mutual funds

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Jump Start

Financial Services & Mutual Funds

Why Financial Services?

• Financial Services is one of

the fastest growing sectors

today with some of the

best career opportunities

Why this seminar?

You are on the threshold

of your career with many

choices of jobs. We shall

help you take informed

decisions, so you can

have a “jump start”

Agenda: Next 90 minutes

Financial Services – An overviewJob Profiles Skill Sets requiredHow to get those skillsDiscussions

Money or……..?

• In business what is more important than money or cash?

Financial Services

• The financial services

incorporates organisations that

deal with the management of

money. It consists of an intricate

network of financial institutions

and markets.

Financial Services….

• The industry plays a vital role in

the functioning of the economy,

facilitating the flow of funds

between savers and

investors.

Numbers???Numbers No of employees Turnover per

employee (lakhs)

7 38731 650.23

20 23303 778.0

21 8289 744.8

30 1010 1252.28

Numbers???Numbers No of employees Turnover per

employee (lakhs)

State banks 7 38731 650.23

Other Nationalised Banks

20 23303 778.0

Private Banks 21 8289 744.8

Foreign Banks 30 1010 1252.28

Numbers

• 41

•6880•4,740,137 Crores

Opportunities unlimited

• “The financial

services

industry is full

opportunities

and varied

areas to work

MUTUAL FUND

Concept, Organisation Structure, Advantages and Types.

Education Earning Years Post Retirement Years

Phase I Phase II Phase III

Age- 22 yrs Age- 60 yrs

Marriage

Child birth

Child’s Education

Child’s Marriage

Housing

22 yrs 38 yrs 10- 20 yrs

Human Life Cycle

60Retirement

40Middle Age

27Young Married

22Young Independent

Individual Investor: Life Stages

Earnings

Consumption

Savings

All individuals have a finite period to save for their investment goals

Value of Money over time

Impact of inflation on monthly expenses of Rs. 30,000 today

Value of Rs. 100,000 over time

At inflation of 5%

Investors need to beat inflation

30,00038,288

62,368

79,599

Today 5 years 15 years 20 years

100,000

78,353

48,10237,689

Today 5 years 15 years 20 years

OPTIONS FOR INVESTING

• Deposit in Bank – SB, RD, FD’s, Locker ;)• Loan a Friend/Relative on Interest• Property Investments• Invest in Bullion - Gold, Silver..• Investment in Capital Markets - -

Direct - Equity Share Markets - Debt & Bonds Market - Indirect - Mutual Funds

Pools the savings of a number of investors who share a common financial goal.

The money thus collected

is then invested in

capital market instruments

such as shares, debentures and other

securities.

The income earned through these investments and the capital appreciation realised are

shared by its unit holders in proportion to the number of units owned by them.

Mutual Fund Operation

How Mutual Fund works? A vehicle for investing in portfolio of stocks and bonds

Structure of Mutual Fund

Structure

Open Ended

Close Ended

Interval Schemes

Investment Objective

Growth

Income

Balanced

Money Market

Others

Tax Saving

Special

Index/Sector

Advantages of Mutual Funds

1. Professional Management

2. Diversification

3. Convenient Administration

4. Return potential

5. Low cost

6. Liquidity

Advantages of Mutual Funds

1. Transparency

2. Flexibility

3. Choice of schemes

4. Well regulated

5. Tax benefits

How do I make money from a mutual fund?

1. Capital appreciation:

As the value of securities in the fund increases, the fund's unit price will also

increase. You can make a profit by selling the units at a price higher than at which

you bought

2. Coupon / Dividend Income:

Fund will earn interest income from the bonds it holds or will have dividend

income from the shares

3. Income Distribution:

The fund passes on the profits it has earned in the form of dividends

Terminologies Demystified…

Asset Allocation

Fund Manager

Fund Offer Document

Dividend

Growth

Terminologies Contd…

• NAV

• Per unit NAV = Net Asset Value

No. of Units Outstanding on Valuation date

• Entry Load/Front-End Load (0-2.25%)

• Exit Load/Back- End Load (0.25-2.25%)

• Sale Price/ Offer Price

• Re-Purchase Price/ Bid Price

• Redemption Price

Investment strategies • Systematic Investment Plan (SIP)

– Invest a fixed sum every month. (6 months to 10 years- through post-dated cheques or Direct Debit facilities)

– Fewer units when the share prices are high, and more units when the share prices are low. Average cost price tends to fall below the average NAV.

• Systematic Transfer Plan (STP) – Invest in debt oriented fund and give instructions to

transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund.

• Systematic Withdrawal Plan (SWP)

What is a Systematic Investment Plan?

An investment plan to invest a fixed amount regularly at a specified frequency say, monthly or quarterly.

