Beruflich Dokumente
Kultur Dokumente
CONCERNS
OF INVESTORS RELATED
TO EQUITY INVESTMENT
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Concern 1
Equity Markets are
RISKY, I want Safety
First.
My Bank FD is giving
me 9% (Guaranteed),
Why should I invest
in equity?
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What Is The Meaning Of Safety?
PRESERVING
THE CAPITAL
OR
PRESERVING
THE PURCHASING
POWER
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Real Life Example
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Key Objective of Investing :
Enhancing Purchasing Power
Over FY 1979–2015 CPI inflation has been 8.4%, eroding purchasing power of Rupee by 94%
Source: Bloomberg, MOAMC internal analysis, Data as on 31st July 2015
Note: The information herein is used for comparison purpose and is illustrative and is not sufficient and shouldn’t be used for the
development or implementation of an investment strategy. It should not be construed as investment advice to any party.
Past performance may or may not be sustained in future.
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Key Objective of Investing :
Enhancing Purchasing Power
Equities significantly enhance purchasing power of portfolios
Current CAGR
Value (%) Times
Sensex 1568 7.87% 13
Gold 196 1.87% 2.51
FD 104 0.11% 0.99
Source: Bloomberg, MOAMC internal analysis, Data as on 31st July 2015
Note: The information herein is used for comparison purpose and is illustrative and is not sufficient and shouldn’t be used for the development or
implementation of an investment strategy. It should not be construed as investment advice to any party.
Past performance may or may not be sustained in future.
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Reality VS illusion
Normally House hold expense gets double at
every 5 years due to CPI and lifestyle inflation.
Today’s house hold expense of
Rs 25,000 will be Rs. 2,00,000, after
15 years Money in your FD will become
Rs.73971*
Biggest Risk in Equity market
“Not investing into it”
FD interest is taxable, while equity investment after
one year of investment, capital gain tax is NIL
*7.5% interest is assumed in Bank FD
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Concern 2
Market is very High,
It should correct.
I will wait for correction.
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Time Is More Important
*12% rate of return Assumed
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Effect Of Compounding Vs. Time
“The most powerful force in the
universe is the power of
Compound.“
Value of Investment
15000/ Per month
Albert Einstein
Savings A/c Bank FD Equity Mutual Fund
No of Years 4% 9% 12% 15% 18%
2 3,75,390 3,95,773 4,08,648 4,22,032 4,35,945
5 9,97,800 11,39,847 12,37,295 13,45,225 14,64,868
10 22,16,110 29,24,485 34,85,086 41,79,859 50,43,863
15 37,03,662 57,18,657 75,68,640 1,01,52,946 1,37,88,133
20 55,19,958 1,00,93,440 1,49,87,219 2,27,39,325 3,51,52,308
25 77,37,650 1,69,42,955 2,84,64,526 4,92,61,106 8,73,49,682
30 1,04,45,444 2,76,67,111 5,29,48,707 10,51,47,309 21,48,79,338
Savings and Bank FD return is assumed at 4% and 9% respectively. For Equity MF various assumed return scenario.
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More Time = More Wealth
It’s Not Timing It’s Time
Into The Market Which
Is More Important.
Historically, those who
stayed invested with
their invested have
made big fortunes.
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Behavior Gap
People who constantly try to By constantly trying to time the
time the market end up getting market, chances of losing those
lesser return than the actual few days are very high.
asset class performance
“World is waiting for market to
Major returns in equity market is crash, market is waiting for your
delivered in few days. passion to crash.”
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Risk Of Missing Few Best Days
Valuation as on 14th July 2014 of Rs 100000 invested for 10 years
Current Impact of Best Days missed
Product
Value
2 days 5 days 10 days 20 days 30 days 40 days
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What if you missed BEST days?
Value of Rs 1,00,000 invested before 10 years*
*as on 14th July 2014
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What if you missed BEST days?
Value of Rs 1,00,000 invested before 10 years*
*as on 14th July 2014
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Concern 3
Market has corrected
and it will correct
further.
I will wait till the things
gets settled down.
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Emotion of FEAR
• The feeling of FEAR is common
when market corrects.
• Emotion of FEAR sometimes
overpowers the LOGIC.
• FEAR leads to the irrational
decisions.
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Every BULL run has witnessed Corrections
Corrections during Bull Market of 20032007
There were around 5 Correction
of more than10% of magnitude
during the journey of Sensex
from 6k to 21k.
The Biggest one was of 30% DIP.
Corrections are not predictable,
we should not waste time in
worrying.
Keep investing, Because..
“In investing, what is comfortable is rarely profitable.”
