4 simple solutions to meet your investment requirements

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4 Simple Solutions to meet your investment requirements


India Savings skewed towards traditional options

Equity Constitutes approximately 3% of the Financial Savings of

Household Sector in India .

Source: latest RBI Annual Report dated March 2014

Equity includes Shares and Debentures. Government Securities are all claims on Government

Distribution of Financial Savings of Household Sector in FY 2014


Understanding your requirements !!

What do investors typically want ???


A Small Differential Can Work Wonders


Different investment options give different rate of returns depending

upon the risk return characteristics

Thus, a small difference in rate of return results in a huge difference in the

resultant earnings

No of Yrs Rs. 10000 Invested Per Month

6% p.a 8% p.a 10% p.a 12%p.a

5 701,188 739,667 780,823 824,863

10 1,646,986 1,841,656 2,065,520 2,323,390

15 2,922,728 3,483,451 4,179,242 5,045,760

20 4,643,511 5,929,472 7,656,969 9,991,479

30 10,095,376 15,002,951 22,793,253 35,299,137

2 % rate differential leads to extra earnings of

30 49.07 Lakhs 77.90 Lakhs 1.25 Crs


Presenting 4 Simple Solutions to

meet your Investment Needs


4 ‘SIMPLE’ but ‘SMART’ Investment Solutions


Stable Returns + Low Volatility

Time Horizon 3 years

Fixed Deposits

Accrual Funds

Tax Savings + Wealth Creation


PPF

Tax Saver Funds

Retirement Solution

Goal Oriented

Insurance

Retirement Funds

1 2 4

Tax Efficient, Simple but Smart Solutions to meet all your

investment needs

Long Term Growth +

Regular Income


PO - MIS

Balanced + SWP

3


Accrual Funds


Ideal for investors looking for a SUPERIOR ALTERNATIVE TO

TRADITIONAL FIXED INCOME INVESTMENTS

Superior & Consistent Returns (versus traditional offerings)

Tax Efficiency (> 3 years - Indexation Benefit)

No restriction on liquidity & investment limit

Well diversified portfolio with

<= 10% limit per issuer

<= 25% limit per sector

<= 20% in group exposure


Accrual Funds – Typical characteristics

All Weather Funds – Suitable Across Market Cycles


Positioning:

High yielding funds focusing on consistent

returns

Duration Discipline:

Low duration is maintained at <= 2 yrs

Balanced Rating Profile :

Balanced exposure in well researched credit

papers

Diversified & Liquid Portfolio :

Well diversified across 50 – 60 issuers

Exposure across maturities


Tax Efficient Returns better than FDs


Average Differential In Post Tax

Returns over the years has been

2.87%, which is ~10% Absolute

over 3 years

Note: For accrual funds, returns are of regular plan. For BANK FD, rates are of 3 yr fixed deposits offered by SBI. Source : SBI

Website. Tax benefits are subject to the existing tax laws. Debt oriented Mutual Fund Schemes enjoy indexation benefit of 20.6% if

units are sold after 3 years.CII (inflation Index) has been assumed at 7%. In case of fixed deposit, tax rates are according to the

applicable tax brackets. For the purpose of calculation, highest tax bracket of 33.9% has been considered.

Average Difference

0.58%

Average Difference

2.87%


Tax Efficient Returns better than Bank FDs


Additional Return of ~Rs. 1 Lakh on an Investment of Rs. 10 Lakhs over 3 Years

Note: For accrual funds, returns are of regular plan. For the purpose of calculation, 3 year average returns/FD rates on monthly basis

over a calendar year has been considered. Tax benefits are subject to the existing tax laws. Debt oriented Mutual Fund Schemes

enjoy indexation benefit of 20.6% if units are sold after 3 years.CII (inflation Index) has been assumed at 7%. In case of fixed deposit,

tax rates are according to the applicable tax brackets. For the purpose of calculation, highest tax bracket of 33.9% has been

considered.


Tax Saver Funds


Ideal for investors looking for Long Term Wealth Creation

along with Tax Benefit

Lowest Lock - in of 3 Years

Higher Return Potential - Through Equity Exposure

Long Term Capital Gain Tax Free

Tax Savings upto Rs 46,350 every year (U/s 80 C)

Offers Regular Cash Flow through Tax Free Dividends


Create Wealth while Saving Tax with Tax Saver Funds!!


• Long term wealth creation through power of equities

• Cash flows through regular dividends (13 dividends in last 12 quarters)

• Free Life Insurance upto Rs 21 lakhs (120 times cover of monthly SIP after 3rd year)

Avg. Rolling Returns (Excluding Tax Benefits) (%)

Period Fund Benchmark Outperformance

3 years 13.4 8.4 5.0

5 years 14.0 9.3 4.7

7 years 14.9 10.1 4.7

10 years 15.8 11.4 4.4

Value of Rs. 1.5 Lakh invested (in Rs. Lakh)

