Basics of Investing- 1

Somebody is taking your wealth away from you Slowly and Silently ?

And May be you do not even know about this…

Money GrowingWealth Reducing

MR. X earns 8 % interest on his money and has to pay 10 % as account maintenancecharges . Calculate his profit/loss in 5 years if he deposited 50,000/Month in his bank.

While you are working hard to make money ;your money is lazy .

It also need to work hard to create wealth for you.

Mr. X would loose around 2 Lakhs in 5 years

Its was just one of the reason, why you should Invest ?

Its not ONLY about keeping your wealth but also about something far more important

YOUR FREEDOM

Income from Labor

Income from Assets

Meet the Characters

Mr. Labor

Mr. Creator

Mr. Power

Mr. Investor

How Rich you think Mr. Labor can become ????

Mr. Labor has physical capacity of doing work, Other three do not have any such constraint

How Rich you think other three characters can become????

Idea of Financial Freedom

Investing is your only Income source which is independent of any physical constraint.

Gold Real estate

Fixed income, Bonds, DebtStock market

WRONG CLASSIFICATION

Store Wealth -> Non-productive assets

Create Wealth-> Productive assets

Bank Example

Client -> FD safe keeping

Bank -> Productive assets

EQUITIES: THE ONLY ASSET CLASS CONSISTENTLY DELIVERING HIGHER PURCHASING POWER

Inflation Gold Sensex G-Sec

1970-75 12 29

1975-80 4 17

1980-85 10 11 8

1985-90 8 10 11

1990-95 10 8 29 12

1995-2000 8 -1 9 13

2000-2005 4 7 5 8

2005-2010 8 21 22 8

2010-2014 10 12 6 8

1984-2014 CAGR 8 9 20 10

Gold Sensex G-Sec

1970-75 17

1975-80 13

1980-85 1 -2

1985-90 2 3

1990-95 -2 19 2

1995-2000 -9 1 5

2000-2005 3 1 4

2005-2010 13 14 0

2010-2014 2 -4 -2

1984-2014 CAGR 1 12 2

Stocks also happen to be the only asset class attracting NO long-term capital gains tax

HISTORICAL 5-YR AVERAGE INCREASE (%) 5-YR AV RETURNS EX-INFLATION (%)

SENSEX AVERAGES 20% RETURNS VS 9% FOR GOLD,VS 10% FOR FIXED INCOME AND 8% INFLATION

Source: RBI

0

5,000

10,000

15,000

20,000

25,000

Mar

-84

Mar

-85

Mar

-86

Mar

-87

Mar

-88

Mar

-89

Mar

-90

Mar

-91

Mar

-92

Mar

-93

Mar

-94

Mar

-95

Mar

-96

Mar

-97

Mar

-98

Mar

-99

Mar

-00

Mar

-01

Mar

-02

Mar

-03

Mar

-04

Mar

-05

Mar

-06

Mar

-07

Mar

-08

Mar

-09

Mar

-10

Mar

-11

Mar

-12

Mar

-13

Mar

-14

Cash (0% CAGR) Gold (9% CAGR) GSec (9.8% CAGR) Sensex (20% CAGR)

10% DELTA RETURN CAN MAKE YOU VERY RICH!

Mar-84 Mar-14

Gold 100 1333

Gsec 100 1,652

Sensex 100 22,386

WHO HAS MOST OF THE WEALTH?

Who is the owner of Corporate ?

That’s Why Inertia Recommends

Then Why Everyone who invested in equities is not RICH?

Any Guesses ?

Check out this and more our next session

Basics of Investing- 2

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service@equities4wealth.comwww.equties4wealth.com

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QUESTIONS