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Basics of investing - Balance Sheet Approach

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Basics of investing - Balance Sheet Approach

  1. 1. Basics of Investing SLR
  2. 2. Session delivery by Infinity Finserv Pvt Ltd 212 Saran Chambers 2, Park Road, Lucknow -226100
  3. 3. Let us visit a simple balance sheet ( As on date) • Assets • Financial assets ( Valued as on date) • Physical Assets ( Valued as on date) • Receivables on Death • Receivable on Survival • Liabilities • Payable Outstanding (Value as on date) : Principal Portion • Payable Outstanding (Value as on date) : Interest Portion
  4. 4. Let us visit a simple balance sheet ( As on date) • Assets • Financial assets ( Valued as on date) • Physical Assets ( Valued as on date) • Receivables on Death • Receivable on Survival • Liabilities • Payable Outstanding (Value as on date) : Principal Portion • Payable Outstanding (Value as on date) : Interest Portion
  5. 5. A good balance Sheet looks like : Excess of Assets Over Liabilities
  6. 6. Todays session • Basics of investing – learning through a balance sheet
  7. 7. 1. Liquidity ratio Liquidity ratio represents an individual's ability to meet committed expenses when faced with an emergency. LIQUIDITY RATIO = CASH OR CASH EQUIVALENTS / MONTHLY COMMITTED EXPENSES It is a prescribed practice to maintain 3-6 months of expenses as your emergency fund, which means that the ideal levels of liquidity ratio range between 3 and 6.
  8. 8. How to maintain liquidity ratio ? • Adding a Financial Asset named “ Liquid Funds” in your Balance Sheet Use our mobile app : fundconnect Enter Advisors number as : 9415410781
  9. 9. Performance of a liquid fund
  10. 10. ASSET TO liability RATIO ASSET TO LIABILITY RATIO = TOTAL ASSETS / TOTAL LIABILITIES - Total assets include both Financial and Physical assets accumulated over years. - Total liabilities include all forms of liabilities such as home loan, car loan, outstanding credit card balance and so on. • This ratio stands as relative measure which helps in determining what you own vs. what you owe. • A mid aged person may have this ratio lower : in between 10% to 50% • At the time of retirement this ratio should not be lower than 80%
  11. 11. How to increase this Asset to Liability Ratio ? • By investing in products which should yield higher than your Liability growth rate • By investing in Long Term Equity products through SIP ( Systematic Investment Plan)
  12. 12. Some examples… SBI Focused Equity Fund – reg – Gr ( 14.12% p.a) Disclaimer : Mutual Funds are subject to market Risk . There is no guarantee that the past return will be repeated in future also
  13. 13. More examples.. Mirae Asset Emerging Bluechip Fund - Regular Plan ( 18.31% p.a) Disclaimer : Mutual Funds are subject to market Risk . There is no guarantee that the past return will be repeated in future also
  14. 14. Asset to liability ratio can be increased through sip
  15. 15. Current ratio ( should not be less than 1) CURRENT RATIO = CASH OR CASH EQUIVALENTS / SHORT TERM LIABILITIES • Cash or cash equivalent component includes assets such as cash in hand, cash in bank and other such assets which can be liquidated immediately. • Short-term liabilities include all your debt repayments that are to be made in the current year, like- Total EMI payments that are to be made in the current year, credit card outstanding balance and other such obligations, which are to be met in the current year, are also considered when calculating short-term liabilities.
  16. 16. Investments for better current ratio Liquid funds Banking & PSU Bond Funds Medium Term Bond Funds
  17. 17. Axis Banking & PSU Debt Fund
  18. 18. Solvency ratio SOLVENCY RATIO = NET WORTH / TOTAL ASSETS • Net worth of an individual is the difference between his/her total assets and total liabilities. Net worth is positive if the accumulated assets are worth more than the liabilities. This ratio indicates the ability of an individual to repay all his/her existing debts using existing assets in case of unforeseen events.
  19. 19. Total Asset ratio : Important for a Retired investor INVESTMENT ASSETS TO TOTAL ASSETS = LIQUID ASSETS / TOTAL ASSETS • Investments in stocks, mutual funds or other such investments, which can be converted to cash easily, are considered as liquid assets. • Apart from these liquid assets, total assets also include illiquid assets such as real estate or other such investments which require more time to convert to cash. • One should hold at least 20 per cent of his/her total assets as liquid assets.
  20. 20. Most important ratio : Saving Ratio • This is one of the most common and simpler financial ratios. It compares the monthly surplus being generated by an individual against total cash inflows. • SAVING RATIO = MONTHLY SURPLUS / MONTHLY INCOME • Though the ratio looks familiar and simple, it will give you valuable insight on how well your finances are being managed. It also represents one's ability to achieve his/her future goals. • A higher saving ratio translates to better money management skills.
  21. 21. For a better wealth management • You need to understand the SLR approach • You need to understand the Goal based approach • You need to love Equity and understand its wealth creation power • You need to give importance to Liquidity in your Balance Sheet
  22. 22. how to start ? Set a counselling session with our expert Get your rough Balance Sheet as on date Check your existing ratios and decide the area of corrections Get your SLR based Risk profiling done Create your Financial Goals and give it a realistic touch
  23. 23. U can Take a self start also • Visit https://infirupee.com • See the Trial Demo
  24. 24. Team is available for your help • Mohit Gupta • Amit • Tarun • Gyanesh • Neetika • Pooja • Anjali • Deep

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