1. 1 Systematic Investment Plan (SIP) The Smart Investors’ Preference

2. 2 Human Life CycleEducation Earning 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 Post Retirement Years

3. 3 Phase II: The Most Challenging Phase Meet current recurring expenses –Rent, Electricity, Telephone –Child’s education, Child’s marriage –Annual Holiday with family…. Build capital assets –House; Car…. Make provisions for –Retirement ; Contingencies- Illness, Accidents, etc. Do you save and invest so that your dreams turn into reality

4. 4 It is Critical, Yet Most Don’t Do It I will start from next month I don’t have the requisite skills The paper work is just too tedious And the list goes on…………..!!!! I don’t have time I don’t have money to save The returns are hardly worth the effort The alternatives are not exciting enough

5. 5 Getting rich is simpler than you think !! Rs.1000 invested every month for 30 years Rs.70 lakhs Rs.22 lakhs Rs.10 lakhs The Power of Compounding Even small amounts invested regularly can grow substantially

6. 6 The Formula for Creating Wealth Create Wealth Start Early Invest Regularly Make your money work hard for you

7. 7 Start Early! You Age : 25 years Start : Today Invest :5 years Amount : Rs 10,000 p.a. Redemption on retirement (age 60) Your Twin Age : 25 years Start : at age 40 Invest :20 years Amount : Rs 10,000 p.a. Redemption on retirement (age 60) Note- Returns are assumed to be 10% p.a. You start investing Your twin starts investing You stop investing

8. 8 Delays affect wealth creation Rs. 1000 invested p.m. @ 10% p.a. till the age of 60 yrs Just 5 years of delay reduces the wealth by half!

9. 9 Invest Regularly Builds wealth over the long term –Just Rs. 1500 per month invested for 17 years @10% would grow to Rs. 8 lacs…could be used for your daughter’s marriage Take advantage of market volatility –Buy more when the markets are down Rs. 10,000 worth of Gold bought every month Highest price Lowest quantity Lowest price Highest quantity 20 grams 15 grams

10. 10 Invest Regularly Myth: Timing is essential to generate high returns Reality: It is the time and not the timing that matters Is it worth the risk or the tension? Who can time the market to perfection? Not even the experts can !! On the worst day to buy (highest sensex each yr) The result Invested a fixed amount in BSE Sensex annually for 25 yrs On the best day to buy (lowest sensex each yr) 15% p.a. 17% p.a.

11. 11 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 Shouldn’t we also invest regularly?

12. 12 Create Wealth2+2 > 5 All we need is…. a blend of –Paycheck –Time –Discipline We already have two of them- Paycheck and Time All we need is Discipline –The Discipline of making small… but regular investments

13. 13 Systematic Investing A method of investing regularly to benefit from the stock market volatility Regular- Similar to Recurring Deposit Convenient and Hassle-Free –Automatic investments, one-time instruction, transactions on the net No entry load –No entry charge for systematic investments Forced saving –Similar to PF : Small amount invested every month to become a huge sum after some years Light on the wallet

14. 14 The Million Dollar Question I am convinced that I should save and invest regularly, but the million dollar question is… Where should I invest?

15. 15 Risk Return Spectrum Note:The above chart is for illustrative purpose only and is not marked to scale. The chart is based on our perception of the risk and return potential of various investment avenues Savings Bank/ FD Liquid Funds PPF, NSC, KVP, PO Deposits, RBI Bonds Debt Funds Gold Real Estate Equity Risk Return potential LowHigh Low High

16. 16 Equities- The Most Attractive Asset Class Equities have outperformed all other asset classes in the long run - globally as well as in India Cumulative annualised returns (1980 - 2004) Source :CLSA

17. 17 Equities outperform in long term In the 5-year period, equities have outperformed all other traditional forms of investment in 12 out of 14 five-year periods (86%) since 1980 Source :RBI Report on Currency and Finance (1997-98) BSE Sensitive Index of Equity Prices – BSE Cumulative annualised returns (1980 - 98)

18. 18 Benefits of long term investing In the twelve 15-year periods between 31.3.79 and 31.3.05, the Sensex has not given negative return even on a single period

