Achieve your financial goals

through
 What are financial goals?

Financial goals are the milestones we hope to

reach in life with the help of our financial
resources.

If we plan our finances, we should be able to

reach these milestones successfully and on time.
 Types of Financial Goals
Short-term goals Medium-term goals Long-term goals

Building a Establishing buying a

Paying of a
emergency a holiday trip home
credit card
fund with family theatre

Short-term goals are those to be reached within a year.

 Types of Financial Goals
Short-term goals Medium-term goals Long-term goals

Down Payment of
Purchase Renovation
payment of Personal
of New Car of House
House Loan

Medium-term goals may be in the one to three year range

 Types of Financial Goals
Short-term goals Medium-term goals Long-term goals

Higher
Marriage Investing for a
education Start a new
Planning of comfortable
planning of business
Child retirement
child

Long-term goals may be in the range of five years or more

 Well Set Financial Goals
Goals should be SMART
Specific
Meaningful and measurable
Agreed to an attainable
Reality Based
Time Bound
 Know your Risk Profile
We think only about RETURN on investments. However, the word RISK is rarely
understood. Like fingerprints, investment profiles of people are always unique. Age,
Life stage, income, savings, dependents and mindsets are factors that define a
person's attitude towards investments. Risk taking ability and mental frame of mind
plays a key role in determining where we ultimately put our money.

The first step in asset allocation is `Risk Profiling'. Risk Profiling combines two key areas -
1) Estimating financial risk-taking capacity and

2) Understanding the (psychological) risk tolerance level of an individual.

Risk Tolerance test helps to make judgments about our financial possibilities.
Analysis of risk profiling can generate following risk tolerance level. The range is
indicative only.
Conservative = Highly risk averse

Moderately conservative = Risk Averse

Moderate = Risk Neutral

Aggressive = Risk tolerant

Very Aggressive = Risk seeker

 Financial Goal
Education Planning for Child

Years Investment Investment

Inflation Rate of Investment
Cost Now From Cost Then Required Per Required Per
Rate Return Required Now
Now Year Month

1000000 5 5% 1276282 12% 724196 200899 15886

1000000 10 5% 1628895 12% 524460 92821 7340

1000000 15 5% 2078928 12% 379812 55766 4410
1000000 20 5% 2653298 12% 275059 36825 2912

1000000 25 5% 3386355 12% 199197 25398 2008

 What is a Mutual Fund?
A mutual fund is a trust that pools the savings of several investors
and then invests these into different kinds of securities (shares,
debentures, money market instruments, or a combination of these)
in keeping with a pre-stated investment objective. The income thus
generated and the capital appreciation is distributed among mutual
fund unit holders in proportion to the number of units held by them.
 Why Mutual Fund
• Diversification
• Professional Management
• Flexibility
• Liquidity
• Cost Effective
• Regulated by SEBI
• Tax benefits

11
 NO ENTRY LOAD
st
from August, 2009
1
on all schemes of Mutual Fund

12
Investment Solutions from Mutual Funds
to achieve our financial goals like :
Medium
Short Term
Term Long Term

Liquid Fund Debt Fund Debt Fund

Fixed
Short Term Monthly
Maturity Plan
Fund Income Plan
(FMP)

Fixed Balanced
Monthly
Maturity Plan Fund/Hybrid
Income Plan
(FMP) Fund

Balanced
Fund/Hybrid Equity Fund
Fund
 What are Liquid/Ultra Short Term Funds ?
Liquid Funds are known as Money Market Schemes, These funds
provides easy liquidity and preservation of capital.
These schemes invest in short-term instruments like Treasury Bills,
inter-bank call money market, CPs and CDs.
These funds are appropriate for corporate and individual investors
as a means to park their surplus funds for short periods.
These schemes rank low on risk-return matrix and are considered
to be the safest amongst all categories of mutual funds.

