1. Creating/managing an investment portfolio

2. Eight Steps to a healthy portfolio

3. Portfolio Management 101

4. Step 1: Goals are different from dreams!
“Get maximum returns!”
I need something after 10 years.
Today it costs Rs. 5 lakhs.
After 10 years, I expect it to cost Rs. 15 lakhs.
How much should I invest each month
and where should I Invest it, so that
I have at least Rs. 15 lakhs (after tax)
in about 8-9 years.

5. Set flexible Goals
Picture courtesy: Soccertackle.com

6. Solutions for 20-somethings
What % of your take-home pay is left after monthly expenses?
Can you spare 5-10% of your take-home pay for an investment that will not touch?
Save the rest for short-term needs and have fun!

7. Products-last Approach

9. A Personal Timeline
Recurring Needs
Non-recurring Needs

10. Asset Allocation When should I invest in what asset class?
What to expect from each asset class?
What is the percentage exposure to each asset class necessary to achieve a certain financial goal?
“Deciding on asset allocation for a financial goal”

11. Asset Allocation When should I invest in what asset class?
0 -5 Years: Equity is too volatile and therefore risky.
100% - fixed income.
0-3 years: RD/FDs
3+ years: debt mutual funds

12. Asset Allocation When should I invest in what asset class?
5 -10 Years: Equity is still too volatile and therefore still too risky.
100% - fixed income.
30% Equity, 70% fixed income
40%+ Equity, rest fixed income

13. Asset Allocation When should I invest in what asset class?
10 Years +: Equity will always be volatile but risk can be managed with minimal effort.
100% - fixed income.
60% -70 Equity, 40%-30 fixed income.
100% equity

14. Asset Allocation What to expect from each asset class?
Equity: 10% -12%. Max 14% +/- 4% (15Y +)
Fixed income: 6-8% (post tax)
Gold: 6-8% (post tax) (10Y +)

15. Expected Portfolio Return
60% Equity (12% return), 40% fixed income (7% return) (12% x 60%) +(7% x40%) =10% (post tax) … for a 10Y+ goal
“Deciding on asset allocation for a financial goal”

16. “It Seemed Like a Good Idea at the Time”

17. A minimalist portfolio

18. Minimalist equity portfolios
1 large cap mutual fund + 1 mid/small cap fund
1 large and mid-cap fund
1 equity-oriented balanced fund

19. Portfolio Management 201

20. Suggestion to 20-somethings
Do not check your portfolio for first 3-5 years. Invest systematically and leave it be

21. It takes time!!

22. Check your portfolio only once a year!
Get rid of that Moneycontrol app. It is evil!
Avoid star ratings
Avoid peer comparison

23. Review your portfolio once a year
What is the net return of your portfolio?
What is the net return of each asset class in the portfolio?
What is the accumulated corpus worth?
Are course corrections necessary?
After a while returns do not matter!

24. Star Ratings

25. How to review a mutual fund SIP?

26. How to review a mutual fund SIP?

27. Have a de-risking strategy in place
1: Correct significant deviations from asset allocation once a year initially and then twice a year: Rebalancing

28. Annual Returns of ICICI Top 100

29. Rebalancing

30. Rebalancing

31. Rebalancing

32. Rebalancing

33. 2 Asset Allocation has to change with time
Financial Goal Planner with Flexible Asset Allocation

34. 15 Years 40% Equity + 60% Fixed income 60% Equity + 40% Fixed income
1.5
years
5% Equity + 95% Fixed income
1.5
years 3
years
15 Years

35. Cannot/ Don’t want to DIY?
Avoid conflict of interest. Avoid anyone who gets a commission
Seek out a SEBI registered investment advisor and invest in commission free products.
Pay a flat fee!
Ignore media reports, amc reports, bloggers AIFW, wealth coaches, wealth doctors etc.
Work with the advisor regularly

36. RISK!

37. Asan Ideas for Worthless information!
“Ashal Sir, Please name the two mutual funds you hold” When Ashal says MDBSC* ….

39. Volatility
Short-term
long-term
Investment Duration

40. Penny Wise, Pound Foolish?

42. An approach to understanding investment risk

43. A lump sum investment in ICICI Top 100
Rs. 10,000 invested on 1st Jan 2003
would have grown to
Rs Lakhs on Dec 31st 2014.
Return = 22.91%

44. Annual Returns of ICICI Top 100

45. Understanding the 22.9%
CAGR
= 22.9%

46. Annual Returns of ICICI Top 100
Average: 29.3% Standard Deviation: 38.6%

47. What can I expect from ICIC Top 100?
Average: 17.5%
Stdev: 13.7%
17.5% +/- 13.7%

48. Sensex Total Returns Index: 1979 to 2013

49. Sensex Total Returns Index: 1979 to 20130%
10-30%
50-70%

50. Equity mf investing: What to expect!

51. Equity mf investing: What to expect!