19. 19 Benefits of long term investing Rs. 1000 p.m. invested in BSE Sensex for 10 years As on June 30, 2005 Rs. 2,41,162

20. 20 Outperformance Value of SIP of Rs. 1000 p.m. in BSE Sensex and BAF * As on July 14, 2005 Notes: 1.SIP assumed to be on the first working day of each month 2.Brokerages and dividends are assumed to be Nil for the purpose of the above calculations SIP investments in Birla Mutual Fund have consistently done better than the benchmark

21. 21 BMF vs Benchmark Annualised Returns* for SIP * As on July 14, 2005 Notes: 1.SIP assumed to be on the first working day of each month 2.Brokerages and dividends are assumed to be Nil for the purpose of the above calculations

22. 22 Mutual Funds: The easy way to invest Professional Management –Ensures that the best brains are managing your money Diversification –Ensures risk reduction Liquidity –Ensures that you get back your money, whenever you want Transparent –Ensures you are apprised of the portfolio regularly Extremely well regulated –Ensures that the fund follows laid down processes Tax efficient –Tax free dividends, LTCG on equity completely tax free, Sec 80C

23. 23 Birla Sun Life Promoted by the Aditya Birla Group & Sun Life Financial of Canada 10 years of performance track record Recipient of awards/ recognitions for its fund performance One of the largest private sector mutual funds –AUM > Rs. 11,000 crores One of the pioneers in the Indian MF industry Strong processes & in-house research Offers the complete bouquet of investment schemes –Across all risk profiles and all investment horizons

24. 24 Start an SIP today and Sit back and Relax

25. 25 Asset Allocation The art of allocation of your investments across asset classes Allocate assets based on –Goals: Long term or short term –Risk taking capacity: Conservative or Aggressive –Age: Young or old Model Portfolios Note- The above model portfolio is for illustrative purpose only

26. 26 Short Term Needs Besides asset allocation, –one also needs to keep side some money in liquid form- to meet the planned and unplanned requirements in the short term –and still earn optimally on these short term funds set aside What is the option that comes to your mind? Savings Account ?? Fixed Deposit ??

27. 27 Did You Know Returns –Current Savings Bank interest rate is 3.5% p.a. –Current FD returns for a 7-15 day FD is 3.5%-3.75% p.a. Savings bank interest- calculated on the min of the balances in the account between the 10 th and 31 st –Effective interest rate turns out to be MUCH lower !! Taxation –Interest Income is taxable at the Maximum Marginal Tax Rate 30% (+ surch. & edu. cess) for assesses in the highest tax slab –Sec 80L deduction no longer available..\savingsbank_effectiverateofreturn.xls

28. 28 Birla Cash Plus*- A superior alternative Generates market related return –Currently in the range of 4%-4.5% p.a. –Investor earns each day till the investment remains in the Fund Returns accrue on the investment amt o/s at each day end –As against a savings bank account Liquid –No lock-in period- as against FD Ease in transacting –Redemptions online/ on phone, Direct credit, Readicheque Taxation * select locations

29. 29 Readicheque* Undated cheques of prespecified denominations issued in favour of investor against his investment –At the time of investment itself –Can be banked as and when the investor desires –No intimation required to be given to BMF by the investor Relieves the investor of the hassles of –Giving a redemption request –Waiting for the cheque to reach him Reduces turnaround time –Quickens the redemption cycle Returns intact –Returns accrue till the day prior to the day on which the cheque hits BMF’s bank account *available only in BCP subject to certain conditions and in select locations

30. 30 Disclaimer The information contained in this document is not a complete presentation of every material fact regarding any industry/security or the fund and is neither an offer for units nor an invitation to invest. This communication is meant for use by the recipient and not for circulation/reproduction without prior approval. The views expressed are based on current market conditions and information available to and do not constitute investment advice. Risk Factors: Mutual Fund investments are subject to market risks and the NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market. Past performance of the schemes managed by Birla Mutual Fund is not necessarily indicative of future performance of the schemes. Please refer to the offer document before investing.

31. 31 Thank You