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Investment Management

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Learning Made Simple

This document provides an overview of investment management and analysis. It discusses key economic indicators like GDP, inflation, and interest rates that impact investments. It also explains why investing is important for financial goals like children's education, marriage, and retirement. The document analyzes different investment options like stocks, bonds, real estate, gold and their risk-return profiles. It demonstrates how equity can provide high returns over the long run through examples. Finally, it discusses the growth in the Indian economy and financial markets which indicates potential for strong returns in the future.

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Investment Management and Analysis By, Kaushal kaushal@thefinancialplanners.in L M LEARNING S Made Simple
Few Parameters  Growth Parameters  GDP (C+I+G+X-M)  Fiscal Deficit / Surplus  Inflation  Banking Parameters  BR, CRR, SLR  Repo Rate L M LEARNING S Made Simple
Why Investment? L M LEARNING S Made Simple
Financial Failure  Earn – Spend – Save Philosophy  American Way of Life.. L M LEARNING S Made Simple
Example  Michel Gerard Tyson  Former American World Heavy Weight Boxing Champion  Youngest man to have won boxing world heavyweight title belt.  Made US $ 30 million during his career.  Declared Bankrupt in 2003  Reason Recent Example  Indiscriminate Spending Michel Jackson  No Financial Planning at all. L M LEARNING S Made Simple
Financial Independence  Earn – Save – Invest – Spend Philosophy Reason for us to study Investment Management and Analysis. L M LEARNING S Made Simple
Example  Kapil Dev  Captained India to their maiden and only Cricket World Cup in 1983 (50 Overs)  His Businesses  5% Stake in Zicom Electronics  Invested money in his own Kapil’s Eleven Restaurant and Kaptain’s Retret Hotel  Established a Company DEV Musco Lighting Pvt Ltd  Result  Comfortable Life L M LEARNING S Made Simple
Investment Objectives.. Why? For Whom? What is in it for me? L M LEARNING S Made Simple
Child’s education and marriage Why Investment? Creation of wealth, so the best can be provided to the family Money for emergencies An independent retired life Legacy for future generations Imp Factors…. 1. No Social Security System 2. Child : having the longest dependency 3. Only 11% of Workforce has access to Orgd Retirement Plg 4. Further cut on Interest Rate (To align with world)
A Range of Financial Products to choose from … Equities Post Office Schemes RBI Bonds Fixed Deposits Insurance Mutual Funds Forex Real Estate / Gold etc L M LEARNING S Made Simple
What Investors Wants?  Safety  Liquidity  Returns L M LEARNING S Made Simple
Investment Alternatives Investment Alternative Risk Return Liquidity Post Office Schemes Low Low Limited Bank FD Low Low Limited Company FD Medium Medium Limited Gold Low Medium High Real Estate High High Low Direct Equity / PMS High High High Mutual Fund (SIP) Medium Medium High L M LEARNING S Made Simple
Investment Choices – Nominal V/s Real Returns Investment Nominal Inflation Real Returns Type Returns Post Office Sch 8% 7.5% 0.5% Gold 10% 7.5% 2.5% Bank FD 10% 7.5% 2.5% Company FD 14% 7.5% 6.5% Real Estate 18% 7.5% 10.5% Equity 20% 7.5% 12.5% L M LEARNING S Made Simple
Equity Market Only Asset Class with High Return, High Liquidity We must ensure that it has lesser Risk… Hence….  We must understand Equity Market L M LEARNING S Made Simple
Equity Market  Primary Market  IPO  Medium to Raise Fund from Public  Secondary Market  Exit Route for Investor  Game for Speculators L M LEARNING S Made Simple
Secondary Market  SENSEX : Bombay Stock Exchange  NIFTY : National Stock Exchange  Share Trading…. Buying / Selling  Buy at Low Price, Sale at Higher Price and Earn Money L M LEARNING S Made Simple
Investment Management
In Last 30 Yrs… We have seen  Three Wars  Three Major Financial Scandals  Assassination of 2 Prime Minister  The Best Bull Phase and the Worst Bear Phase  The Worst Global Slowdown after great depression  11 Different Government  Unfair Share of Natural Disaster L M LEARNING S Made Simple
