Wealth Creation

By
A venture by IIT Bombay
alumnus
Aditee Amit Saoji
 Building wealth
is a marathon.
It is not a sprint.
Discipline is the
key ingredient.
 Art not Rocket Science
Wealth creation is an art.
You have to follow more don’ts than
dos.
• Patience

• Low greed

• Trust on knowledge based

planning

Wealth Creation
 Why do you invest?
• For capital growth
• At the same time, you want safety of
capital and regular income

There are many avenues where you

invest depending on your need and
risk taking abilities.
 Various types of assets

Some assets are liquid and some are less

liquid.

Where should you invest?

• In illiquid and non revenue generating
assets?
• Or in revenue generating and commercial
assets?
Investment Avenues
Real Estate
Gold
Insurance
Bonds
FDs
Stocks
Mutual Funds
Cash/ Savings Account
 Real Estate
• Investing in real estate at good valuations and
in an area with potential growth makes sense

You have to invest lumpsum amount to

acquire a good property

Real estate investment is highly illiquid

For selling the real estate, it takes roughly

6 months for the deal to materialize and
get the money.
 Real Estate

We should have real estate

for our own use. Buying a
second home, farmhouse or
open plots at far and interior
locations doesn’t make
business sense.

Investment Gurus
 A natural hedge to
investment in
riskier assets

A certain
Historically
percentage of
proven to be a
investment is must
good asset class
in gold (not jewelry)

Gold
 Gold
• In Indian context, gold has given
phenomenal returns due to Dollar
appreciation compared to Rupee.
Going forward, it may reverse.
• Currently, there is an import duty of
12.5% on gold. Whenever the import
duty is taken off, gold prices will come
down.
 Insurance

• must Premium cost is

Mediclaim • takes care of very low. For ex.
insurance your hospital you can get a
bills term insurance
cover for Rs 1
cr for a nominal
• must
Term cost of 9850 Rs
• takes care of any
per year. ( Age
insurance unfortunate
assumed 30)
event
 Insurance
• Remember, this is not an investment
instrument.
• You should keep investment and
insurance separate.
• Mixing of investment and insurance
will cost you a huge amount in the form
of commission which could be as high
as 35%.
 FDs
• Due to safety and fixed returns, this is the
most preferred asset class for common
man after gold.
Net gain after
inflation is
negative.

CPI Inflation 7.34%

Core CPI Inflation 5.5%

FD returns 4-5.5%
 FDs
• Investor has to pay tax according to his/her
tax bracket on interest earned irrespective of
inflation
• If the amount has to be withdrawn before
maturity, investor has to pay a cost.

S inflation adjusted
negative returns
A
F tax liability
E
T
redemption cost
Y
 Bonds, Govt securities, debt
instruments
Not so famous among
Generates regular
common investors but
interest income which
very famous with
can beat inflation
intelligent investors

Choose
according to
risk reward
ratio

An option of zero Other categories

credit risk investment where investor can
such as central expect higher returns
government securities with some credit risk.
 Reasonable
safety

Tax benefits Bonds, Higher

for long term Debt returns
investment Instruments

Liquidity
 Stocks

Maximum return generating asset class

Highly liquid with great returns

Long term investment in well

researched stocks rewarding

Day trading, tip based trading can

result in huge losses
 Stocks
• Few multibaggers of past period are
Infosys, Asian paints, Cipla etc
• Investor has to keep himself up-to-date
with the current market conditions and
it’s a huge task to identify good stocks
from thousands of listed stocks
Mutual Funds
 Mutual Funds

Historically
Long term Generates
best asset class
investment good returns
worldwide
 Mutual Funds

• invest lumpsum amount OR

Flexible • invest small amounts at regular
intervals in the form of (SIP)

• purchase amount debited from

Transparent and redemption amount credited
to your bank account directly.

• redeem at a short notice

Highly liquid • 1 day (for debt funds)
• 3 days (for equity funds)
 Why Mutual Fund
is best asset class?
You Bank
deposit pays
money in you
bank interest

Bank gives
From where
loans to
does bank
industries
generate
and gets
income?
interest

You buy LIC invests

an LIC your money in
policy equity and
debt markets
 Third
parties
• Banks • Keep a part of
• LIC • Invest your profit as
money in commission
Third the market Third
parties parties

Can we skip the third parties?

Why Mutual Fund & Why not
Direct Stock Market?
 Percentage of stock in overall
portfolio matters
• We need to have maximum allocation
to the best performing sectors!
• At times we need to book profits and
enter again!
• It all depends on market condition.
• It is relatively tough for individual
investor to identify and act upon.
• Mutual fund managers take care of
these things with a dedicated team for
market research and analysis.
 Sector allocation
Plays an important role while
constructing the portfolio
Recent COVID pandemic has changed
sector allocation in NIFTY
IT, Banking, Pharma were the
growth sectors

After US elections, the perception

has changed
Value stocks will outperform
growth stocks

By investing in Mutual Funds, you will not miss out on

sector opportunities.
 Discipline is the way of life

• Whether it is your personal life or

professional life, discipline is very
important.
• Mutual fund is the disciplined way of
investment which will help in generating
good returns.
 Asset Allocation
• Selecting proper asset classes with safety
and good returns is a must for wealth
creation.
• Just like selecting a batting line up to score
and defend 200+ score in T20.
Hockey team Asset allocation
Three to
four
forward
players

One One
penalty centre
shootout forward
specialist specialist

Hockey
team

Two Three full

Defenders back

One goal
keeper
Portfolio Asset Allocation
• Asset which
Equity accelerates
growth

• Defensive
Debt assets for
backup

Gold • Natural
hedge

Real • Some part

Estate for own use
 Portfolio returns

Aggressive
assets with
Defensive 15%
assets with returns
6-8%
returns

Balanced
assets with
10-12%
returns

12-15% Compounded Annual Growth

(CAGR) - a great value for your portfolio
 An SIP of 1 lac per month will
accumulate 5 cr amount in 15 years*

*Assuming Expected rate of return 12% per annum

After 15 years, even if you withdraw Rs 3
lac per month, your invested corpus is
not only preserved, but appreciated

This is the actual data of initial amount of 5 cr

invested in balanced advantage fund and
withdrawn at the rate of 3 lac per month.
Get in touch with us to know more

A1 Investments
Give us a call on 8329011643,0712-2248245
Drop a mail at a1investmentsnagpur@[Link]
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