Period Fund Benchmark Outperformance

3 years 2.19 1.91 28,000

5 years 2.89 2.34 55,000

7 years 3.96 2.95 1.01 Lakh

10 years 6.52 4.42 2.09 Lakh

3 year Avg. Rolling Returns including Tax Savings is 20.9%

Annualized Returns excluding Tax Benefits

Source: MFI Explorer

One of the leading Tax Saver Funds has been considered for calculating Returns


Balanced Funds + SWP


Ideal for investors looking for TAX EFFICIENT REGULAR MONTHLY

CASH FLOW along with WEALTH CREATION

Higher Return Potential - Through Equity Exposure

Lower Volatility through Debt exposure

Tax Efficiency - Long Term Capital Gain Tax Free

Regular Cash Flows (Tax Free Dividends + SWPs)

Ideal Investment Horizon ~ 5 Yrs

Triple Benefits: Wealth Creation + Tax Efficiency+ Cash Flows


Monthly SWP in Balanced Funds


A tax efficient way to plan regular cash flow & earn higher returns

The below table represents back tested results for investments made in one of the leading Balanced Funds in June

of every year since inception and a monthly SWP of 9% for a period of 3, 5 & 7 years

Average Rolling Returns of > 14% over 3 years, 5 years and 7 years

Year of Investment 3 years 5 years 7 years

2005 7.4 14.7 12.0

2006 13.1 14.8 12.3

2007 20.1 13.9 15.8

2008 17.8 12.9 16.3

2009 12.4 15.6

2010 6.1 13.1

2011 13.9

2012 21.8

Average Rolling Returns 14.1 14.2 14.1

Minimum Returns 6.1 12.9 12.0

Maximum Returns 21.8 15.6 16.3

% Returns with 9% SWP across different time periods


Monthly SWP in Balanced Fund


A tax efficient way to plan regular cash flow & earn higher returns

If any investor had invested Rs 10 lakh and done a SWP @9% for a period of 5 years, across

various time periods, the value of Investments and withdrawals would be as under:

13

.5 L

13

.6 L

12

.9 L

12

.3 L

12

.4 L

12

.4 L

4.5

L

4.5

L

4.5

L

4.5

L 4.5

L

4.5

L

Jul'05 Jul'06 Jul'07 Jul'08 Jul'09 Jul'10

VALUE OF INVESTMENT TOTAL AMOUNT WITHDRAWN

Current Value of

Investment

Withdrawal

through SWP

Intitial Investment : Rs. 10 lakhs

Withdrawal: Rs. 4.5 lakhs

Average Current Value of Investment: Rs. 13.2 Lakhs

Average Total Value of Investment: Rs. 17.7 Lakhs


We all need retirement planning because…..

Higher Life Expectancy -

thanks to science and medical

advancement

Nuclear Family Disintegration of Joint family system

Lack of Social Security Measures Do not have any government sponsored social security

Inflation is a Silent Killer A monthly expense of Rs 1 lakh today could be Rs 7 lakh in 30 years*

* Assuming inflation rate @ 7%

Why Plan for Retirement ??


Retirement Funds


Ideal for investors looking One Stop Retirement Solution Offering Long

Term Wealth Creation + Regular Income in Tax Efficient Manner

Wealth Creation: Take advantage of equity and debt oriented scheme

with an aim create long term wealth for post retirement

Liquidity - Withdrawal option after a small lock-in period, subject to the

applicable exit load

Flexibility - to choose investment allocations between Equity / Debt to

construct your portfolio

Convenience- do unlimited switches between equity-debt /Step-up your

investments/Auto-withdrawal with SWP facility on retirement

Tax deductions for investments up to Rs. 1.5 Lakhs u/s 80C


Note: The above table is only for illustration purposes, purely to explain the concept of SIP and annuity and should not be taken as any indication of correlation with the scheme either by way of capital protection or equity market returns.

Retirement Calculator - Accumulation & Distribution

Returns during

Accumulation

Returns during

Distribution

Returns during

Accumulation

Returns during

Distribution

12% 10% 15% 12%

Retirement

Corpus

Monthly Pension

Amount

Retirement

Corpus

Monthly Pension

Amount

20 40 480 4,800,000 117,647,725 980,398 310,160,548 3,101,605

30 30 360 3,600,000 34,949,641 291,247 69,232,796 692,328

35 25 300 3,000,000 18,788,466 156,571 32,435,296 324,353

40 20 240 2,400,000 9,892,554 82,438 14,972,395 149,724

45 15 180 1,800,000 4,995,802 41,632 6,685,068 66,851

50 10 120 1,200,000 2,300,387 19,170 2,752,171 27,522

58 2 24 240,000 269,735 2,248 277,881 2,779

SIP Start

AgePeriod (Yrs)

No. of

Installments

Amount

Deposited

10,000

60 Years

Assumptions

Monthly Instalment Rs. * The returns earned on the retirement corpus is assumed to be systematically withdrawan as

annuity. Hence, the principal of the retirement corpus will remain intact and the annuity will

be perpetual in natureRetirement Age


To Sum Up

4 Simple and Smart investment solutions to meet your

investor needs:

Accrual Funds – Superior alternative to traditional investment options

Balanced + SWP – Long Term Wealth creation & Regular Income

Tax Saver Funds – Create Wealth while Saving Tax (u/s Sec 80c)

Retirement Funds – Retirement Solution offering Wealth Creation

opportunity + Tax Benefits


Thank You

Contact your Financial Advisor for more details

4 simple solutions to meet your investment requirements

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