Why do Equity Gives Higher Returns? Because it represents portion of the business (Profit) which is growing. L M LEARNING S Made Simple
What Returns to Expect from Equity Market? Returns = Earning Growth + Dividend L M LEARNING S Made Simple
Power of Equity Lets look at the power of Profit (Dividend) L M LEARNING S Made Simple
Just imagine…  How much can you make in 26 years by just investing Rs.10,000 initially in any of financial instruments ? Let us look at the real example… L M LEARNING S Made Simple
If you have subscribed in 100 shares of ________ company with a face value of Rs. 100 in 1980…  In 1981 company declared 1:1 bonus = you have 200 shares  In 1985 company declared 1:1 bonus = you have 400 shares  In 1986 company split the share to Rs. 10 = you have 4,000 shares  In 1987 company declared 1:1 bonus = you have 8,000 shares  In 1989 company declared 1:1 bonus = you have 16,000 shares  In 1992 company declared 1:1 bonus = you have 32,000 shares  In 1995 company declared 1:1 bonus = you have 64,000 shares  In 1997 company declared 1:2 bonus = you have 1,92,000 shares  In 1999 company split the share to Rs. 2 = you have 9,60,000 shares  In 2004 company declared 1:2 bonus = you have 28,80,000 shares  In 2005 company declared 1:1 bonus = you have 57,60,000 shares L M LEARNING S Made Simple
Your present valuation is about Rs. 250 Cr.+ (CAGR 60%) & The company is ‘WIPRO’ L M LEARNING S Made Simple
Other such examples… CIPLA Investment of Rs. 10,000 in 1979 will fetch Rs. 95 cr.+ INFOSYS Investment of Rs. 10,000 in 1992 will fetch Rs. 1.5 cr.+ RANBAXY Investment of Rs. 1000 in 1980 will fetch Rs. 1.9 cr.+ L M LEARNING S Made Simple
Returns - Power of Time Horizon L M LEARNING S Made Simple
Market Size.. Is it self sufficient? Is there a chance of GROWTH? Can we make money out of it? L M LEARNING S Made Simple
Retail Financial Service Industry  Over 100 million retail investors  24000 + Bank Branches  5000 + Insurance Service Branches  10000 + Brokerage Service Branches  100000 + CA  Growing Number of Financial Products L M LEARNING One Million = 10 Lacs S Made Simple
Projections.. Estimated* Year 2008 2009 2010 2011 2012 GDP (Rs Cr) 44,80,000 50,18,000 56,20,000 62,94,000 75,52,800 Savings @ 21% (Rs Cr) 9,41,000 10,53,000 11,80,000 13,22,000 15,86,000  Total Household Savings in next 5 years estimated at Rs. 60,82,000 Crs.. If Equity Market Represents 5% Stake, The Total Market Size Is equal to Rs 3,04,100 Cr Need to be INVESTED (US $6 Trillion)
Favorable Socio – Economic Factors 1. More than 50% of Population under 25 Yrs of Age. 2. More than 80% of Population under 45 Yrs of Age. 3. Growing Urbanization and Disposable Income 4. Middle Class more than 23% of Population 5. 66 Millions to be added to working population in 20-34 age group in next 5 Yrs.
India’s Wealth CARD…  Annual income of over Rs. 1 Crore  1 in 800 in Mumbai households  1 in 500 Delhi households  Nationally this segment has grown 26%  Expected to touch 1,40,000 households by 2010 from around 75,000 currently  Nagpur has 425 and Surat has 146 such households showing the highest growth rate in the country. L M LEARNING S Made Simple
Facts  India’s Market Capitalization has touched US$ 1.04 trillion making the ninth largest in the world.  According to Goldman Sachs, Indian Companies may raise US$ 6 billion from IPO till 2010  India is 5th Largest Life Insurance Market and this segment is growing @ 34% pa.  According to global consultancy firm, Deloitte Haskins & Sells, the Indian economy and capital markets are expected to witness a turnaround within six to nine months.  India’s GDP growth of 7.1 per cent for the current year would make the country the second-fastest growing economy of the world. L M LEARNING S Made Simple
LearningMadeSimpleTM Learning Made Simple is initiative taken by few people earlier related to the Corporate World whose aim is to provide quality education and training to those who wish to excel in their career path. Learning Made Simple is an association who works on a no profit no loss basis and provide training and development in the era of Financial Planning, Financial Management, AMFI, NCFM, Management Concepts, Soft Skills, Leadership, Personality Development, Goal Setting, Marketing Management, Behavioral Science, NLP and various other segments. You can get in touch with us by sending email on kaushal@thefinancialplanners.in
