Have You Saved Enough For A Rainy Day?

Have you saved
enough for a
rainy day?
1
Presentation points
• What are savings?

• Have you saved enough for a rainy day?
• A Smarter Way to Save
• Inflation – The Silent Assassin
• Principal Systematic Investment Plan (PSIP)
• Advantages of PSIP
• Any Day SIP from Principal
• How to make PSIP work for you?
2
What are savings?
• Saving is what we retain from our income after all the expenditures
have been taken care of
• “Savings = Income – Expenses”
• Expenses more often than not are never ending and comes out of
money set aside for monthly savings
• This acts as a vicious cycle forcing one to play catch-up with the
targeted savings amount
3
Have you saved enough for a rainy day?
Requirement Period to Expense

Annual Holiday Every 1 – 2 years
Own a Car (Capital Asset) After 2 – 3 years
Own a House (Capital Asset) After 5 years
Child’s Education After 15 – 20 years
Child’s Marriage After 25 years
Retirement Corpus After 30 years (Recurring)
Contingency (Illness, Accidents) Recurring
4 The list is endless!!

A Smarter Way to Save
• Rearrange the priorities by putting savings before expenditure
• Save at the beginning of the month and spend out of what

remains
• A change in equation
From
“Savings = Income – Expenses”
To
“Expenses = Income – Savings”
5
Inflation – The Silent Assassin
Inflation silently eats into our savings
Most people discount the effect of inflation while

planning for future needs
To put things in perspective let’s assume an average

inflation of 6.5 % for the next 30 years
6
Understanding Inflation
Rs 10,000 today will be worth….
Rs 7,299 in 5 years
Rs 5,327 in 10 years
7
Tips for Smart Investing
• Disciplined Investing – Invest regularly and systematically
• Invest in Instruments that beat Inflation
• Start Investing as early as possible
8
Welcome to the World of Systematic Investing
Presenting
Principal Systematic Investment Plan (PSIP)
9
What is a Systematic Investment Plan (SIP)?
Invest a fixed amount
Every month
at the NAV on a specified date
• Invest Rs 2000 on the 10th of every month in a Principal equity

scheme
• Units are allocated as per the NAV on that date
10
Advantages of investing using PSIP
• Easy to understand and operate – Simply fill up an application form

along with an Auto Debit Form (ECS) / Cheques and attach PAN proof
• Allows investments of small amounts - Invest as low as Rs 500 every
month
• Instills investment discipline – Forced saving and investments are
made in all market scenarios
• Also
9 Rupee Cost Averaging (Buy less when markets are up / more when
markets are down)
9 Power of Compounding (Your investments compound along with the

returns over the years)
9 Convenient to build a corpus for future requirements
11
Rupee Cost Averaging
Investor A’s SIP Investment Investor B’s Lumpsum Investment

Month NAV Amount (Rs) Units Amount (Rs) Units
10.50 3000 285.71 36000

April 1 3428.57
May 1 10.65 3000 281.69

June 1 10.05 3000 298.50
July 1 9.75 3000 307.69
August 1 9.60 3000 312.50
September 1 9.50 3000 315.79
October 1 9.25 3000 324.32
November 1 9.05 3000 331.49
December 1 8.90 3000 337.08
January 1 8.75 3000 342.86
February 1 8.50 3000 352.94
March 1 8.80 3000 340.91
TOTAL 36000 3831.48 36000 3428.57
Investor A’s SIP Investment has accumulated 3831.48 units whereas Investor
B’s Lumpsum Investment has accumulated 3428.57 units
12
Note: The figures of NAV are hypothetical and are for illustrative purposes only.
Power of Compounding
No. of Amount Rate of Returns

Years Invested (Rs)
8% 10 % 15 % 20 %
5 60,000 72,945 76,561 86,331 97,216
10 1,20,000 1,80,214 1,99,864 2,59,973 3,39,119
15 1,80,000 3,37,606 3,98,444 6,09,229 9,41,053
20 2,40,000 5,68,999 7,18,259 13,11,707 24,38,856
25 3,00,000 9,08,991 12,33,325 27,24,642 61,65,871
30 3,60,000 14,08,551 20,62,843 55,66,559 1,54,39,875
13
Power of Compounding
Regular Investments in an instrument giving 8 % returns would

have compounded to Rs 14, 08,551 vs. investments giving 15 %
returns compounded to Rs 55,66,559
If you wait to invest after 5 years in an instrument giving 15 %

returns then you are already behind Rs 86,331 in returns compounded.
14
Start Early - Save for your future
Investor X Investor Y
Starts investing at age 30 Starts investing at age 40
Rs 1000 every month in an

instrument which grows @ 10 % p.a.
At Age 60
Investor X’s investment = Rs 20.62 lacs Investor Y’s investment = Rs 7.18 lacs
Investor X’s Actual Investment = Rs 3,60,000 Investor Y’s Actual Investment = Rs 2,40,000
Investor X’s investment would have more than doubled