Average Returns of Ultra Short Term Funds as on 12/03/2010

1 Month 3 Months 6 Months 1 Year

Peer Group Average 4.00 4.12 4.17 4.66

Highest Return 4.78 4.8 4.94 5.64

Lowest Return 3.87 3.91 3.9 4.35

 What are Monthly Income Plans?
Invests maximum of their total corpus in debt instruments while
they take minimum exposure in equities.
It gets benefit of both equity and debt market
These scheme ranks slightly high on the risk-return matrix when
compared with other debt schemes.

Different flavor available according to risk profile of

investor :
Aggressive
Equity 0-30 Debt 0-100

Moderate
Equity 0-20 Debt 0-100

Conservative
Equity 0-10 Debt 0-100
 Features of Monthly Income Plans :
Investment in safe debt instruments like government bonds, highly rated
bonds of reputed companies to generate regular income for you.

Some part in shares of reputed companies, so that your investment grows

and beats inflation.

Earn Extra every month (Can be an add-on to your current income or income
after retirement).

Monthly Income in form of Dividend, hence tax free in your hand).

Average Returns of Monthly Income Plans as on 12/03/2010

1 Month 3 Months 6 Months 1 Year 2 Years 3 Years 5 Years

Peer Group
Average 0.92 1.02 3.81 18.94 7.63 8.74 8.77
 What are Equity Funds?
These funds invest a maximum part of their corpus into equities holdings. The
structure of the fund may vary different for different schemes and the fund manager’s
outlook on different stocks. The Equity Funds are sub-classified depending upon their
investment objective, as follows:
•Diversified Equity Funds
•Mid-Cap Funds
•Sector Specific Funds
What are Balanced Funds?
They invest in both equities and fixed income securities, which are in line with
pre-defined investment objective of the scheme.

These schemes aim to provide investors with the best of both the worlds. Equity
part provides growth and the debt part provides stability in returns.
They generally invest 40-60% in equity and debt instruments.
These funds are also affected because of fluctuations in share prices in the stock
markets. However, NAVs of such funds are likely to be less volatile compared to
pure equity funds.
 Benefits of investing in Equity Funds?
Equity is known to give attractive long -term returns and hence may be used for
funding long term needs (like child education, buying a home etc.).

Save taxes : No capital gains tax (on withdrawal/redemption) if you stay invested
for over a year.

Invest in the long-term to short-term ups and downs.

Risk is lowered : Mutual Funds invest in many companies and funds are managed
by experts; safer than direct investing in shares. .

Returns of Large Cap Diversified as on 12/03/2010

1 Year 2 Years 3 Years 5 Years
Peer Group Average (Nos of
funds 18) 104.71 5.28 13.8 20.82
Highest Return 105.92 11.52 19.9 27.22
Lowest Return 97.51 -5.74 3.11 11.6
BSE Sensex 105.74 3.17 9.99 20.16
 Make Every Penny Count
Every SIP goes to Build a Secure Future

Small investments made regularly

can become BIG SUMS
over a period of years.
You can invest as little as Rs. 500/- p.m.

START A SIP TODAY.

THE SMART WAY TO INVEST
IN STOCK MARKETS
 No need to time the market
 Get better rupee cost averaging
 Lower Risk and Better Returns
 Instills Discipline in Investing
Benefit from power of compounding
SIP helps you to …
Beat market volatility, reduce risk
Mr. SIP investor Mr. One Time Investor
Month NAV Amount Units Amount Units
invested accumulated invested accumulated
1 10 1000 100.00 6000 600
2 11 1000 90.91 0 0
3 9 1000 111.11 0 0
4 8 1000 125.00 0 0
5 8 1000 125.00 0 0
6 11 1000 90.91 0 0
Total units accumulated 642.93 600
Value of Investment (Rs.) 7072.22 6600
Average Price 9.33 10
The above example is merely an illustration of Rupee Cost Averaging. The NAV and returns
generated are purely indicative and do not depict the performance of any mutual fund scheme.