Robert Arnott
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TURNING POINT on Road
is PART of Road NOT END
of it.
Similarly
CORRECTION in Stock
Market is PART of Stock
Market NOT END of it.
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Return After Correction
DON’T MISS THIS
INVESTMENT
OPPERTUNITY.
IT’S TIME TO ADD
MORE IN
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Concern 4
Let The More Clarity
Come, Then I Will
Invest
“WALL OF WORRY”
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Market Doesn't’t Wait For Clarity
Market always reacts in advance.
It goes up or down before the actual event takes place.
Waiting for the clarity may result in paying the
premium and lesser returns.
So when odds are in favor of investment, don’t wait for
the exact clarity.
People who were waiting for election to get over have
missed the rally of 6000 points in Sensex.
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Cost Of Clarity
2014: But exit polls always underestimates
Exit Polls gives NDA majority 23551
Early may Congress
But BJP does not have majority in
2014: May BJP alone gets majority 24122
upper house
Market don’t care for “Wall of Worry”
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Concern 5
I don’t want to invest as the last
3 years returns are not good.
Every time I invest in Equity
Fund looking at performance,
but after my investments
scheme performance
deteriorates.
Investing based on past performance
only is as risky as driving a car while
looking into rear view mirror only.
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Historical Returns
EPS for PE (based
BSE Sensex ( as
Date financial on EPS for 1 year 2 year 3 years 4 years 5 years 6 years 7 years 8 years 9 years 10 years 12 years 15 years
on Dec 31)
year FY)
• Sensex is taken as on particular day( i.e last day of December of each calendar year.
• EPS is taken for the respective financial year. www.prudentcorporate.com
Future Returns
PE
EPS for
BSE Sensex ( (based
Date financial 1 year 2 year 3 years 4 Years 5 years 6 years 7 years 8 years 9 years 10 years 12 years 15 years
as on Dec 31) on EPS
year
for FY)
24‐Dec‐93 3346 129 25.94 17.36% ‐3.58% ‐2.67% 2.26% ‐1.80% 6.94% 2.48% ‐0.32% 0.10% 5.73% 8.99% 7.31%
23‐Dec‐94 3927 181 21.70 ‐20.79% ‐11.36% ‐2.33% ‐6.08% 4.97% 0.19% ‐2.61% ‐1.87% 4.51% 5.33% 11.03% 10.46%
22‐Dec‐95 3110 250 12.44 ‐0.81% 8.46% ‐0.59% 12.63% 5.01% 0.80% 1.18% 8.19% 8.72% 11.69% 16.91% 13.40%
24‐Dec‐96 3085 266 11.60 18.60% ‐0.48% 17.51% 6.52% 1.12% 1.52% 9.54% 9.98% 13.17% 16.15% 9.97% 11.34%
31‐Dec‐97 3659 291 12.57 ‐16.50% 16.97% 2.77% ‐2.83% ‐1.59% 8.10% 8.80% 12.51% 15.88% 18.68% 13.91% 11.77%
31‐Dec‐98 3055 278 10.99 63.83% 14.02% 2.21% 2.54% 13.83% 13.70% 17.41% 20.73% 23.41% 12.18% 17.19% 13.76%
30‐Dec‐99 5006 280 17.88 ‐20.65% ‐19.27% ‐12.29% 3.92% 5.69% 11.07% 15.57% 19.12% 7.56% 13.31% 9.85% 12.03%
29‐Dec‐00 3972 216 18.39 ‐17.87% ‐7.79% 13.70% 13.55% 18.80% 23.05% 26.23% 11.73% 17.89% 17.84% 14.14%
31‐Dec‐01 3262 236 13.82 3.52% 33.78% 26.49% 30.28% 33.41% 35.61% 16.75% 23.33% 22.66% 16.83% 16.84%
31‐Dec‐02 3377 272 12.42 72.89% 39.82% 40.65% 42.14% 43.13% 19.12% 26.46% 25.29% 18.41% 19.12% 19.10%
31‐Dec‐03 5839 348 16.78 13.08% 26.87% 33.16% 36.53% 10.56% 20.03% 19.66% 12.94% 14.29% 13.72%
31‐Dec‐04 6603 450 14.67 42.33% 44.50% 29.24% 9.94% 21.48% 20.79% 12.92% 14.44% 13.79% 15.33%
30‐Dec‐05 9398 523 17.97 46.70% 21.30% ‐11.22% 16.76% 16.89% 8.64% 10.93% 10.65% 12.67%
29‐Dec‐06 13787 718 19.20 47.15% ‐31.04% ‐4.87% 10.44% 2.31% 5.88% 6.28% 9.01%
31‐Dec‐07 20287 833 24.35 ‐52.45% ‐7.22% 0.36% ‐6.58% ‐0.86% 0.67% 4.44%
31‐Dec‐08 9647 820 11.77 81.03% 45.80% 17.01% 19.12% 16.96% 19.07%
31‐Dec‐09 17465 830 21.04 17.43% ‐5.93% 3.61% 4.86% 9.50%
31‐Dec‐10 20509 1060 19.35 ‐24.64% ‐2.67% 0.98% 7.61%
30‐Dec‐11 15455 1140 13.56 25.70% 16.89% 21.18%
31‐Dec‐12 19427 1196 16.24 8.70% 18.98%
31‐Dec‐13 21117 1326 15.93 30.22%
31‐Dec‐14 27499 1404 19.59
Min ‐52.45% ‐31.04% ‐12.29% ‐6.58% ‐1.80% 0.19% ‐2.61% ‐1.87% 0.10% 5.33% 8.99% 7.31%
Max 81.03% 45.80% 40.65% 42.14% 43.13% 35.61% 26.46% 25.29% 23.41% 19.12% 19.10% 13.76%
Average 15.95% 9.90% 9.21% 11.31% 11.73% 12.20% 11.74% 12.55% 13.31% 13.83% 13.79% 11.44%
• Sensex is taken as on particular day( i.e last day of December of each calendar year.
