STUDENT DEVELOPMENT

PROGRAM (S.D.P)
Organized by PGDM 2
nd
year Finance Student (2013-
15) Presented By: Sushil Kumar, Dipankar Maiti, Ajeet
Malik & Satya Prakash.
Youth Financial Education (with special
Refrence to Mutual Funds
Faculty Mentor:
Prof. Mohit Dhawan
Differentiating between needs and wants
Setting a series of financial goals
The basics of a financial plan
Compare short and long term savings options and goals
Mutual fund Investment
Understand the purpose of credit and credit cards
Identify the factors to consider when choosing a credit
card or other loan product
ITR-1(Income Tax)

Show Me My Money

Learning Objective:
Needs & Wants
NEEDS
A need is something
you have to have, something
you can't do without. A good
example is food. If you don't
eat, you won't survive for long.
Many people have gone days
without eating, but they
eventually ate a lot of food. You
might not need a whole lot of
food, but you do need to eat.
WANTS
A want is something you would
like to have. It is not absolutely
necessary, but it would be a
good thing to have. A good
example is music. Now, some
people might argue that music
is a need because they think
they can't do without it. But
you don't need music to
survive. You do need to eat.
How to set your financial goals?

Be specific, realistic, and write down your
goals. Keep each goal simple and give it a
timeframe and a Rs amount.
Set some big goals - like buying a home in the
next five years or saving for your retirement
(this could be your biggest goal of all).
Set some smaller goals to help you get there
like saving for a deposit or paying off your
credit cards.

Basics of financial plan
Budgeting
An emergency fund
Risk management with insurance
Investing
Income tax consideration

How to set your goals?
1. Tracking your Income and Expenses
Determine your overall income
Identify how you're spending money
Compare your regular expenses with your paycheck amount
2. Creating Your Budget
Set budget and financial goals
Make a list of what's absolutely essential that you pay for
Begin budgeting out the rest of your discretionary spending
Use software to help you budget
How to set your goals?
3. Becoming a Budget Pro
Dont go over budget
Keep your journal
Know the difference between luxurious and necessities
Reduce larger expenses
4. Making your budget go further
Cut your taxes
Appeal your home assessment
Stay ahead in inflation
Dont count on windfalls
Take your money out for the week at once

Education
Earning Years
Post Retirement Years
Phase I Phase II
Phase III
Age- 22 yrs Age- 60 yrs
Marriage
Child birth
Childs Education
Childs Marriage
Housing
22 yrs 38 yrs 10- 20 yrs
Human Life Cycle
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
30,000
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
OPTIONS FOR INVESTING
Deposit in Bank SB, RD, FDs, 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
So what are my alternatives?
Fixed Interest Products

Bank Deposits
Corporate Deposits
RBI Bonds
Corporate Bonds

Rates of Return?

Returns Net of tax?

Wont Inflation eat into the return?

Returns net of tax/ inflation is poor hedge against inflation
4.54%
1.95%
0.01%
4.54%
2.10%
0.36%
4.54%
2.40%
1.06%
4.54%
2.25%
0.71%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
Bank FD Company FD RBI Bond Co Bonds
Inflation Tax @ 30% Net Returns
What is Dutch auction?

Ans : An auction where the bid
price falls from high to low
It is for you
How To Invest In Equities
Direct Equity
High risk, high return category.
Needs a lot of time & expertise.
Substantial initial capital required.

Mutual Funds
One-Time Investment
Systematic Investment Plan (SIP)
Sushil
What is a Mutual Fund?
A Mutual Fund is a trust that pools the savings of a
number of investors who share a common financial
goal.
The money collected is invested by the fund manager
in different types of securities. These could range
from shares to debentures to money market
instruments, depending upon the schemes stated
objectives.
The income earned through these investments and
the capital appreciation realized by the scheme are
shared by its unit holders in proportion to the
number of units owned by them.
sushil
Regulations
Governed by SEBI (Mutual Fund) Regulation 1996
All MFs registered with it, constituted as trusts ( under Indian Trusts
Act, 1882)

Bank operated MFs supervised by RBI too

AMC registered as Companies registered under Companies Act, 1956

SEBI- Very detailed guidelines for disclosures in offer document, offer
period, investment guidelines etc.
NAV to be declared everyday for open-ended, every week for closed
ended
Disclose on website, AMFI, newspapers
Half-yearly results, annual reports
Select Benchmark depending on scheme and compare
Type of
Mutual Fund
Schemes
Structure
Investment
Objective
Special
Schemes

Open Ended
Funds
Close Ended
Funds
Interval Funds
Growth Funds
Income Funds
Balanced Funds
Money Market
Funds
Industry Specific
Schemes
Index
Schemes
Sectoral
Schemes
TYPES OF MUTUAL FUNDS
Types of Mutual Fund Schemes
By Structure
Open-Ended anytime enter/exit
Close-Ended Schemes listed on exchange, redemption
after period of scheme is over.

