1. Finance Basics
T.N.Satish

2. Salary Increment
Last year, your take home salary was Rs.1,00,000 / month
Your expenditure was Rs.90,000 / month
You got 10% raise this year (in take home salary).
If you are not buying anything extra, how much more can you save this year compared to last year?

3. Inflation Your average savings would be Rs.16,400 / month
Inflation for 2017 was 4%.
Inflation is the cost of increase of the consumer prices.

4. Provident Fund (PF) and FD
PF Interest Rate 8.55% > Inflation 4%
FD Interest Rate 6.5% > Inflation 4%

5. Inflation % %
> 9% [Except for one year]
If you had got salary raise less than 9% between , it actually means, your salary got reduced.

6. Value of Money
Is Rs.1 Lakh today same as Rs.1 Lakh 15 years back?

7. Value of Money Is Rs.1 Lakh today same as Rs.1 Lakh 15 years back?

8. Value of Money Is Rs.1 Lakh today same as Rs.1 Lakh 15 years back?
Fixed deposit of Rs.1 Lakh at the interest rate of 9% per annum for 15 years would become Rs.3,83,800.
If Rs.1 Lakh is more valuable for you 15 years back, you are losing money by having in Fixed Deposit.

9. Life Insurance Money Back Policies Term Insurance - No money back
Pay Rs.5000/month - You will get Rs.10 Lakh after 15 years
Term Insurance - No money back
Pay Rs.3500/year - Get Insurance cover of Rs.25 Lakh (for age 25)
Which one is better?

10. Life Insurance Money Back Policies Term Insurance - No money back
Pay Rs.5000/month - You will get Rs.10 Lakh after 15 years
Term Insurance - No money back
Pay Rs.3500/year - Get Insurance cover of Rs.25 Lakh (for age 25)
Which one is better?
In Money Back Policy, you will get all your money back along with insurance
In Term Insurance, you will only get insurance, but no money back.

11. Life Insurance If your budget is Rs.60,000 / year
Pay Rs.3500/year for Term Insurance
Invest remaining amount anywhere else (FD or PPF or Mutual Funds)
Most of the time, Money back policy would pay less than other investments.

12. Buying a Flat Your income after all exemptions is Rs.9,00,000.
You are utilizing section 80C completely
You are not eligible for special schemes introduced by Modi
Bank is giving loan for 10% interest and you get tax exemption
I am ready to offer you the loan. But, you won’t get tax exemption
Would you take loan from me? If so, how much interest would you be willing to pay?

13. Buying a Flat - Interest Rate
The Income Tax Exemption is on the interest.
For 10% interest, with 20.8% tax exemption, the real interest rate is 7.92%
If anyone offers you loan for less than 7.92%, you would be better off taking that loan rather than taking home loan
If you are having FD (without any immediate need of money) and having loan, you are wasting your money

14. Buying a Flat
Flat is a depreciating asset - Its value goes down every year
The increase in price that you see in a flat is the increase in the price of the land
After 30 years or so, the apartment needs to be reconstructed
You need to pay significant amount to reconstruct the flat
If not, your undivided share in the land would be reduced to half.
Buying Land is the best investment

15. Gold If you had invested Rs.31,000 in 2012 in,
Gold - It would have been 32,000 by today
Fixed deposit of 6.5% - It would have been Rs.45,643 today
Since 1981 till today except during , Gold was always behind FD
In , the price is increased mainly because of Global crisis
Long back, All the countries’ currency was backed by Gold
It is no longer the case. (Still, the recommendations are continued).
Gold would have better value, only if the economy is completely destroyed.

16. Business
If you have some spare money, would you like to invest in a business
Provided there is a trusted person who can run the business
The business would be profitable in the long run.
If your answer is No, then stock market may not be for you

17. Business
It is hard to see anyone who earned hundreds of crores of money legally without doing business.
There is a limit to earn money without doing any business.
If you want to earn a lot, you need to own business.

18. Business You don’t need to have lot of money to own business.
If you think some business has better future, you can try to own a minute fraction of that company.
Your Profits would also be proportionate to that.

19. Stock Market
Stock Market is nothing but a market which allows you to buy a minute fraction of the company’s share.
If you have Rs.1000, you can own % share of Reliance Industries (of Mukesh Ambani)
If you have Rs.300, you can own % share of Wipro or % share of ICICI Bank
If you think some company grows bigger than other companies, it is better to invest in those companies, so that, our money grows proportionally.

20. Stock Market - Wipro
If you had spent Rs.10,000 in buying Wipro in 1980, what would be the value today?

21. Stock Market - Wipro
If you had spent Rs.10,000 in buying Wipro in 1980, what would be the value today?
More than Rs.500 crore

22. Stock Market - Eicher Motors
In 2001, instead of buying a Royal Enfield bike, if you had bought Eicher Motors (which produced Royal Enfield), what would be the value today?