• EPS is taken for the respective financial year. www.prudentcorporate.com
Concern 6
Sentiments are not good,
just look at the NEWS.
National and International
Experts are predicting the
bear marketing
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Don’t Act On Headlines (Print Media)
“I think the worst mistake you can
make in stock market is to buy or
sell based on current headlines.”
Warrant Buffet
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Truth of Market Experts!!!
Nobody can
predict
the market.
Don’t take
these experts
seriously.
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You Decide….
31st Aug., 2015
Are there any changes in
Indian Fundaments in
These 7 days which made
this smiling face so
serious??!!!
7th Sep., 2015
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You Decide….
Jim Rogers is Bearish on India since year 2002, when Sensex was around
3000, Today Sensex Is 27000 points.
Should You listen to him?...... You Decide
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Concern 7
No One Is Investing
In Stock Market
Right Now.
Don’t Follow the
HERD.
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When To Invest?
Choice 1: When Market is cheap, attractive but no one wants to invest.
Choice 2: When Market is costly And everyone wants to invest.
Why we opt for 2nd Choice?
Investor's Decision Vs Feeling
Alone Group
Wrong Very Bad Not So Bad
Right Very Good Not So Good
What is more profitable: buying cheap or buying costly?
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Concern 8
What if FIIs move
out of market?
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We think “Achhe din aane WALE hai”
FII believe “Achhe din aa GAYE hai.”
We are proud of our country and its economic power.
FII invest in our economic power and earn from it.
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Understanding FII/FPI
FII/FPI is not a single entity
There are around more than 4054* FIIs/FPIs as on 8th Oct 2015
They are all from the different parts of the world
All of them may not require the money at the same time.
They come for the longer period of time.
Over a period of time FIIs/FPIs have increased their
holding in Indian companies.
*Sourec:https://www.cdslindia.com/publications/RegForeignInstInvstr.aspx
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FII Inflow In Indian Equity Market
FII Flow cr FII Flow cr
Financial Year Financial Year Financial Year FII Flow cr in
in in
Since last 10 years FII is net seller only in 1 full financial year.
FIIs are continuously buying the Indian Equity markets
On daily basis due to the huge volumes of FIIs market may be volatile,
but over long term FIIs are interested only in buying.
Source: https://www.fpi.nsdl.co.in/web/Reports/Yearwise.aspx?RptType=5
**up to Oct 8, 2016
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What FIIs Own?
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How have we done over time?
Non Promoters
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Concern 9
Markets are at
all time high,
it can’t move up
further.
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Valuation – Price vs Value
Sensex may be at all time high, but valuation are not.
One need to keep an eye the valuation measured by
P/E ratio to find out weather the markets are cheap or
costly
P/E of market swings like pendulum from low to high.
Current PE of market
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Valuations are comfortable
Sensex P/E (x)*
Sensex P/B (x)
Sensex ROE (%)‐ 10 Year
45
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Source : Bloomberg
Sensex Projection
Sensex Projection at 15% EPS growth yoy Sensex Projection at 18% EPS growth yoy
Years 3 5 7 Years 3 5 7
EPS 1340* 2,038 2,695 3,564 EPS 1340* 2,202 3,066 4,269
15 30570 40428 53466 15 33025 45984 64028
18 36684 48514 64160 18 39630 55181 76834
PE PE
20 40759 53904 71289 20 44033 61312 85371
22 44835 59295 78417 22 48437 67443 93908
Low PE 10.68
Historical
Average PE 18.31
PE movement
High PE 28.47
**As on 31th Mar., 2015 Source: http://www.moneycontrol.com/news/market‐edge/at‐0‐growth‐fy15‐earningspicturedisaster_1397280.html
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Concern 10
I don’t need Mutual Funds,
they also go down with
market.
