In the 5th session, you’ll be learning about understanding the power of SIPs and how to plan a proper plan for becoming a crorepati. Investment planning for early retirement.
Firoze Azeem (Deputy CEO, Anand Rathi Private Wealth)
- 20+ years of experience into capital markets
- Expert in private wealth management. Deep expertise in efficient portfolio strategy
- Designed 1200+ financial products. Featured in 40 under 40 Fortune India Magazine 2019
- Awarded - The Most Innovative Leader 2020
As per Firoze, financial goals must be fluid (unless you don’t experience financial uncertainty, you won’t get that financial moulding).
Vehicles for an aspiration of 1CR & early retirement:
Growth assets: equity (SIP & lumpsum), real estate (unaffordable + liquidity issues)
Defense assets: debt (sure shot failure), gold (only gives you great night sleep)
Following this, Firoze presented 3 successful case studies of investors investing differently & what’s their end output
In all the above real-life case studies, Firoze explained the difference in thier age and how XIRR differs when teh investment & tenure changes.
After which, there were certain examples presented to know the investing mistakes.
Picking the right period for the SIP
Here’s the list of returns 262 investors have got are given below for 4 types of duration.
Taking the 1st tenure of 3 years with a monthly SIP of ₹1,000 and an average return of 16.5%. Total return is ₹1.06 lakh
Taking the 2nd tenure (out of 238 investors) of 5 years with a yearly SIP of monthly SIP of ₹10,000 and avg return of 18.3%. Total return = ₹3.73 L
Understanding Extremes or Risks
Here understanding risk means predicting the worst of worst situation and planning to reach the ultimate riskiest case.
In extreme cases taking the same examples:
For the 1st investor, the maximum portfolio can be ₹7.53 L and minimum portfolio value can be ₹2.51 L
But the one who have invested for the longest time has positive returns of 6.9% even in minimum returns.
This table helps to understand which tenure suits us as per our investment and market conditions. Extremes & risks makes us future ready by planning SIP today
In this probability table, we get to know how much percentage of investors have got returns at each interval and in how many years.
We don’t have to time the market while investing in SIPs (if you’re disciplined, systematically investing without any withdrawals).
The numerology data says that you can pick any date for SIP investment, the returns aren’t much affected.
For an SIP, for the 1st 5 years it gives me -ve 9% return and -ve 3%, the market will correct eventually if you stay invested for more years. Your negative graph will be progressed & compounded growth format will take place. The more market falls, higher it bounces.
Golden Number Target of Every Investor
- Targeting is a good exercise in meeting your financial goals. When the goal is set for each family member, there has to be a discussion involving everyone.
- Risk appetite: Imagining your worst-case scenario
- Market volatility: Friend of SIP
- Liquify requirement: Never took a loan to invest in SIP and investments should not be disturbed.
In this crorepati calculator (
access here the wealth calculator - open this in MS Excel to edit the settings, given by Mr. Firoze Azeem) given by Firoze here the estimated gains are considered after tax deductions. This calculator will help to decrease the unwanted expenses in your monthly budget.
The thumb rule of budgeting:
Expenses = Income - savings (where a strong control on senses of not getting influenced in this marketing world need to have)
Higher the age becomes, accordingly the equity & debt allocations gets adjusted. The calculation of the age will be of the person whose is earning the money & investing the same money.
After looking at the standard deviation you can see and net returns in 1st & last row are almost the same, here taking risk is a good option.
QnA Round:
As an 18 year old should I go with stocks or SIP?
Ans: Instead of directly jumping into the flowing river, choose a graduate path by starting with SIP. You can learn about the fund manager who has invested your money to understand their philosophy.
On the day the SIP is deducted from the A/c, does the fund manager invest in the market on the same day or on some other day?
You get NAV when the money is deducted from your A/c. When your money has reached fund manager, it the FM’s decision when to invest it. You just need to check whether you got the NAV after teh deduction.
If somebody has become late to get aware of to do SIPs, equity investments, suppose at the age of 45
Ans: You can correct yourself via an excel sheet calculator with high SIP and get a tailwind from Indian market
How much amt to keep in emergency fund?
Taking borrowing helps here as the emergency may not come anytime. So, taking an overdraft of 1 year salary and paying its interest with your existing income will suit the best.
Launch your Graphy