Powered By, L M LEARNING S Made Simple

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Investment Management

  • 1. Investment Management and Analysis By, Kaushal [email protected] L M LEARNING S Made Simple
  • 2. Few Parameters  Growth Parameters  GDP (C+I+G+X-M)  Fiscal Deficit / Surplus  Inflation  Banking Parameters  BR, CRR, SLR  Repo Rate L M LEARNING S Made Simple
  • 3. Why Investment? L M LEARNING S Made Simple
  • 4. Financial Failure  Earn – Spend – Save Philosophy  American Way of Life.. L M LEARNING S Made Simple
  • 5. Example  Michel Gerard Tyson  Former American World Heavy Weight Boxing Champion  Youngest man to have won boxing world heavyweight title belt.  Made US $ 30 million during his career.  Declared Bankrupt in 2003  Reason Recent Example  Indiscriminate Spending Michel Jackson  No Financial Planning at all. L M LEARNING S Made Simple
  • 6. Financial Independence  Earn – Save – Invest – Spend Philosophy Reason for us to study Investment Management and Analysis. L M LEARNING S Made Simple
  • 7. Example  Kapil Dev  Captained India to their maiden and only Cricket World Cup in 1983 (50 Overs)  His Businesses  5% Stake in Zicom Electronics  Invested money in his own Kapil’s Eleven Restaurant and Kaptain’s Retret Hotel  Established a Company DEV Musco Lighting Pvt Ltd  Result  Comfortable Life L M LEARNING S Made Simple
  • 8. Investment Objectives.. Why? For Whom? What is in it for me? L M LEARNING S Made Simple
  • 9. Child’s education and marriage Why Investment? Creation of wealth, so the best can be provided to the family Money for emergencies An independent retired life Legacy for future generations Imp Factors…. 1. No Social Security System 2. Child : having the longest dependency 3. Only 11% of Workforce has access to Orgd Retirement Plg 4. Further cut on Interest Rate (To align with world)
  • 10. A Range of Financial Products to choose from … Equities Post Office Schemes RBI Bonds Fixed Deposits Insurance Mutual Funds Forex Real Estate / Gold etc L M LEARNING S Made Simple
  • 11. What Investors Wants?  Safety  Liquidity  Returns L M LEARNING S Made Simple
  • 12. Investment Alternatives Investment Alternative Risk Return Liquidity Post Office Schemes Low Low Limited Bank FD Low Low Limited Company FD Medium Medium Limited Gold Low Medium High Real Estate High High Low Direct Equity / PMS High High High Mutual Fund (SIP) Medium Medium High L M LEARNING S Made Simple
  • 13. Investment Choices – Nominal V/s Real Returns Investment Nominal Inflation Real Returns Type Returns Post Office Sch 8% 7.5% 0.5% Gold 10% 7.5% 2.5% Bank FD 10% 7.5% 2.5% Company FD 14% 7.5% 6.5% Real Estate 18% 7.5% 10.5% Equity 20% 7.5% 12.5% L M LEARNING S Made Simple
  • 14. Equity Market Only Asset Class with High Return, High Liquidity We must ensure that it has lesser Risk… Hence….  We must understand Equity Market L M LEARNING S Made Simple
  • 15. Equity Market  Primary Market  IPO  Medium to Raise Fund from Public  Secondary Market  Exit Route for Investor  Game for Speculators L M LEARNING S Made Simple
  • 16. Secondary Market  SENSEX : Bombay Stock Exchange  NIFTY : National Stock Exchange  Share Trading…. Buying / Selling  Buy at Low Price, Sale at Higher Price and Earn Money L M LEARNING S Made Simple
  • 18. In Last 30 Yrs… We have seen  Three Wars  Three Major Financial Scandals  Assassination of 2 Prime Minister  The Best Bull Phase and the Worst Bear Phase  The Worst Global Slowdown after great depression  11 Different Government  Unfair Share of Natural Disaster L M LEARNING S Made Simple
  • 19. Why do Equity Gives Higher Returns? Because it represents portion of the business (Profit) which is growing. L M LEARNING S Made Simple
  • 20. What Returns to Expect from Equity Market? Returns = Earning Growth + Dividend L M LEARNING S Made Simple
  • 21. Power of Equity Lets look at the power of Profit (Dividend) L M LEARNING S Made Simple
