Systematic Investment Plan

Invest As you Earn

Real Return

Real Return = Returns Inflation - Tax

Real returns are important as they tell you the actual increase in value

Equity - The Wealth Creator

Historically, Equity has been the Biggest Wealth Creator
CAGR Returns of Different Investment Avenues from Jan 1980 to Jun 2009

Inflation Gold Bank FD's G-Secs Equity 0 2 4 6

6.8 7.2 10.4 11.3 17.9 8 10 12 14 16 18 20

% CAGR Return, Pre-tax

Source: CLSA

Equity: Fraught with apprehension, guided by emotions

21000 19500 18000 16500 15000 13500 12000 10500 9000 7500 6000 4500 3000 1500 0
Apr-00 Apr-01 Apr-02 Apr-03 Apr-04 Apr-05 Apr-06 Apr-07 Oct-00 Oct-01 Oct-02 Oct-03 Oct-04 Oct-05 Oct-06 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Oct-07 Jan-08 Jul-00 Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06 Jul-07

Habit of Timing the market could be dangerous.

Greed: Buy

Greed: Buy

Greed: Buy

Fear: Sell

Fear: Sell Greed: Buy Greed: Buy

Fear: Sell Fear: Sell

Due to Greed of making more money we tend to buy at high market levels and because of Fear of losing it we sell at lowest levels. In fact the opposite needs to be done.

Equity Investing = Business Ownership

Investing in equity is like investing in business; it takes time to reward. But usually the reward is much higher over a longer period

Its Time and not Timing that matters

Longer the stay better it is. Safety of equities increases with time
28 One-Year Periods
35%

24 Five-Year Periods
12%

14 Fifteen -Year Periods

65% 100%

88%

Risk of Stock Market Loss over Time, Mar 1979- Mar 2007 The BSE Sensex is examined with 1, 5 and 15-year holding periods.

Periods with Gain Periods with Loss

Its Time and not Timing that matters

Lets assume that you were really unfortunate and invested at the highest point of the Sensex every year since 1980. Had you to hold on to your every Investment till Sept 2007, the is the average CAGR return you would have made would be:

Time-honoured Investment Strategies

Start investing early Invest regularly Invest systematically, without heeding short-term market dynamics

The secret of wealth creation lies in being disciplined, not in being lucky

Start Investing Early

Power of Compounding
You start investing in a diversified equity mutual fund through a Systematic Investment Plan at age 35 40 # Your monthly investment Rs. 5000 Rs.5000 # You stop investing at age 60 60 # Your total contribution Rs.15,00,000 Rs.12,00,000 Your Savings could grow to* Rs. 1,37,82,804 Rs. 66,35,367
Difference = Rs. 71 lakhs! (Investment amount difference Rs. 3 lakhs)

Compounding allows your money to grow exponentially over time. Start investing early.
* Assumes compounded annual returns of 15%over the entire period

Start Investing Early Mr. X

Age : 25 years Start : Today Invest : 5 years Amount : Rs 10,000 p.a. Redemption on retirement (age 60)
Value of Investments (Rs. in Lacs)
Mr. X Mr. Y

Mr. Y
Age : 25 years Start : at age 40 Invest : 20 years Amount : Rs 10,000 p.a. Redemption on retirement (age 60)
11.72

6.3 4.52 0.67 0 30 0 1.74 0.1 40 Age (in yrs) 50 60 1.75

0.1

25

Returns are assumed @ 10% p.a.

Invest Regularly It is the small drops that make an ocean!! Relieves you of the last minute pressure Slow and steady wins the race E.g. Split your Sec 80C investments into smaller amounts and invest every month Reduces the risk of investing at the wrong time Difficult to predict the market and know when is the right time

We earn regularly; We spend regularly Shouldnt we also invest regularly?

Invest Systematically

THE POWER OF RUPEE COST AVERAGING Month Unit Price 1 20 2 18 3 14 4 22 5 26 6 20 Total Amount Invested Average price paid Total units bought Value of investment after six months Lum-Sum Investor Regular Investor Amount Invested Units Bought Amount Invested Units Bought 60000 3000 10000 500 --10000 556 --10000 714 --10000 455 --10000 385 --10000 500 Rs 60000 Rs 60000 20 19 3000 3109 Rs 60000 Rs 62018

This example uses assumed figures and is for illustrative purposes only.

Benefits of SIP

Rupee Cost Averaging

WNAV rises, SIP lowers average cost of purchase When NAV falls, SIP procures more units

Compounding Benefit
Early bird advantage

Convenience
Disciplined saving habit Auto debit facility Switch / systematic transfer Lower entry load

SIPs work best over a period of time & There is no wrong time to start a SIP

SIP @ Kotak
Minimum amount: Rs.1000 every month / quarter Rs.500 in case of Kotak ELSS Minimum number of installments: 6 Can be thru ECS Debit (in select locations) or thru Post Dated Cheques.

Initial investment on any day; SIP / STP dates: 1st, 7th, 14th, 21st
For SIP / STP amount below Rs.25 lacs per installment in Kotak Equity FOF / equity and balanced schemes* Entry load: 2.25% Exit load: 1% for redemption before 6 months For further details on terms, please contact your financial advisor * Not applicable for investments by FIIs / sub a/c of FIIs / FOFs

Risk Factors

Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Scheme will be achieved.*As with any securities investment, the NAV of the Units issued under the Scheme can go up or down depending on the factors and forces affecting the capital markets.*Past performance of the Sponsor does not indicate the future performance of the Scheme.*Kotak 30 is only the name of the Scheme and does not in any manner indicate either the quality of the Scheme, future prospects or returns.*The NAV of the Scheme may be affected, inter alia, by changes in the market interest rates, trading volumes, settlement periods and transfer procedures.*Appreciation of the value of the Units issued under the Scheme can be restricted in the event of a high asset allocation to cash, when stock appreciates *Tax laws may change, affecting the return on investment in Units. Statutory: Kotak Mahindra Mutual Fund has been established as a trust under the Indian Trusts Act, 1882, by Kotak Mahindra Bank Limited (liability Rs. NIL) with Kotak Mahindra Trustee Company Limited as the Trustee and with Kotak Mahindra Asset Management Company Limited as the Investment Manager. Before investing, please read the Offer Document.

Invest Regularly &

Systematically

Invest through SIP & Make volatility work for you