Mutual funds

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Jump Start
Financial Services & Mutual Funds

Why Financial Services?
• Financial Services is one of
the fastest growing sectors
today with some of the
best career opportunities

Why this seminar?
You are on the
threshold of your career
with many choices of
jobs. We shall help you
take informed decisions,
so you can have a
“jump start”

Agenda: Next 90 minutes
Financial Services – An overview
Job Profiles
Skill Sets required
How to get those skills
Discussions

Money or……..?
• In business
what is more
important
than money
or cash?

Financial Services
• The financial services incorporates
organisations that deal with the
management of money. It consists of
an intricate network of financial
institutions and markets.

Financial Services….
• The industry plays a vital role in the
functioning of the economy,
facilitating the flow of funds
between savers and investors.

Numbers???
Numbers No of employees Turnover per
employee (lakhs)
7 38731 650.23
20 23303 778.0
21 8289 744.8
30 1010 1252.28

Numbers???
Numbers No of employees Turnover per
employee (lakhs)
State banks
7 38731 650.23
Other
Nationalised
Banks
20 23303 778.0
Private Banks
21 8289 744.8
Foreign Banks
30 1010 1252.28

Numbers
• 41
•6880
•4,740,137 Crores

Opportunities unlimited
• “The financial
services industry
is full of
opportunities
and varied areas
to work in.

MUTUAL FUND
Concept, Organisation Structure,
Advantages and Types.

Education Earning Years Post Retirement 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

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

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, FD’s, 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

Pools the savings of a number of
investors who share a common
financial goal.

The money thus collected
is then invested in
capital market instruments
such as shares, debentures and other
securities.

The income earned through these
investments and the capital
appreciation realised are shared by its
unit holders in proportion to the
number of units owned by them.

Mutual Fund Operation

How Mutual Fund works?
A vehicle for investing in portfolio of stocks and bonds

Structure of Mutual Fund
SEBI

MF
Structure
Open Ended
Close Ended
Interval
Schemes
Investment
Objective
Growth
Income
Balanced
Money
Market
Others
Tax Saving
Special
Index/
Sector

Advantages of Mutual Funds
1. Professional Management
2. Diversification
3. Convenient Administration
4. Return potential
5. Low cost
6. Liquidity

Advantages of Mutual Funds
1. Transparency
2. Flexibility
3. Choice of schemes
4. Well regulated
5. Tax benefits

How do I make money from a 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
3. Income Distribution:
The fund passes on the profits it has earned in the form of dividends

Terminologies Demystified…
 Asset Allocation
 Fund Manager
 Fund Offer Document
 Dividend
 Growth

Terminologies Contd…
• NAV
• Per unit NAV = Net Asset Value
No. of Units Outstanding on Valuation date
• Entry Load/Front-End Load (0-2.25%)
• Exit Load/Back- End Load (0.25-2.25%)
• Sale Price/ Offer Price
• Re-Purchase Price/ Bid Price
• Redemption Price

Investment strategies
• Systematic Investment Plan (SIP)
– Invest a fixed sum every month. (6 months to 10 years-
through post-dated cheques or Direct Debit facilities)
– Fewer units when the share prices are high, and more units
when the share prices are low. Average cost price tends to
fall below the average NAV.
• Systematic Transfer Plan (STP)
– Invest in debt oriented fund and give instructions to transfer
a fixed sum, at a fixed interval, to an equity scheme of the
same mutual fund.
• Systematic Withdrawal Plan (SWP)

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

www.edventures1.com | training@edventures1.com | +91-9787-55-55-44chopra.rajiv@icai.org
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

SIP: The Power Of Compounding
SIP of Rs. 1000 invested per month @ 8% pa till the age of 60.
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!

SIP - How Rupee Cost Averaging helps
Month Amount Rising Market Falling Market Volatile Market
NAV (Rs)
Units
Allotted
NAV (Rs)
Units
Allotted
NAV (Rs)
Units
Allotted
1 10000 10 1000.00 10 1000.00 10 1000.00
2 10000 10.5 952.38 9.75 1025.64 10.5 952.38
3 10000 12 833.33 9 1111.11 9 1111.11
4 10000 14 714.29 7 1428.57 11 909.09
5 10000 17 588.24 6.5 1538.46 13 769.23
6 10000 18 555.56 6 1666.67 11.5 869.57
Total 60000 81.50 4643.79 48.25 7770.45 65.00 5611.38
Avg. Purchase NAV (Total of
NAVs/No. of investments
13.58 8.04 10.83
Avg. cost per unit (Total
Investment /No of units
held)
12.92 7.72 10.69

www.edventures1.com | training@edventures1.com | +91-9787-55-55-44chopra.rajiv@icai.org
Equity Funds
• Diversified equity funds
• Index funds
• Opportunity funds
• Mid-cap funds
• Equity-linked savings schemes
• Sector funds like Auto, Health Care, FMCG etc
• Dividend Yield Funds
• Others (Exchange traded, Theme, Contra etc)

Mutual Fund: How to buy?
Financial Goals
Identify ‘What to Buy’
Evaluate Funds from various Mutual Fund Cos.
Online Offline
Mutual Fund Co. and
others
Financial Distributor
Fill Up Form
Attach Relevant Documents
Submit
Banks,
Financial Svc.
Cos.,
Brokers,
Individual
Agents

Mutual Fund: How to redeem?
Fill-up relevant details
(You could do partial redemption as well)
Sign the Form
(All applicants to the units need to sign)
Submit
(Submit the form to the Branch of the specific Mutual Fund Co.)
Money into your Bank Account
(Money gets credited to you as per the scheme-specific turnaround time)
Choose ‘redemption’
Download Common Transaction Slip
(Download from Mutual Fund Company’s website or get it from the branch)

Getting the job
“Get jobs that you
want not jobs that
want you”

• +91-97-87- 55- 55- 44
• training@edventures1.com
• www.edventures1.com

Terminologies Demystified…
• Asset Allocation
Diversifying investments in different assets such as stocks, bonds, real estate, cash
in order to optimize 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.
• Dividend
– Profits given to the investor from time to time.
• Growth
– Profits ploughed back into scheme. This causes the NAV to rise.

Terminologies Contd…
• NAV
– Market value of assets of scheme minus its liabilities.
• Per unit NAV = Net Asset Value
No. of Units Outstanding on Valuation date
• Entry Load/Front-End Load (0-2.25%)
– The commission charged at the time of buying the fund.
– To cover costs for selling, processing
• Exit Load/Back- End Load (0.25-2.25%)
– The commission or charge paid when an investor exits from a mutual fund. Imposed to discourage
withdrawals
– May reduce to zero as holding period increases.
• Sale Price/ Offer Price
– Price you pay to invest in a scheme. May include a sales load. (In this case, sale price is higher than
NAV)
• Re-Purchase Price/ Bid Price
– Price at which close-ended scheme repurchases its units
• Redemption Price
– Price at which open-ended scheme

Mutual funds

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