  • 22. Just imagine…  How much can you make in 26 years by just investing Rs.10,000 initially in any of financial instruments ? Let us look at the real example… L M LEARNING S Made Simple
  • 23. If you have subscribed in 100 shares of ________ company with a face value of Rs. 100 in 1980…  In 1981 company declared 1:1 bonus = you have 200 shares  In 1985 company declared 1:1 bonus = you have 400 shares  In 1986 company split the share to Rs. 10 = you have 4,000 shares  In 1987 company declared 1:1 bonus = you have 8,000 shares  In 1989 company declared 1:1 bonus = you have 16,000 shares  In 1992 company declared 1:1 bonus = you have 32,000 shares  In 1995 company declared 1:1 bonus = you have 64,000 shares  In 1997 company declared 1:2 bonus = you have 1,92,000 shares  In 1999 company split the share to Rs. 2 = you have 9,60,000 shares  In 2004 company declared 1:2 bonus = you have 28,80,000 shares  In 2005 company declared 1:1 bonus = you have 57,60,000 shares L M LEARNING S Made Simple
  • 24. Your present valuation is about Rs. 250 Cr.+ (CAGR 60%) & The company is ‘WIPRO’ L M LEARNING S Made Simple
  • 25. Other such examples… CIPLA Investment of Rs. 10,000 in 1979 will fetch Rs. 95 cr.+ INFOSYS Investment of Rs. 10,000 in 1992 will fetch Rs. 1.5 cr.+ RANBAXY Investment of Rs. 1000 in 1980 will fetch Rs. 1.9 cr.+ L M LEARNING S Made Simple
  • 26. Returns - Power of Time Horizon L M LEARNING S Made Simple
  • 27. Market Size.. Is it self sufficient? Is there a chance of GROWTH? Can we make money out of it? L M LEARNING S Made Simple
  • 28. Retail Financial Service Industry  Over 100 million retail investors  24000 + Bank Branches  5000 + Insurance Service Branches  10000 + Brokerage Service Branches  100000 + CA  Growing Number of Financial Products L M LEARNING One Million = 10 Lacs S Made Simple
  • 29. Projections.. Estimated* Year 2008 2009 2010 2011 2012 GDP (Rs Cr) 44,80,000 50,18,000 56,20,000 62,94,000 75,52,800 Savings @ 21% (Rs Cr) 9,41,000 10,53,000 11,80,000 13,22,000 15,86,000  Total Household Savings in next 5 years estimated at Rs. 60,82,000 Crs.. If Equity Market Represents 5% Stake, The Total Market Size Is equal to Rs 3,04,100 Cr Need to be INVESTED (US $6 Trillion)
  • 30. Favorable Socio – Economic Factors 1. More than 50% of Population under 25 Yrs of Age. 2. More than 80% of Population under 45 Yrs of Age. 3. Growing Urbanization and Disposable Income 4. Middle Class more than 23% of Population 5. 66 Millions to be added to working population in 20-34 age group in next 5 Yrs.
  • 31. India’s Wealth CARD…  Annual income of over Rs. 1 Crore  1 in 800 in Mumbai households  1 in 500 Delhi households  Nationally this segment has grown 26%  Expected to touch 1,40,000 households by 2010 from around 75,000 currently  Nagpur has 425 and Surat has 146 such households showing the highest growth rate in the country. L M LEARNING S Made Simple
  • 32. Facts  India’s Market Capitalization has touched US$ 1.04 trillion making the ninth largest in the world.  According to Goldman Sachs, Indian Companies may raise US$ 6 billion from IPO till 2010  India is 5th Largest Life Insurance Market and this segment is growing @ 34% pa.  According to global consultancy firm, Deloitte Haskins & Sells, the Indian economy and capital markets are expected to witness a turnaround within six to nine months.  India’s GDP growth of 7.1 per cent for the current year would make the country the second-fastest growing economy of the world. L M LEARNING S Made Simple
  • 33. LearningMadeSimpleTM Learning Made Simple is initiative taken by few people earlier related to the Corporate World whose aim is to provide quality education and training to those who wish to excel in their career path. Learning Made Simple is an association who works on a no profit no loss basis and provide training and development in the era of Financial Planning, Financial Management, AMFI, NCFM, Management Concepts, Soft Skills, Leadership, Personality Development, Goal Setting, Marketing Management, Behavioral Science, NLP and various other segments. You can get in touch with us by sending email on [email protected]
  • 34. Powered By, L M LEARNING S Made Simple