15 just by starting earlier than Investor Y
How does PSIP work?
• Select a scheme and decide an amount to invest (after all mandatory

expenses & bills are paid)
• Fill up an application form along with an Auto Debit Form (ECS) for the
period you would like to invest systematically
• Submit the forms along with an initial investment cheque and submit
additional cheques (if not using Auto Debit facility) and a PAN proof
• For every SIP investment, additional units will be added to your folio
(as per the prevailing NAV) at regular intervals
• A statement confirming transaction and allotment of units will be sent

periodically (as per SEBI Mutual Fund Regulations 1996)
16
Any Day SIP from Principal
• SIP can be started on 1st, 5th, 15th and 25th of every month
• SIP instructions to be given atleast two working days prior to the

chosen SIP date
• First cheque submitted with the SIP form should be of the same
bank as the one through which ECS is to be carried out
• The Investment in the next month would be the nearest SIP date
i.e.1st,5th,15th or 25th of a month.
• For example:
9 If the cheque date of an investor is 16th October’07. Then he
will get the NAV of the same day and his SIP date will be of
25th November’07.
17
How to make PSIP work for you?
• Set your financial goal – Why are you investing?
• Identify the scheme – Invest in a scheme as per your objective /

risk appetite and long term performance
• Decide the SIP Amount – How much you would like to invest
monthly / quarterly?
• Long term commitment – PSIP is most effective in the long term
• Aim for the big picture – Invest regularly! Market fluctuations are
way of life – do not get distracted.
• Start Investing – Take the 1st step! After all the planning go
ahead and finish the formalities and make PSIP to work for you.
18
So now what’s stopping you from reaching out for your dreams?
Start a PSIP today!

Statutory Disclosures & Risk Factors
Note: The calculations are based on assumed rate of return for illustrative purposes only and should not
be construed as a promise, guarantee or forecast on minimum returns. PSIP does not guarantee
protection against loss in a declining market. Applicable taxes, fees, expenses and/or any other charges
have not been considered in calculations and where the same if taken into consideration may reduce the
returns on your actual investments. Dividend declarations, if any and Inflation have not been considered
for calculation of returns. Please consult your legal/tax/investment advisor before investing.
Statutory Details: Principal Mutual Fund has been constituted as a trust with Principal Financial Group
(Mauritius) Limited, Punjab National Bank and Vijaya Bank as the co-settlors. Sponsor: Principal
Financial Services Inc., USA. Trustee: Principal Trustee Company Private Limited. Investment
Manager: Principal Pnb Asset Management Company Private Limited. Risk Factors: Mutual funds and
securities investments are subject to market risks and there can be no assurance and no
guarantee that the objectives of Principal Mutual Fund can be achieved. As with any investment in
securities, the NAV of the units issued under the scheme(s) can go up or down, depending upon
the factors and forces affecting the capital markets. Past performance of the Sponsor/ AMC/ Principal
Mutual Fund/ Punjab National Bank/ Vijaya Bank does not indicate or guarantee the future performance
of the Schemes of Principal Mutual Fund. The Sponsor and any of its associates including co-settlors are
not responsible or liable for any loss resulting from the operations of the Mutual Fund beyond the initial
contribution of an amount of Rs. 25 Lakhs towards setting up Principal Mutual Fund. Investors in the
scheme are not being offered a guaranteed or assured rate of return or monthly or regular/periodical
income distribution, and the actual returns and/or periodical income distribution of an investor will be
based on the distributable surplus. For scheme specific risk factors, terms of issue etc. investors are
urged to read the Scheme Information Document (SID) carefully and consult with their
legal/tax/investment advisor before they invest in the Scheme. Copy of SID can be obtained at the
investor service centres of AMC and website: www.principalindia.com Alternately investors can
call our Toll Free No: 1800 22 5600 to obtain a copy of the same.
20

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Have you saved

• What are savings?

• “Savings = Income – Expenses”

Requirement Period to Expense

Own a House (Capital Asset) After 5 years

Child’s Education After 15 – 20 years

Child’s Marriage After 25 years

Retirement Corpus After 30 years (Recurring)

Contingency (Illness, Accidents) Recurring

4 The list is endless!!

• Rearrange the priorities by putting savings before expenditure

• Save at the beginning of the month and spend out of what

“Savings = Income – Expenses”

“Expenses = Income – Savings”

Inflation silently eats into our savings

Most people discount the effect of inflation while

To put things in perspective let’s assume an average

Rs 10,000 today will be worth….

• Disciplined Investing – Invest regularly and systematically

• Invest in Instruments that beat Inflation

• Start Investing as early as possible

Principal Systematic Investment Plan (PSIP)

Invest a fixed amount

at the NAV on a specified date

• Invest Rs 2000 on the 10th of every month in a Principal equity

• Easy to understand and operate – Simply fill up an application form

9 Power of Compounding (Your investments compound along with the

9 Convenient to build a corpus for future requirements

Investor A’s SIP Investment Investor B’s Lumpsum Investment

10.50 3000 285.71 36000

May 1 10.65 3000 281.69

No. of Amount Rate of Returns

5 60,000 72,945 76,561 86,331 97,216

10 1,20,000 1,80,214 1,99,864 2,59,973 3,39,119

15 1,80,000 3,37,606 3,98,444 6,09,229 9,41,053

20 2,40,000 5,68,999 7,18,259 13,11,707 24,38,856

25 3,00,000 9,08,991 12,33,325 27,24,642 61,65,871

30 3,60,000 14,08,551 20,62,843 55,66,559 1,54,39,875

Regular Investments in an instrument giving 8 % returns would

If you wait to invest after 5 years in an instrument giving 15 %

Starts investing at age 30 Starts investing at age 40

Rs 1000 every month in an

Investor X’s investment would have more than doubled

• Select a scheme and decide an amount to invest (after all mandatory

• A statement confirming transaction and allotment of units will be sent

• SIP instructions to be given atleast two working days prior to the

• Set your financial goal – Why are you investing?

• Identify the scheme – Invest in a scheme as per your objective /

• Long term commitment – PSIP is most effective in the long term

Start a PSIP today!

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