1. Long-Term Goal Planning

2. Long-term financial goals Greater than 10 years Vital Inflation Returns Important because inflation is important Taxation Important because inflation is important

3. Inflation in India: Some Real Numbers Jan 1995 to May 2014

8. Permanent loss in capital

11. We need to be practical! We cannot expect more because we cannot invest enough!

12. Returns do not matter!

13. Understanding the nature of stock market returns

15. Sensex Total Returns Index: 1979 to 2013

16. Negative returns: 4 periods out of 32 Lowest return: -11% Highest return: 50%

17. Negative returns: 2 periods out of 30 Lowest return: -2% Highest return: 45%

18. Negative returns: 1 periods out of 28 Lowest return: -2% Highest return: 36%

19. Negative returns: 0 periods out of 25 Lowest return: 3% Highest return: 30%

20. Negative returns: 0 periods out of 20 Lowest return: 8% Highest return: 26%

21. Negative returns: 0 periods out of 15 Lowest return: 12% Highest return: 21%

22. Negative returns: 0 periods out of 10 Lowest return: 15% Highest return: 20%

23. Sensex Total Returns Index: 1979 to 2013 5%

24. S&P 500 Total Returns Index: 1871 to 2013 Source: http://www.moneychimp.com/features/market_cagr.htm 12%

25. Sensex Total Returns Index: 1979 to 2013

26. S&P 500 Total Returns Index: 1871 to 2013

27. Normal Distribution Source: http://www.mathsisfun.com/data/standard-normal-distribution.html

28. 68% of values are within 1 standard deviation of the mean 95% of values are within 2 standard deviations of the mean 99.7% of values are within 3 standard deviations of the mean

29. Mutual Fund Star Ratings Source: MorningStar.com

30. Sensex 1979 to 2013 15 year CAGR Transformed Distribution: Square Root 14% +/- 4%

31. Return expectation Equity allocation  60% Debt allocation  40% Equity expectation  10% (after tax) Debt expectation  6-7% (after tax) Portfolio expectation 10%(60%) + 7%(40%) = 8.8% (approx.) Investments are assumed to start simultaneously

32. Years to goal Present cost Inflation Post-tax rate of return of portfolio8.8.00% Future Cost Amt invested so far Post-tax rate of return on current investment Future value of curr. Inv. Annual increase in monthly invest. % Initial monthly investment required Annual increase in monthly invest. % Initial monthly investment required Goal Planner

33. Anatomy of a bull market

35. Asset Allocation Finding the balance between risk and reward How much should my equity exposure be? Should it decrease with age? Farther the goal, higher the equity exposure?

37. Portfolio with 50% equity and 50% debt

38. Asset Allocation

39. Maximum Loss: worst case scenario

41. Higher risk does not imply higher return! Return Risk Standard Deviation

42. Higher risk does not imply higher return!

43. Asset Allocation Time FrameConservativeModerateRiskyMad-Max < 5 YearsFD/RD~ 10% Eq 30-40% Eq> 60% Eq 7 YearsFD/RD10-20% Eq40-50% Eq>60% Eq 10 yearsFD/RD40% Eq>60% Eq100% Eq 10-15 Years<40% Eq60% Eq80% Eq FD/RD 100% Eq >15 Years< 60% Eq60% Eq80% Eq FD/RD 100% Eq Time FrameConservativeModerateRiskyMad-Max < 5 YearsFD/RD~ 10% Eq 30-40% Eq> 60% Eq 7 YearsFD/RD10-20% Eq40-50% Eq>60% Eq 10 yearsFD/RD40% Eq>60% Eq100% Eq 10-15 Years<40% Eq60% Eq80% Eq FD/RD 100% Eq >15 Years< 60% Eq60% Eq80% Eq FD/RD 100% Eq

45. Sensex Total Returns Index: 1979 to 2013

46. S&P 500 Total Returns Index: 1871 to 2013

47. S&P 500 1871 to 2013

48. Sensex 1979 to 2013 Annual Returns

49. Sensex 1979 to 2013 Annual returns

50. Sensex 1979 to 2013 15 year CAGR