Basics of investing-1
25
Basics of Investing- 1
-
Upload
erkhareanshul -
Category
Economy & Finance
-
view
50 -
download
0
Transcript of Basics of investing-1
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
