Group 12
Financial Planning for the
Age Group 22-25 years
What is Financial Planning?
A process of determining an individual's
financial goals, purposes in life and life's
priorities, and after considering his resources,
risk taking ability and current lifestyle, to
detail a balanced and realistic plan on 'what
needs to be done' to meet those goals
It varies from person to person and should be
updated from time to time
Why should youngsters do Financial
Planning
• To work towards achieving short and long
term goals
• To ensure a secure future
• To provide for unforeseen circumstances
• To earn better returns on their funds, which
would otherwise be idle
What constitutes Financial Planning
• Making a detailed budget of incomes and
expenses
• Start by allocating a fixed amount to save
every month
• Adjust budget as per execution
• Invest the saved money in Financial
Instruments
What Financial Instruments?
•
•
•
•
•
•
Equity Markets
Mutual Funds
Systematic Investment Plans
Fixed Income Instruments
Insurance
Commodities Market
What determines where one invests?
•
•
•
•
•
Financial Objectives
Priorities
Risk Taking Ability
Ability to Monitor Investments
Idleness of Funds
Thumb Rules
• Common sense approach to managing your finances. It cannot change
your situation overnight, it is a lifelong process
• Events beyond your control will affect your financial planning results
• Set measurable financial goals
• Be realistic in your expectations
• Understand the effects of each financial decision
• Re-evaluate your financial situation periodically
• Start planning as soon as you can
• Realise that you are in charge
STOCK MARKET CRASHES
The Wheels of Fortune
+12% -30%
+12% -4%
-50%
+10%
+4%
+10%
-10%
+50%
+18%
+35%
+3%
-3%
WHEEL 1
+9%
-11%
WHEEL 2
Mutual Funds
Recent Schemes and Past
performance
Basics of Mutual Funds
Evolution of Mutual Funds
• Growth of Unit Trust of India (1964-87)
• Entry of Public Sector (1987-93)
• Emergence of Private Funds (1993-96)
• Growth and SEBI Regulations (1996-99)
• Emergence of a large and uniform industry (1999-2004)
• Consolidation and Growth (From 2004 onwards)
Mutual Fund Operation
Flowchart
Passes
back to
Investors
Returns
Pool their
Money with
Creates
Securities
Fund Manager
Invest in
Constituents of Mutual Fund
Sponsor Company
Managed by a board of trustees Mutual Fund
Appointed by trustees
Appointed by trustees
Appointed by AMC
Asset management company
Custodian
Bankers
Appointed by AMC Registrars & Transfer Agents
Why Mutual Funds?
• Portfolio Diversification
• Reduction of Risk
• Professional Management
• Liquidity
Why Mutual Funds?
• Reduction in Transaction Cost
• Transparency
• Favorable Returns
Net Asset Value
• NAV = (Market value of the assets) –
•
(its liabilities)
• NAV/UNIT = Net Asset Value
Number of Units Outstanding
Top Performers- Equity Diversified Fund
Scheme
Type
Previous
NAV
Latest
NAV
Change
(Rs.)
% Annual
Return
Standard
Char Prem
Open
13.5978
23.2253
9.6275
70.80
Reliance R
S -Equi
Open
15.0668
25.5302
10.4634
69.45
DBS Chola
Opportunity
Open
26.4500
44.0400
17.5900
66.50
DWS
Investment
Opp
Open
22.9300
37.9600
15.0300
65.55
SBI
Magnum
Comma
Open
15.2800
24.6200
9.3400
61.13
(as on 26/02/2008)
Premier Equity Fund
About the Fund
Premier Equity Fund
AMC
Standard Chartered Asset
Management Co. Pvt. Ltd
Category
Equity – Diversified
Scheme Type
Open Ended
Net Asset Size
Rs. 690.70 cr.(as on 31/01/2008)
Dividend
No Dividends Declared Yet
Premier Equity Fund
NAV Performance
Absolute Return (as on 26/2/2008)
1Week
1Month
3Months 6Months 9Months 1 Year
0.47 %
-5.13 %
0.65 %
34.92 % 45.13%
70.80%
Premier Equity Fund
Asset Allocation Portfolio
Assets Break-up (as on 31-01-2008)
%
Equity
86.95
Non Convertible Debentures
9.09
Others
2.17
Current Assets
1.23
Cash
0.55
NAV Chart
52-week High 28.33 (Jan 07, 08)
Premier Equity Fund
52-week Low 12.33 (Mar 07, 07)
ICICI FUSION FUND
ICICI FUSION FUND
About the Fund
Structure
5 year Close Ended Equity Diversified
Scheme
Investment
Objective
Generate long-term capital appreciation by
investing predominantly in equity and equity
related instruments of companies across
large, mid and small market capitalization
Options
Growth option
Dividend option
Benchmark Index
Nifty Junior
Net Assets
7207.9 million (January 31, 2008 )
Expense Ratio
2.17%
ICICI FUSION FUND
Asset Allocation Portfolio
Type of
Instruments
Minimum
Allocation
(% of Net
Assets)
Maximum
Risk Profile
Allocation (%
of the
of Net Assets) instrument
Equity and equityrelated securities
70%
100%
Medium to
High
Debt, money
market
instruments and
call money
0%
30%
Low to
Medium
ICICI FUSION FUND
NAV Performance
• NAV Return % (Growth)
NAV
Growth
1 week
1 mth
3 mths
6 mths
1 year
0.20%
-5.54% -2.32%
7.81%
24.63%
NAV Return % (Dividend)
1 week 1 mth
NAV
Growth
0.21%
December 17,
2007
-5.55%
Dividend
10%
3 mths
6 mths
1 year
-2.16%
7.99%
24.84%
ICICI FUSION FUND
Fund Performance
Performance of
Indian Mutual Fund Industry
Assets Under Management
Funds Mobilized by Private Sector
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
Y ea r s
6
05
-0
4
20
03
-0
2
20
01
-0
0
20
99
-0
8
19
97
-9
6
19
19
95
-9
4
Fu nds M ob ilis ed
(Rs . C r or e)
-9
93
19
Fu nds mob ilis ed Rs . cr or e
Net Res ou r ces M ob ilis ed b y P r iva te Sector M u tu a l Fu nds
An Overview
Growth of Assets under Management
Growth of Assets under Management
48560.6
50000
45000
R
s.
c
r
o
r
e
40000
35000
28345.35
30000
21550.17
25000
15006.43 14961.54
20000
15000
10000
1238.23
4158.26
6481.67
5000
0
2001
2002
2003
2004
2005
2006
2007
2008
A “No” Surprise Fund
Funds
Period
HDFC
Growth
Fund (%)
HDFC
HDFC
Equity
Top 200
Fund (%) Fund
HDFC
Capital
Builder
Fund (%)
HDFC
HDFC
Long term Taxsaver
Advantage (%)
Fund (%)
Last 5 years
56.15
57.81
57.99
58.19
56.46
60.90
975213.9
7
978076.04 981012.8
9
933441.89
1070670.86
Value of Rs. 926693.50
1 lac
invested on
01/01/03
As on 31/12/2007
BE IT SMALL, BE IT BIG,
INVEST EARLY, INVEST REGULARLY,
BUT INVEST SMART
Happy Investing In Mutual Funds
Compiled by
• Kinjal Mehta
87
• Nirav Patel
97
• Rashmi Soni
112
• Minal Thakkar
113