This slide talks about how mutual fund works and the benefit of investing in a mutual fund. As a small investor, you may find that it is not possible to buy shares of larger corporations. Mutual funds generally buy and sell securities in large volumes which allow investors to benefit from lower trading costs. The smallest investor can get started on mutual funds because of the minimal investment requirements.

2. Objectiveof the Presentation
What is MF ?
How MF works ?
Why invest in MF ?
How do you make money from mutual fund ?
SIP and its power and benefits
How much should a MF be allocated in a portfolio

3. What is a Mutual Fund ?
.
Thingswhich are “Mutual”in a MutualFund
Trust
Pool of Money
Investment Objectives
Risk & Returns
Mutual Fund is a Trust that Pools the Savings of a number of Investors,
having a common Financial Goal, and is collectively managed by an
Asset Management Company according to stated investment objectives.

4. How Mutual Fund works?

5. Why Mutual Fund ?
Portfolio Diversification
Transparency
Liquidity
Convenience
Flexibility
Low Investment
Market linked Returns
Return Potential
Low Cost
Professional Management
Reduction in Risk
Choice of Schemes
Well Regulated
Tax Benefit

6. Buying a Mutual Fund is like buying a small slice ofa big
Pizza

7. Education Earning 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

8. 60
Retirement
40
Middle Age
27
Young Married
22
Young Independent
Individual Investor:Life Stages
Earnings
Consumption
Savings
All individuals have a finite period to save for their investment goals

9. Value ofMoney 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
30,000
38,288
62,368
79,599
Today 5 years 15 years 20 years
100,000
78,353
48,102
37,689
Today 5 years 15 years 20 years

10. Instrument Tax Benefit Return Duration
EPF √ 8.65% Long Term
PPF √ 8 % Long Term
NSC √ 8 % Long Term
FD’s – Banks & Post Office √ 7 % – 8 % Short Term
Senior Citizen Savings
Scheme
√ 8.5 % Long Term
Mutual Funds √ Market Linked Long Term & Short Term
ULIP √ Market Linked Long Term
NPS (New Pension Scheme) √ Market Linked Long Term
Direct Equity √ Market Linked Long Term
Gold √ Market Linked Short Term
Real Estate √ Market Linked Long Term

11. TerminologiesDemystified…
Asset Allocation
Diversifying investments in different assets
such as stocks, bonds, real estate, gold ,
cash in order to minimize 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.

12. TerminologiesDemystified (contd.)
Dividend
Profits given to the investor from time to time.
Growth
Profits ploughed back into scheme. This causes the NAV to rise.
NAV
Market value of assets of the scheme minus its liabilities.

13. Howdo you makemoneyfroma 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

14. Howdo you makemoneyfroma mutual fund?
3. Income Distribution:
The fund passes on the profits it has earned in the
form of dividends
Disclaimer
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. Although Mutual Fund does not guarantee the same.

15. A Systematic Investment Plan (SIP) is an investment plan that allows an individual to invest
regularly a fixed amount at a specified frequency say, monthly or quarterly
>> A Recurring Deposit in Mutual Funds
Systematic Investment Planning
(SIP)
•It is a method of investing regularly to benefit from the stock market
volatility and take the benefit of Rupee Cost Averaging.
•Convenient and Hassle-Free - Automatic investments, one-
time instruction.
•Forced Saving : Small amount invested every month to
become a huge sum after some years.
•Light on the wallet.
•Become a disciplined Investor – Setting aside and invest a
fixed sum of money.

16. • It is the small drops that make an ocean - Your money earns more money for
you – Compounding Effect
• Relieves you of the last minute pressure
• Slow and steady wins the race - SIP helps wins over Lump sum in Volatile
Markets
• Reduces the risk of investing at the wrong time - By investing in the markets
without taking a call on what is the ‘Right’ time.
• Investing a fixed sum at fixed intervals we can bring down the average cost
per unit. This is called Rupee Cost Averaging.
• SIP takes care that your average price works out to be lower than the price
you would have paid at the market peak (illustrated in the chart)

17. Start Early : SIP
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!

18. KBC –Kaise Banoge Crorepati ?
Scenario 1 :
A Child is born (be it a Girl or a Boy)……Celebrate her / his birth by starting a SIP of Rs.3000/=
pm…….They will be Crorepati at the age of 25 (assuming the return of 15% pa)
Scenario 2 :
Start a savings of Rs.4000/= pm, the chances of becoming a Crorepati is much more, even
@ 14%
Scenario 3 :
Rs.4500/= would be required to make you a Crorepati @ 13%
Scenario 4 :
You have to put Rs. 5000/= ina SIP if we assume @ 12%
THINK BIG !!!

19. SummingUp……
 Mutual Funds are the best way to en-cash the upside potential of Equity Markets
 A Long-term horizon is important for successful investing in Equity Funds. While
equity investments may be volatile in the short-term, they have the potential to
deliver superior returns over a period of time.
 Trying to time the market is a good idea, but only in hindsight. It’s the time one gives
an investment that matters, and not timing.
 The decision to sell must be clearly based on a specific need.
 Start Early & Investing regularly through SIP can help stabilize long term returns and
create Wealth.
 Harness the power of compounding by choosing Growth option

20. Thanks