By Investment Objective
Equity (Growth) only in Stocks Long Term (3 years or
more)
Debt (Income) only in Fixed Income Securities (3-10
months)
Liquid/Money Market (including gilt) Short-term Money
Market (Govt.)
Balanced/Hybrid Stocks + Fixed Income Securities (1-3
years)

sushil
10 REASONS TO INVEST IN MUTUAL
FUNDS
Expert on your side:
Limited risk:
More for less:
Easy investing:
Convenience:
Investor protection:
Quick access to your money
Transparency
Low transaction costs
Tax benefits
Sushil

TAXATION
All dividends declared by debt / equity
oriented schemes are tax free in the hands of
the investor
Long term capital gain in equity schemes
exempt from tax
Indexation benefit available for long term non
equity schemes
Equity short term capital gain @10%
STCG in Debt funds Rates applicable for the
investor

sushil
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
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

sushil
Systematic Investing, An Example
9.40
6.93
6.46
7.57
8.31
9.10
8.93
8.01
8.12
8.75
9.35
7.60
2
3
4
5
6
7
8
9
10
Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct -04 Nov-04 Dec-04
106.39
units
154.75
units
When the price is highest,
you buy the least number of units
When the price is lowest,
you buy the highest number of units
Guess the word?
A Latin word which is a combination of
merx which means goods, and com
means trade.


COMMERCE
IS NAV CHANGE YOUR INVESTMENT
DECISION?
SCHEME A SCHEME B
NAV= RS 15 NAV=RS 90
INVESTMENT=RS 9000 INVESTMENT=RS 9000
UNITS= 600 UNITS=100
NAV = 16.5 NAV= 99
9900 9900
CHOSSE PLAN FOR LONG DURATION
SCHEME A SCHEME B
5000 PER MONTH 5000 PER MONTH
15 YEARS 20 YEARS
9 LACS 12 LACS
18% 18%
45,17,457
1.17 CRORE
What ELSS stand for?
Equity linked saving
scheme
It is for you
What is plutocracy?
A wealthy class that controls a
government
Which Indian surname means District
Accountant in native language?
HSDENAPDE
DESHPANDE
g
Investing Checklist
Draw up your asset allocation
Financial goals & Time frame (Are you investing for retirement? A
childs education? Or for current income? )
Risk Taking Capacity

Identify funds that fall into your Buy List

Obtain and read the offer documents

Match your objectives
In terms of equity share and bond weightings, downside risk protection,
tax benefits offered, dividend payout policy, sector focus

Check out past performance
Performance of various funds with similar objectives for at least 3-5
years (managed well and provides consistent returns)
Sushil

Checklist Contd

Think hard about investing in sector funds
For relatively aggressive investors
Close touch with developments in sector, review portfolio regularly

Look for `load' costs
Management fees, annual expenses of the fund and sales loads

Does the fund change fund managers often?

Look for size and credentials
Asset size less than Rs. 25 Crores

Diversify, but not too much

Invest regularly, choose the S-I-P
MF- an integral part of your savings and wealth-building plan.

sushil
Buying Mutual Funds
Contacting the Asset Management Company directly
Web Site
Request for agent
Agents/Brokers
Locate one on AMFI site
Financial planners
Bajaj Capital etc.
Insurance agents
Banks
Net-Banking
Phone-Banking
ATMs
Online Trading Account
ICICI Direct
Motilal Oswal, Indiabulls- Send agents
Person should have a savings/current account
in the bank.
He/ She should present his/ her assets and
liabilities on a particular date in the bank.
A statement of annual or monthly income.
He/ She is considered credit worthy up to
certain limit depending upon his/ her income,
assets and expenditure.

Eligibility For Getting The Card
Types of the credit cards
Standard Card- It is issued for the general
consumers of the bank.
Business Card/Executive Card- It is issued to
small partnership firms , solicitors, tax-
consultants ,for use by executives on their
business trips.
Gold Card- A credit card issued by credit-card
companies to favoured clients, entitling them to
high unsecured overdrafts, some insurance
cover, etc.
What does 16 digit means?
Name of the customer
16-digit card number
Validity date
The VISA hologram and the VISA logo
Name of the issuing bank
Signature period
Magnetic strip
CVV/ CAV/ CVC
Magnetic Chip
Particulars Displayed On Credit Cards
Domestic card- Cards that are valid only in India
and Nepal are called domestic cards.
International Card- credit Cards that are valid
internationally are called international cards.

Credit cards on the basis of
geographically

Credit purchase
Purchase of goods and
service on card

Credit card processing
merchant delivers goods after taking an authenticated credit card
and noting the number and taking signature on certain forms.

Bill raising
Merchant raises the bill for the purchase and sends it to
the credit card issuing bank for payment

payment
Issuing bank pays amount to the merchant
establishment

Bill to card holder
Issuing bank raises bill on the credit cardholder and
sends it for payment

Card payment
Credit card holder makes the payment to
the issuing bank
Credit card cycle
Disadvantages of a credit card
Overuse
Credit card charges
High interest rates
Stolen
Keep card with your signature.
Do not leave cards lying around.
Report lost or stolen cards promptly.
Do not give out account number unless
making purchases.
Keep a list of all cards, account numbers, and
phone numbers separate from cards.
Close unused accounts in writing and by
phone, then cut up the card.
Safety Tips