a good idea to check that each of the funds in your portfolio is living up to your expectations. Talking to an Investment Adviser could help you decide whether you need to switch money between funds.

    GETTING THE RIGHT MIX


    For the greatest long-term growth potential you could invest all your money in equities. But this could be a high-risk strategy as the markets could dip just before you need the money. You may need to think about making changes to your portfolio over time. You could aim for strong growth in the early years, and then, lock in gains you may have made and move into lower-risk investments. As you get closer to needing your money, bonds and cash investments could be your emphasis.
    These portfolios are for illustrative purposes only. Your investment decisions will depend on your own circumstances, risk appetite and time horizon. You may want to consult an Investment Adviser for guidance.

    Notes:

    Notes:

    Fidelity has a long history of helping people meet their financial goals. We cannot advise you on what investments would suit your particular circumstances, so you may want to talk to your Financial Adviser. However, we do have a range of brochures about our products and services and a number of free guides on key investment topics. If you would like copies of any of these publications or more information about Fidelity, reach us at fidelity.co.in or email us at info@fidelity.co.in

    This brochure is solely for the purpose of providing information about Fidelity and general information about mutual funds and not for solicitation of investments with Fidelity in India or any other jurisdictions. Risk factors: Mutual funds, like securities investments, are subject to market risks and there is no guarantee against loss in the scheme or that the schemes objectives will be achieved. As with any investment in securities, the NAV of the units issued under the schemes can go up or down depending on various factors and forces affecting capital markets. Past performance of the Sponsor/the AMC/the Mutual Fund does not indicate the future performance of the schemes. Please read the Scheme Information Documents of the schemes and the Statement of Additional Information carefully before investing. Statutory: Fidelity Mutual Fund (the Fund) has been established as a trust under the Indian Trusts Act, 1882, by FIL Investment Advisors (liability restricted to Rs. 1 Lakh). FIL Trustee Company Private Limited, a company incorporated under the Companies Act, 1956, with a limited liability is the Trustee to the Fund. FIL Fund Management Private Limited, a company incorporated under the Companies Act, 1956, with a limited liability is the Investment Manager to the Fund. Fidelity, Fidelity International and Pyramid Logo are trademarks of FIL Limited. Please contact your financial adviser before CI01609 investing.

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