Plan for Session 1
Part 1 (45 minutes): Becoming an Investment Advisor
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Activity 1: Investor Profiles (20–25 min)
Activity 2: Breaking News (20 min)
Part 2 (15–20 minutes): Time Value of Money
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Future Value
Present Value
Compounding
Mention EAR, APR and continuous return (one or two slides max)
Part 3 (50-60 min) – Measuring returns using real stock data
Use actual NSE data and calculate:
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Holding Period Return
Average Return
Arithmetic Mean
Geometric Mean
(Briefly) Continuously Compounded (Log) Return
Part 4 (40-45 min) - Measuring Investment Risk
Use the same dataset
Calculate:
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Variance
Standard Deviation
Discussion:
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Which stock is riskier?
Is higher return always better?
Would every investor choose the same stock?
Part 5 (10-15 min) – Introduce Sharpe Ratio
Content for session 1
Create Investor profiles
1. Young Professional - 26-year-old software engineer, recently started working, has ₹8
lakh to invest, wants to retire early at 50, no major financial commitments
2. Mid-Career Family Person
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37-year-old marketing manager
Married with two school-going children
Has ₹30 lakh to invest
Wants to save for children's higher education
Also wants to build a retirement corpus
3. Senior Executive
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48-year-old vice president in a multinational company
Has ₹1 crore to invest from accumulated savings
Retirement is about 12 years away
Wants a comfortable retirement without financial worries
4. Business Owner
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42-year-old entrepreneur
Business income is unpredictable
Has ₹75 lakh available for investment
Most of the family's wealth is already tied up in the business
5. Newly Retired
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61-year-old retired bank manager
Received retirement benefits of ₹1.2 crore
Monthly expenses are covered by pension
Wants investments to last for the next 25 years
6. Young Doctor
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32-year-old doctor
Stable and growing income
Has ₹20 lakh to invest
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Planning to buy a clinic in the next five years
7. NRI Returning to India
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40-year-old engineer returning from Dubai
Bringing back savings of ₹2 crore
Planning to settle permanently in India
Wants to invest for long-term wealth creation
8. Recently Inherited Wealth
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35-year-old architect
Inherited ₹1.5 crore from parents
Never invested before
Wants to preserve wealth while growing it over time
9. Corporate Employee Close to Retirement
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56-year-old HR manager
Retirement is four years away
Has ₹90 lakh in savings
Wants regular income after retirement without taking excessive risk
10. Young Couple
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Both spouses are 30 years old
Combined annual income is ₹35 lakh
Have ₹25 lakh available for investment
Planning to buy a house in seven years and have children in the future
Search for news slides. Find out some scenarios and ask them how it would change the allocation
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RBI surprises markets by increasing the repo rate by 2%.
Nifty falls 12% in a single week after weak corporate earnings.
US Federal Reserve raises interest rates by 1%.
Inflation rises unexpectedly to 8%.
Crude oil jumps to $130 per barrel following geopolitical tensions in the Middle East.
A new pandemic is reported in multiple countries.
The Government announces a sharp increase in capital gains tax.
Gold prices hit an all-time high after global uncertainty
The Indian rupee depreciates 15% against the US dollar.
Artificial Intelligence companies have doubled in value over the past year.
Residential real estate prices increase by 25% in two years.
Banks are now offering 9% fixed deposits.
Then ask
"So what is the one thing that protects investors from an uncertain future?"
"Successful investing is not about predicting the next headline. It's about building a portfolio
that can survive almost any headline."
Returns are always relative.
Investor's Question
How much did I make?
How fast did my lump sum grow?
I invested through SIPs. What's my return?
Is this fund consistently good?
"What is the riskiest investment you have ever made?"
Category 1: Market Risk
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Stock market
Mutual funds
Crypto
Category 2: Business Risk
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Startup
Own business
Category 3: Credit Risk
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Lending money
Bonds
Category 4: Liquidity Risk
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Real estate
Category 5: Behavioural Risk
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Following friends
Social media tips
FOMO
Return Measure
Absolute Return
CAGR
XIRR
Rolling Returns
"Did everyone define risk in the same way?"
"In finance, we need a way to measure risk objectively."
"Did anyone here lose money?"
"Did anyone here make money from a risky investment?"
"So is risk the same as losing money?"
"Risk is not loss.
Risk is uncertainty."
"Looking back today... was it actually a bad investment?"
An investment is not inherently risky. An investment can become risky because of how it fits
into your portfolio.
Plot the average return and risk (x axis)
"Which point would you choose?"
"How many of you actually invest this way?"
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Fund manager
Expense ratio
Consistency
Past performance
Brand
Tax
Goals
“Today, we've only learned to evaluate investments using two numbers.
Over the next nine sessions, we're going to add all of those other dimensions."
George Box famously said, "All models are wrong, but some are useful".
"Standard deviation isn't a perfect measure of risk. But it is one of the most useful, and it
underpins much of modern portfolio theory."