1. Wealth Creation

2. More foreign investors prepared to invest long term in India India gets more FII funds than Asian peers

4. Financial Goals in life Buying a House Funding Children’s education Funding Children’s marriage Planning for retirement

5. Investment is a Myth Many people think that investing is out of their reach Not Correct. There is an investment out there that can work for you, whether you have a couple of thousands or more to set aside each month.

6. Survey results- Younsters,Age group of 20-30 yrs, employed & unmarried SharesMFsFDsReal estate Gold/ ETFs NIL Men12%8%24%13%32%11% Women6%11%26%3%47%6% INVESTMENTS

7. Success is an attitude Small steps to accomplish great things! “It is our attitude at the beginning of a difficult task which, more than anything else, will affect it’s successful outcome.” --An American philosopher

8. Secrets for Wealth Creation Remember the Acronym “SPLIT” S-Savings P-Protection L-Liquidity I-Inflation T-Tangible commodities

9. How to get started Write out your Goals Know the size of your purse Learn the ropes of Investing Plan your invts to match your Goals Review Regularly

10. Choosing the right mix Risk-Return Paradigm What is your Risk Appetite?

11. 3 Types of Investors ConservativeModerateAggressive

12. Conservative Type Risk/Return Volatility is LOW Return Potential is LOW STOCKS 40% BONDS 35% CASH 25%

13. MODERATE Type Risk/Return Volatility is Moderate Return Potential is Moderate STOCKS 60% BONDS 25% CASH 15%

14. AGGRESSIVE Type Risk/Return Volatility is High Return Potential is High STOCKS 80% BONDS 15% CASH 5%

15. A very useful behavioral model behavioral : Helps investors to understand themselves well. The model classifies investors according to 2 personality characteristics: 1.Method of action (careful or impetuous) 2.Level of confidence (confident or anxious).

16. BBK Model-5 Groups Individualist - careful and confident, often takes a "do-it-yourself" approach Adventurer - volatile, entrepreneurial and strong willed Celebrity - follower of the latest investment fads Guardian - highly risk averse, wealth preserverrisk averse Straight Arrow - shares the characteristics of all of the above equally

17. Find the Right Path Your Level of knowledge Personality Resources should determine the path that you choose.

18. Generally, investors adopt one of the following strategies: Don't put all of your eggs in one basket. In other words, diversify. Put all of your eggs in one basket, but watch your basket carefully. Combine both of these strategies by making tactical bets on a core passive portfolio. passive

19. Ropes of Investing 1.Start investing early 2.Do it regularly 3.Give your investments time to grow & benefit from compounding “The most powerful force in the universe is compound interest.” —Albert Einstein 4. Be aware of Risk/Reward relationship & your risk appetite while making the investments

20. Asset Allocation Maximise the overall return on your portfolio by spreading across a good mix of equity instruments, Debt instruments, Liquid instruments. Diversification helps in balancing risk & return

21. Investment Strategy Determined by: 1.Your Risk tolerance 2.Time Horizon 3.Current income 4.Your wealth 5.Number of Working years left 6.Dependants you have to provide for.

22. Open the Door to Investment opportunities

23. Where to Invest 1.Bank Deposits 2.Mutual Funds 3.Shares 4.Bonds 5.Post office schemes 6.Real estate 7.Gold/Silver/Platinum 8.Insurance

24. Bank Deposit Low risk investment Choice of Banks Rate of interest Duration Guarantee upto Rs.1 lakh Fixed maturity

25. The present scenario for FDs It is time to go for Bank FDs Rates are going up For senior citizens, it is 10% Corporate FDs too, increasing trend Be choosy about the companies

26. Mutual Funds Collective investment Professional Management Risk Diversification SIP the best Different types like equity, debt, Money market MFs etc

28. Schemes according to Maturity Period: Open-ended Fund available for subscription and repurchase on a continuous basis. No fixed maturity period buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis key feature of open-end schemes is liquidity. Close-ended Fund stipulated maturity period e.g. 5-7 years exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. NAV generally on weekly basis.