Return of SIP in Large Cap Diversified Equity Fund as on 12/03/2010

3 Years
Bse Sensex 15%

Large Cap Diversified Mutual Fund Return 18-20%

SIP helps you to …
Benefit from power of compounding
SIP helps you to …
Start Early
 Systematic Transfer Plan (STP)

While investing in a debt fund normally assures you of fairly consistent returns, equities have the
potential to create wealth. But the unpredictability in equity funds can be quite a deterrent when
you make a choice. To combine the best of both worlds, there is Systematic Transfer plan.

Ideal for
Investors who want to invest lump sum money in schemes with stable returns and ensure small exposure to
equity schemes in order to avail of the potential for higher growth through equities.

Invest a lump sum amount in a debt-oriented scheme (Debt schemes can be either 100% debt or High Debt and
Low equity). Specify a desired amount to be transferred to any equity schemes of the same AMC . This works
like a SIP (Systematic Investment Plan). Lowering Risk and increasing returns. This is best suited when markets
have peaked or the investor is unsure of the further uptrend in the market

Options
Investor has the option of :

Daily STP Weekly STP Fortnightly STP Monthly STP Quarterly STP
 STP in Equity Fund From MIP
Total Investment 100000

Monthly STP 2000

Maturity Amount 186806

Total Return 86806

Return on Investment 13.31%p.a.
Expected Expected
Return on MIP Return on Equity Fund through STP
10% 15%
Total
TRF to Maturity
Op TRF from STP
Year Investment Total Return Total Equity Balance Op STP Cl STP Amount
Balance MIP Return
Fund

1 0 100000 100000 9340 109340 24000 85340 0 24000 1721 25721

2 85340 0 85340 7805 93145 24000 69145 25721 24000 5855 55576

3 69145 0 69145 6109 75255 24000 51255 55576 24000 10655 90231

4 51255 0 51255 4236 55490 24000 31490 90231 24000 16226 130457

5 31490 0 31490 2166 33657 24000 9657 130457 24000 22692 177149 186806
 Assets Allocation & Rebalancing
Start 6 Months 12 Months 18 Months

After 6 Months Market After 12 Months Market After 18 Months Market

goes up but still in Fair goes up to Expensive lands in Discounted
Fair Market
Range Zone Zone

Value in Value in Value in Value in

% Rs. % Rs. % Rs. % Rs.
Equity 60 60000 Equity 65 77400 Equity 75 150444 Equity 35 57169
Debt 40 40000 Debt 35 41600 Debt 25 49504 Debt 65 103973
Total Wealth 100000 Total Wealth 119000 Total Wealth 199948 Total Wealth 161142

Action Action Action

Reduce allocation to Increase allocation to

Bring Back allocation as
Equity as per suggested Equity as per suggested
per suggested grid
grid grid

Value in Value in Value in

% Rs. % Rs. % Rs.
Equity 60 71400 Equity 50 99974 Equity 70 112799
Debt 40 47600 Debt 50 99974 Debt 30 48343
Total Wealth 119000 Total Wealth 199948 Total Wealth 161142
Note
Debt Return
assumed 8%p.a
 CA. Ravi Malhora
B.Com. FCA, DISA(ICA), CERTIFIED FINANCIAL PLANNERCM

Mobile : 9896155000
email : ravimalhotra.ca@gmail.com

Disclaimer
The information contained here is for education purpose only. Recommendations, opinions or
suggestions are given with the understanding that readers acting on this information assume all risks
involved. I do not assume any responsibility or liability resulting from the use of such information,
judgment and opinions for Trading or Investment purposes.

CFPCM , CERTIFIED FINANCIAL PLANNERCM and are certification marks owned outside the U.S. by Financial Planning Standards Board

Ltd. (FPSB). Financial Planning Standards Board India is the marks licensing authority for the CFPCM marks in India, through agreement with

FPSB.