23. Stock Market - Eicher Motors
In 2001, instead of buying a Royal Enfield bike, if you had bought Eicher Motors (which produced Royal Enfield), what would be the value today?
More than Rs.6 crore

24. Stock Market - Reliance, KFA
If you had spent Rs.10 Lakh each in buying the following on Jan 1st 2008 (IPO for Reliance Power), What would be your worth today?
Reliance Communications (Anil Ambani)
Reliance Power (Anil Ambani)
Kingfisher Airlines

25. Stock Market - Reliance, KFA
If you had spent Rs.10 Lakh each in buying the following on Jan 1st 2008 (IPO for Reliance Power), What would be your worth today?
Reliance Communications (Anil Ambani)
Reliance Power (Anil Ambani)
Kingfisher Airlines
Reliance Power - Rs. 10 Lakh to Rs.1.27 Lakh
Reliance Communications - Rs. 10 Lakh to Rs.18,522
Kingfisher Airlines - Rs.10 Lakh to ZERO

26. Mutual Funds
Mutual Funds are professionally managed funds which invest in Stocks
They take investments from multiple investors/institutions
They diversify the investments in multiple stocks to reduce the risk
The portfolio managers are professionals and they regularly keep track of the companies, economy and many others

27. Mutual Funds
They keep track of all the information that is not in the media
It need not be confidential information that others are not supposed to know
It can be
Whether the company is paying salaries to their employees or not
The state of the court cases that the company is handling and its impact
The state of the enquiries by gov. organizations like CBI, SEBI etc.
If you take any company that has gone down, you hardly find any MF investments in the last three years before the public announcement (Whether it is Gitanjali Gems (Nirav Modi) or Kingfisher Airlines)

28. Stock Market - Gambling?
People consider investing in Stock Market is Gambling.
If you are planning to buy stocks today and sell tomorrow, it can be gambling
But, if you consider it as owning a part of the company, it is not gambling

29. ULIP - Insurance
Insurance sales people pitch ULIP is a better product as it includes equity investments (Mutual Funds)
Many times, they do not disclose the charges in the insurance, which eats up significant amount
Difficult to track ULIPs performance with others

30. ULIP - Insurance For ULIP, you need to see two criteria
Claim Settlement Ratio
Returns from the investments
When you put money which is having two independent criteria, you would get the worst of the both
Take Term Insurance based on Claim Settlement Ratio
Invest in Mutual Funds based on the returns

31. Stocks and MF Taxes Stocks Charges Mutual Funds Charges
Brokerage Charges – around 0.3% of transaction value (If you use Zerodha)
Mutual Funds Charges
Exit Load – 1%, if redeemed in less than 1 year.
Taxes for Stocks and MF
Tax for Profits within less than one year – 15%
Tax for Profits after one year
Upto Rs.1 Lakh – Tax Free
More than Rs.1 Lakh – 10%
There is no other investment with this much less tax

32. Mutual Funds Tax Saving Mutual Funds
Minimum Amount : Rs. 500
Lock – in Period : 3 years
Normal (Non-Tax Saving) Mutual Funds
Minimum Initial Amount: Rs.5000
Additional Increment Amount: Rs.1000
No Lock-in
If Rs.500 is not a big amount for you, please start investing in Mutual Funds.

33. 80C Tax Saving Product Lock In PF Till Retirement PPF 15 years ULIP
Other Insurance
10-20 years
Tax Saving FD
Tax Saving Mutual Funds
3 years

34. Tax Saving Mutual Funds
Invest Rs.1.5 Lakh for the next three years in Tax Saving Mutual Funds
In 4th year, withdraw the amount that you invested in 1st year and invest again
In 5th year, withdraw the amount that you invested in 2nd year and invest again
After three years, you don’t need to allocate budget for 80C

35. ELSS (Tax Saving) Mutual Funds
Returns over 5 year
Asset value more than Rs.1000 crore
Axis Long Term Equity Fund
Aditya Birla Sunlife Tax Relief 96
Reliance Tax Saver
DSP Blockrock Tax Saver Fund
L & T Tax Advantage

36. Investing in Mutual Funds
If you are KYC Compliant - Directly login to respective MF Website
Invest in Direct Growth plan
If you are not KYC Compliant, Register in FundsIndia
FundsIndia would do all the paperwork
Then, you can invest directly from the MF websites
Investing in MF directly (Direct Plan) would save 1% when compared to investing through FundsIndia (Regular Plan)
Dividend plan would be taxable at 10% - So, Opt for Growth Plan

37. Returns
One of our Colleagues has invested a small amount in Franklin Templeton MF in It is increased by 30 times in 15 years.
If he does not withdraw that amount, and if the value increases by same proportion, what would be the value 15 years later?

38. Returns
One of our Colleagues has invested a small amount in Franklin Templeton MF in It is increased by 30 times in 15 years.
If he does not withdraw that amount, and if the value increases by same proportion, what would be the value 15 years later?
In 30 years - Returns would be 60 times

39. Returns
One of our Colleagues has invested a small amount in Franklin Templeton MF in It is increased by 30 times in 15 years.
If he does not withdraw that amount, and if the value increases by same proportion, what would be the value 15 years later?
In 30 years - Returns would be 60 times
In 30 years - Returns would be 900 times

40. Land and Mutual Funds Invest in Land and Mutual Funds
Nothing else will keep your money with the same value

41. Disclaimer
Mutual Fund Investments are subject to market risk. Please read the offer document carefully.
Do NOT invest, if you want to withdraw in less than 5 years or whenever you need money
Invest only, if you are prepared to keep the money for at least two government changes at the center.
Keep 6 months of your expenses in FD.
Try to invest equal amount every month

42. Income Tax Returns Everyone needs to file Income Tax Returns
ITR-2 is Strongly Recommended Except when
You did not submit any HRA
You do not have any other income except from FD/Savings Account
Even if you have Rs.10,000 FD, you need to pay tax on the interest that you got

43. Related Topics of Interest
Stock Market Basics
How I lost money in stock market?
Indian Economy from Nehru to Modi
Let’s print more money to eradicate poverty
Let’s try for $1 = Re.1