29. Fund according to Investment Objective: Growth / Equity Oriented Scheme Income / Debt Oriented Scheme Balanced Fund Money Market or Liquid Fund Gilt Fund Index Funds Gold ETF

30. Where do the Mutual Funds Invest ? MFs are required to disclose full portfolios of all their schemes on half-yearly basis which are published in the newspapers. Some MFs send the portfolios to their unitholders. The scheme portfolio shows investment made in each security i.e. equity, debentures, money market instruments, government securities, etc. and their quantity, market value and % to NAV. These portfolio statements also required to disclose illiquid securities in the portfolio, investment made in rated and unrated debt securities, non-performing assets ( NPAs), etc. Some of the mutual funds send newsletters to the unitholders on quarterly basis which also contain portfolios of the schemes.

31. Know about SIP 1.Keep sufficient balance in your Bank account 2.Invest in SIP in all asset classes, including Gold 3.Each SIP is an individual investment 4.Monthly option is best 5.Choose the right amount

32. Exchange Traded FundExchange Traded Fund (Gold ETF)ETF Gold ETFs invest your money in physical gold.ETFs Gold ETFs buy gold from very reliable sources on your behalf, and take care of its safekeeping. In return, they issue units of the ETF, each unit representing roughly 1 gram of gold. These units are traded on the stock market, and can be bought like ordinary shares.ETFsunitsETFunitunits The NAV of these units usually mirrors the price movement of physical Gold. The charges for storage and safekeeping of physical gold purchased are deducted from the NAV of the units.NAVunitsNAVunits

33. Advantages of Gold ETFETF Ease: If you want to invest in gold, you just purchase the units of the ETF. You just sit back and relax! And if you want to sell, no need to go to the market to a jeweler - just sell the units like ordinary shares. unitsETF units Safety: Since gold is not physically held by you, you don't have to worry about its safekeeping! That's a big relief! Quality: If you are buying physical gold, your first concern would be to be sure about the quality of gold. With ETFs, that worry is gone too - the ETFs buy only from the most reliable sellers, and so, you are in safe hands!ETFs Small Investments: With Gold ETFs, you can invest in as less as 1 gram of gold. You can make regular (maybe monthly) investments in gold, just like Systematic Investment Plans (SIPs) of MFs.ETFsSIPsMFs No Wealth Tax: There is no wealth tax on gold held in the form of Gold ETFs. Liquidity: Gold ETFs are traded in open markets in a transparent manner, and they have ample liquidity.ETFs

34. What is NET ASSET VALUE ? Take the current market value of the fund's net assets (securities held by the fund minus any liabilities) and divide by the number of shares outstanding. If a fund had net assets of Rs.50 lakh and there are one lakh shares of the fund, then the NAV is Rs.50.00.

35. Shares Right broker after conducting basic research Invest for 3-5 years based on fundamentals of the companies Track your portfolio-Co’s financials & performance regularly Understand the basics EPS,NP,PE,DIV. Pay out Do not overexpose to one stock Keep investments small & simple Have courage to buy on lows & sell when high. Fix an upward target price & stop loss before buying the stock

37. Some tips Do not put more than 10% of your money into any one stock · Do not own more than 2-3 stocks in any industry · Buy your stocks over time, not all at once · Buy stocks with consistent and predictable earnings growth · Buy stocks with growth rates greater than the total of inflation and interest rates. Follow company specific news Check the websites of stock exchanges & SEBI

38. Mistakes to be avoided Lack of Knowledge and No Plan Unrealistic Expectations Listening to Others Getting in the Way emotionally Poor Money Management Only Trading Market in One Direction Overtrading

39. Initial Public Offering (IPO ) New shares Offered to the public in the Primary Market IPO is a company's first sale of stock to the public. Public issue should be kept open for a minimum of 3days and a maximum of 21 days. For issues, which are underwritten by FIs, the offer should be kept open for a min of 3 days and a max of 21 days. For issues, underwritten by all India financial institutions, the offer should be kept open for a maximum of 10 days. Generally, issues are kept open for only 3 to 4 days.