Mutual Funds are even not
Beating Sensex, why
should I invest in MF?
I can do it on my own, I am educated and intelligent.
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Understanding And Doing It Different
Just by looking at the picture,
I am sure you can understand
what the by pass surgery is ..
Now if you have understood
what the bypass surgery is,
If you or any of your
member suffer from
blockage of coronary artery,
WILL YOU DO IT YOURSELF?
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It’s Not About Being Intelligent
“I can calculate the movement of stars, but not the madness of men.”
Sir Isaac Newton www.prudentcorporate.com
It’s Not About High IQ It’s About High EQ
Newton lost his life saving of 20000 British pound in year 1720 trying on his own.
His loss is equal to approx Rs 18 cr. in today’s context.
Do you think you are more educated and intelligent than Isaac www.prudentcorporate.com
Can You Do This On Your Own?
Value As On Value As On
Investment Smart Investor, Additional
(Panic (Confused Abs.
Particulars On Investment on 21st Sept 2001
Investor) Investor) Growth
14‐Feb‐00 21‐Sep‐01 23‐Nov‐04
25000 50000 100000
Sensex 5924.31 2600.12 6009.86 1.44%
Understanding something and doing something is all together different ball game.
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Invested Amount Value as on Value as on 31st
Scheme Name % Change
on 08th Jan 2008 09th Mar 2009 July 2016
I want to stop my SIP, because
the returns are not good for
Last 5 year
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Equity Investment Game of Patience
You take a tiny seed, plant it and water it...you get a tiny
1 sampling.... nothing more
You water it, fertilize it.... the sampling stays as it is....
2 nothing happens
You continue to water it, take care of it...still nothing
YEARS 3 happens
Against your better judgment, you need to continue to
4 water it, fertilise it... and still nothing will happen
To everyone's surprise, the tree sprouts and grows NINTY
5 feet in SIX weeks
What was going on in first Few Years?
9The tiny sampling was actually developing its root system underground to
sustain its impending over the ground growth fifth year onwards.
Chinese Bamboo tree 9If you had uprooted the sampling to see why it was not growing, it would die.
tests your patience 9But if you were patient and had faith, you would witness the miraculous growth
later on
INVESTING – SIMILAR GAME OF PATIENTS
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SIP Stopped Vs SIP Continued
Normally average Investor stops SIP after 3 or 5 years
if returns are not good or negative
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SIP Stopped Vs SIP Continued
Normally average Investor stops SIP after 3 or 5 years if returns are
not good or negative www.prudentcorporate.com
Concern 12
I want to save for my Son’s
education/My retirement;
why should I invest in
equity? wherein there
is no surety of returns?
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PPF Returns
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ELSS Vs. PPF
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Comparison Of ELSS Vs. PPF
The Table shows value of 1 lac invested every year in PPF, Sensex and Various ELSS schemes on 31st March of every year.