SIP is a simple method of investing used across the world as a means to creating wealth

www.edventures1.com | training@edventures1.com | +91-9787-55-55-44chopra.rajiv@icai.org

Benefits of SIP

• Regular• Investments happen every month unfailingly

• Power Of Compounding• Rupee Cost Averaging• Forced saving

• Helps you overpower the temptation to spend fully• Helps you build for the future

• Automated• Completely automated process• No hassles of writing cheque every month

• Light on the wallet• Investment amount can be so small that you do not even feel

the pinch of it being directly deducted, yet the small amount is powerfully working towards your financial security

SIP: The Power Of Compounding

SIP of Rs. 1000 invested per month @ 8% pa till the age of 60.

Starting Age Total Amount Saved Value at the age of 60

25 4,20,000 23,09,175

30 3,60,000 15,00,295

35 3,00,000 9,57,367

40 2,40,000 5,92,947

…the sooner you start, makes a difference!

SIP - How Rupee Cost Averaging helps

Month Amount Rising Market Falling Market Volatile Market

NAV (Rs) Units Allotted NAV (Rs) Units

Allotted NAV (Rs) Units Allotted

1 10000 10 1000.00 10 1000.00 10 1000.00

2 10000 10.5 952.38 9.75 1025.64 10.5 952.38

3 10000 12 833.33 9 1111.11 9 1111.11

4 10000 14 714.29 7 1428.57 11 909.09

5 10000 17 588.24 6.5 1538.46 13 769.23

6 10000 18 555.56 6 1666.67 11.5 869.57

Total 60000 81.50 4643.79 48.25 7770.45 65.00 5611.38

Avg. Purchase NAV (Total of NAVs/No. of investments 13.58 8.04 10.83

Avg. cost per unit (Total Investment /No of units

held)12.92 7.72 10.69

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Equity Funds

• Diversified equity funds • Index funds • Opportunity funds • Mid-cap funds • Equity-linked savings schemes • Sector funds like Auto, Health Care, FMCG etc• Dividend Yield Funds• Others (Exchange traded, Theme, Contra etc)

Mutual Fund: How to buy?

Financial Goals

Identify ‘What to Buy’

Evaluate Funds from various Mutual Fund Cos.

Online Offline

Mutual Fund Co. and others Financial Distributor

Fill Up Form

Attach Relevant Documents

Submit

Banks,

Financial Svc. Cos.,

Brokers,

Individual Agents

Mutual Fund: How to redeem?

Fill-up relevant details(You could do partial redemption as well)

Sign the Form(All applicants to the units need to sign)

Submit(Submit the form to the Branch of the specific Mutual Fund Co.)

Money into your Bank Account(Money gets credited to you as per the scheme-specific turnaround time)

Choose ‘redemption’

Download Common Transaction Slip(Download from Mutual Fund Company’s website or get it from the branch)

Getting the job

“Get jobs that you want not jobs that want you”

• +91-97-87- 55- 55- 44

• training@edventures1.com

• www.edventures1.com

Thank You!

Terminologies Demystified…

• Asset Allocation

Diversifying investments in different assets such as stocks, bonds, real estate, cash

in order to optimize risk.

• Fund Manager

The individual responsible for making portfolio decision for a mutual fund, in line

with fund’s objective.

• Fund Offer Document

– Document with investment objectives, risk factors, expenses summary, how to invest etc.

• Dividend

– Profits given to the investor from time to time.

• Growth

– Profits ploughed back into scheme. This causes the NAV to rise.

Terminologies Contd…• NAV

– Market value of assets of scheme minus its liabilities.

• Per unit NAV = Net Asset Value No. of Units Outstanding on Valuation date

• Entry Load/Front-End Load (0-2.25%)– The commission charged at the time of buying the fund.– To cover costs for selling, processing

• Exit Load/Back- End Load (0.25-2.25%)– The commission or charge paid when an investor exits from a mutual fund. Imposed to discourage

withdrawals – May reduce to zero as holding period increases.

• Sale Price/ Offer Price– Price you pay to invest in a scheme. May include a sales load. (In this case, sale price is higher than

• Re-Purchase Price/ Bid Price– Price at which close-ended scheme repurchases its units

• Redemption Price– Price at which open-ended scheme

Investment strategies • Systematic Investment Plan (SIP)

– Invest a fixed sum every month. (6 months to 10 years- through post-dated cheques or Direct Debit facilities)

– Fewer units when the share prices are high, and more units when the share prices are low. Average cost price tends to fall below the average NAV.

• Systematic Transfer Plan (STP) – Invest in debt oriented fund and give instructions to

transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund.

• Systematic Withdrawal Plan (SWP)

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