40. Analysing an IPO 1. Who are the Promoters ? What is their credibility and track record ? 2. What is the company manufacturing or providing services - Product, its potential 3. Does the Company have any Technology tie-up ? if yes, What is the reputation of the collaborators 4. What has been the past performance of the Company offering the IPO ? 5. What is the Project cost, What are the means of financing and profitability projections ? 6. What are the Risk factors involved ? 7. Who has appraised the Project ? In India Projects apprised by IDBI and ICICI have more credibility than small Merchant Bankers

41. Chartered AccountantChartered Accountant by qualification an investor / trader by profession.investortrader In 2010, Forbes rated him India's 51st and the world's #1062 richest man with wealth of $1.0 billion. He is tagged by the media as "India's Warren BuffettWarren Buffett". Rakesh Jhunjhunwala

42. INVESTMENT STRATEGY OF RAKESH JHUNJHUNWALA Invest in good, scalable businesses / companies Invest across diverse sectors Select India-linked stories which participate in India’s growth story Stick with good investments Increasing exposure as uncertainty reduces

43. INVESTMENT BELIEF OF RAKESH JHUNJHUNWALA 4 3 2 1 Realism as a Conviction Rigidity as a Taboo Safety of Capital as a Religion Absolute Returns as a Passion

44. INVESTMENT BELIEF OF RAKESH JHUNJHUNWALA RIGIDITY - A TABOO –Do not have fixed rules in investment –Investment is both a science and an art –Use periods of extreme optimism to exit and extreme pessimism as an opportunity to buy

45. LEARNINGS OF RAKESH JHUNJHUNWALA Invest in the realms of possibilities. Pursue opportunity wherever visible. Return dependent on the efforts of the management. Valuation = Longevity + Growth + Efficiency. Consistent Review. Discipline in Rectifying Mistakes. Patience, driven by Conviction, to Buy and Hold.

46. ADVICE OF RAKESH JHUNJHUNWALA 1.Be an optimist! The necessary quality for success in Investment. 2.Expect a realistic return. Balance fear and greed. 3.Invest on broad parameters and the larger picture. Make it an act of wisdom, not intelligence. 4.Caveat emptor. Never forget this four-letter word - R-I-S-K. 5.Be disciplined. Have a game plan...contd…

47. ADVICE contd….. 6.Be flexible. For Investing is always in the realms of possibilities. 7.Contrarian investing. Not a rule, not ruled out. 8.It is important what you buy. Its more important at what price you buy. 9.Have conviction. Be patient. Your patience may be tested, but your conviction will be rewarded. 10.Make exit an independent decision, not driven by profit or loss.

48. Follow these Basic Rules while Investing Rule 1: Don’t buy unlisted shares Rule 2: Don’t buy inactive shares Rule: 3 Don’t buy shares in closely held companies:

49. EQUITIES – A TAX PARADISE If you sell your investment in less than 12 months (short term), you pay 10% tax! If you sell your investment in more than 12 months (long term), you pay NO tax! And even the Dividends are TAX FREE!

50. What does the term “Margin Trading” mean ? ‘Margin” means borrowing money from your broker to buy a stock. Investors generally go for trading on margin so to increase their purchasing power so that they can own more stock without fully paying for it. That means you will pay a part of the buy price and the broker will lend you the difference. For the loan you have taken - You will pay interest in addition to the usual fees. Broker will hold the stocks as collateral and has the right to sell that as well in case buyer doesn’t meet certain obligations as per margin rules and agreements.

51. Demat Account Demat refers to a dematerialised account. Though the company is under obligation to offer the securities in both physical and demat mode, you have the choice to receive the securities in either mode. If you wish to have securities in demat mode, you need to indicate the name of the depository and also of the depository participant with whom you have depository account in your application. It is, however desirable that you hold securities in demat form as physical securities carry the risk of being fake, forged or stolen. Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, Nowadays, you need to open a demat account if you want to buy or sell stocks. Shares are all held electronically in your account.

52. Demat account is a must for trading and investing Most banks are also DP participants, as are many brokers. You can choose your very own DP. To get a list, visit the NSDL and CDSL websites and see who the registered DPs are.NSDLCDSL A broker is separate from a DP. A broker is a member of the stock exchange, who buys and sells shares on his behalf and on behalf of his clients. A DP will just give you an account to hold those shares. You do not have to take the same DP that your broker takes. You can choose your own.