Valuation Date: 31 March 2015. (Past performance may or may not sustain in future)
1 Year 2 Years 3 Years 5 Years 7 Years 10 Years 12 Years 15 Years
CAPITAL INVESTED
Scheme Name
Rs. 1 Lac Rs. 2 Lacs Rs. 3 Lacs Rs. 5 Lacs Rs. 7 Lacs Rs. 10 Lacs Rs. 12 Lacs Rs. 15 Lacs
RETURNS GENERATED FROM VARIOUS ELSS SCHEMES (In Rs. Lacs)
Axis Long Term Equity Fund 1,62,028 3,81,420 6,29,637 11,66,023 NA NA NA NA
Birla Sun Life Tax Plan 1,56,836 3,50,800 5,62,113 9,73,374 15,88,678 26,40,985 51,50,592 97,78,801
Birla Sun Life Tax Relief 96 1,58,647 3,56,246 5,72,117 9,65,535 16,05,536 27,45,679 47,26,695 83,73,981
BNP Paribas Long Term Equity Fund 1,56,731 3,48,921 5,58,721 10,12,344 16,44,589 NA NA NA
Canara Robeco Equity Taxsaver 1,43,796 3,13,654 4,96,177 8,82,713 16,20,765 30,93,292 55,89,147 86,87,301
DSP BlackRock Tax Saver Fund 1,50,324 3,34,719 5,38,412 9,34,394 15,99,039 NA NA NA
Franklin India Taxshield 1,52,924 3,38,589 5,37,471 9,64,089 16,89,788 30,22,168 56,44,674 1,06,50,185
HDFC Long Term Advantage Fund 1,34,361 3,01,035 4,79,543 8,51,978 15,03,929 25,60,361 51,45,850 NA
HDFC Taxsaver 1,43,848 3,20,550 4,99,101 8,63,638 15,35,762 27,25,964 58,54,380 1,23,71,365
HSBC Tax Saver Equity Fund 1,38,671 3,09,541 5,01,545 8,79,247 14,96,620 NA NA NA
ICICI Prudential Taxplan 1,44,860 3,31,738 5,31,134 9,36,035 17,04,294 29,16,493 63,25,118 1,22,91,715
IDFC Tax Advantage (ELSS) Fund 1,54,454 3,45,286 5,60,204 9,84,132 NA NA NA NA
Kotak Taxsaver 1,57,021 3,29,131 5,10,465 8,64,496 14,00,851 NA NA NA
L&T Tax Advantage Fund 1,39,549 3,09,182 4,86,529 8,50,352 14,83,695 NA NA NA
Principal Personal Taxsaver 1,35,268 3,02,287 4,80,623 8,12,305 13,18,008 22,14,769 38,78,960 67,24,847
Principal Tax Savings Fund 1,42,751 3,22,895 5,22,938 9,00,473 14,12,378 22,68,558 40,42,034 73,17,707
Reliance Tax Saver (ELSS) Fund 1,70,357 3,97,863 6,26,646 11,17,467 19,66,675 NA NA NA
Religare Invesco Tax Plan 1,55,527 3,47,633 5,56,324 9,91,468 17,39,161 NA NA NA
SBI Magnum Tax Gain Scheme 93 1,47,797 3,30,403 5,26,335 9,14,452 15,08,182 27,26,093 70,50,286 1,25,31,130
Sundaram Taxsaver 1,43,270 3,07,436 4,82,720 8,31,484 13,76,918 25,07,070 51,49,598 98,86,262
Tata Tax Saving Fund ‐ Plan A 1,51,674 3,33,538 5,29,609 9,29,306 15,55,152 25,68,343 47,39,223 84,78,271
UTI Equity Tax Savings Plan 1,40,040 3,05,575 4,82,480 8,25,144 13,30,579 21,58,779 35,70,806 63,53,832
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Summary
past performance may or may not sustain in future.
As on 31st March, 2015
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Case Study – Retirement Planning
Name Raj Sharma Age 35
• Retirement Age 60 Years
• Life Expectancy 80 Years
• Current Monthly Expense 25000
• Inflation 8%
• Post Tax Retirement 9%
• Monthly Expense at retirement 1,71,212
• Corpus Required for the Retirement 37,699,209
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Case Study – Retirement Planning
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Years to Save – 25 Retirement Corpus needed 4.53 Cr.
Monthly Investment
49,550 26,630 16,444 10,069 7,241
required
Power of compounding is the 8th wonder of world.
Not investing into the Equity may be more risky.
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Case Study – Child Education Fund
Parent : Anil Kumar / Child Name : Samir
• Child Age 5 Years
• Higher Education Age 18 Years
• Current Education expense 10,00,000 Rs.
• Inflation 8%
• Expected Education cost
(after 13 years) 27,19,623 Rs.
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Case Study – Child Marriage Fund
Parent : Anil Kumar / Child Name : Samir
• Child Age 5 Years
• Marriage Age 25 Years
• Current Marriage expense 10,00,000
• Inflation 8%
• Expected Marriage cost after 20 years 9,321,914
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Case Study – Child Marriage Fund
Monthly Investment
16,278 10,134 7,024 4,838 3,765
required (Rs)
Power of compounding is the 8th wonder of world.
Not investing into the Equity may be more risky.
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Concern 13
What if the fund chosen
by me underperform?
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• Don’t invest in Schemes
based on Past Performance
only.
• Consult your Financial
Advisor
• Ask for Fund Selection
Parameters.
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Past performance as on 31st July 2016
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Concern 14
Equity Can’t Beat the
return from the Real Estate
Investments.
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Perception Vs Reality?
Are the Grey Lines Straight?
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Perception Vs Reality?
Yes. The Lines are straight…
Things are not always the way they appear to us.
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Case Study
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Case Study
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Perception Vs Reality?
Things are not always the way they appear to us.
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Perception Vs Reality?
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THANK YOU
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