53. Earnings per share EPS = Net Income (PAT)______ No.of outstanding shares Shareholders are concerned about the earnings of the firm in 2 ways. 1.Dividends 2.Retained earnings

54. P/E Ratio Price earnings multiple = Market price of the share/Earnings per share Helps in determining the expected MV of a stock. Firm A has a P/E of 5 & firm B a P/E of 9 & both the firms are having an EPS of Rs.3.If the average P/E of the industry in which they operate is 7, then; MV based on P/E of he industry = 7X3= 21 MV of firm A =5X3 =15 MV of firm B =9X3 = 27

55. Dividend Yield Dividend Yield = Dividend per share Market price of the share This ratio gives the current return on investment. This is of interest to investors who are keen on dividend income. No dividend yield exists for firms which do not declare dividends.

56. Present trend Online trading & mobile trading 3 in one account in Banks More house wives have taken to online trading More number of broking houses, in terms of branches, with lot of facilities for traders Lot of newsletters/Bulletins/advice memos online SMS flashes

57. What is a Bond ? A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states & central Govt. and foreign governments to finance a variety of projects and activities. Bonds are commonly referred to as fixed- income securities and are one of the three main asset classes, along with stocks and cash equivalents.

58. Bonds Required for balanced portfolio Secured, sometimes tax free Tradeable securities Price of bond is inversely related to the movement of interest rates

59. Post Office Schemes Less risk For risk averse investors Backed by Soverign guarantee PPF, NSC,TD,RD,KVP Lock in periods-1-15 yrs PPF, NSC qualify for tax deduction

60. Real Estate Land –Plots or Farmland Independent House Flat Commercial space

63. Advantages/Disadvantages Land/Plot No Liquidity/Returns Authenticity of Documents Capital Appreciation in 5-10 yrs Low maintenance No tax benefit Land grabbing-Go for gated community Flat Regular cash flow High maintenance charges Tax benefits

64. Land Measurements 1 acre =100 cents 1 Cent = 436 s.ft 1 Sq.Mile =640 acres 1 Hectare =247 cents 1 Kaani =132 cents or 23.98 grounds

65. Income Tax treatment of Interest Payment on Home Loans The interest you pay as the part of your EMI is considered an expense under the head “Income from House Property”, and is deductible up to a maximum of Rs. 1.5 Lakhs under Section 24 of the Income Tax Act.EMI The interest amount would be deductible from your total income under Sec 24. Even if you have any other income from the house (like rent), that income would get reduced by the amount of interest paid (subject to the cap of Rs. 1.5 Lakhs).

66. Gold & Silver Gold -1 year return:: 17.46% Silver-1 year return:: 74.9%

67. Simple ways to minimize risk –Diversification –Asset allocation –Rebalancing

68. Simple ways to minimize risk Diversification

69. Simple ways to minimize risk Asset allocation Younger investor Older investor. 80% 50% 40% 20% 40% 10%

70. Simple ways to minimize risk Rebalancing after one year rebalanced

71. Raman’s portfolio Mr.Raman is 45 yrs old.He has a flat of his own in Chennai and works at a MNC co.He has a 15 year old son. His financial Goals are: 1.Son’s higher education in 3 yrs 2.Retirement in 15 yrs’ time. Please draw up his investment portfolio.

72. Raman’s suggested portfolio 1.Expenses:: Cash in Bank, FDs,Fixed Maturity plan schemes. 2.Son’s higher education :: Equity 40%; Fixed income 55%; Gold 5% 3. Retirement :: Equity 75%; Fixed income 20%; Gold 5% 4. After allocation for individual financial goals, remaining corpus to be used for further wealth creation.

73. Tax Deductions Sec/IT Act AreasAmount eligible Rs. 80CPPF,NSC,Int in NSC,LIC pre paid,School fees paid for children, HL-Princial, Invt.in ELSS, 5Yr FD 1,00,000 24HL interest1,50,000 80DMed claim insurance prem paid- Husband & wife Med claim insurance prem paid- Father & Mother 15000 80CC FInvestment in Infrastructure Bonds20000 Sodexo Pass30000 Base deduction1,50,000 Total4,80,000 80G 80E Donation Interest on EL 50% 100%

74. Savings Instruments in Financial Markets Treasury Bills (14/91/182/364 days Maturity) Certificate of Deposits Commercial Paper