WEALTH CREATION

Dr. Anuj Verma

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“ I can calculate the motions of the Heavenly
bodies but not the movements of the Stock
market.”

- Sir Isaac Newton

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 Einstein loved compound interest. History's
most famous scientist is said to have once
described compound interest as “the eighth
wonder of the world”.

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 LetWhat is thewith
us begin Average Age
a small quiz
when one starts Earning?

25 Years

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 What is the Average Retirement Age?

60 Years

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 What is an Average Income of an
Middle-Class House-hold?

Rs.40,000/- p.m.

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 How much can a person
save on a regular basis?

Rs.5,000/- p.m.

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 If a person can save Rs.5,000/- per month
What will be his wealth when he retires?

Assuming:
He Invests in an Asset class that gives returns of 17% p.a.

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 At Age 60 his wealth would be

Rs.10 Crores

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 PV r n
One time Annuity 12% 30
100000 5000

FV 2,995,992.21 1,206,663.42
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 Give time to your investments rather than timing
10 Crores*

Mr. Early Mr. Late

Savings Starting Age 25 40

Savings - Monthly SIP Rs.5,000/- Rs.15,000/-

Saving Years till age 60 35 years 20 years

Total Amount Saved (appx.) Rs.21 lacs Rs.36 lacs 2.5 Crores*

25 years 40 years 60 years

*Assumptions: Returns assumed at 17% CAGR
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 Past Performance (BSE Sensex)

Year Sensex Investment Rs.

1979 100 1,00,000

2019 38871 38871000

In past 40 years BSE Sensex has given about 16% Compounded annualized returns

This is in spite of …

• Two wars • At least 3 recessionary periods

• At least three major financial scandals • 11 different governments and
• Assassination of 2 prime ministers • An unfair share of natural disasters

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12/2/2019
35000
36000
37000
38000
39000
40000
41000
1-Jul-19

1 July 2019
3-Jul-19

5 August 2019
5-Jul-19
7-Jul-19
9-Jul-19
11-Jul-19
13-Jul-19
15-Jul-19
17-Jul-19

36699
39686
19-Jul-19
SENSEX

Dr. Anuj Verma

21-Jul-19
23-Jul-19
25-Jul-19
27-Jul-19
29-Jul-19
31-Jul-19
IS THIS THE RIGHT TIME TO INVEST ???

2-Aug-19
8%

4-Aug-19
13
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 Be Fearful When Others
are Greedy
&
Be Greedy When Others
are Fearful
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PERFORMANCE OF BSE SENSEX - Equities not risky in long run
PERFORM ANCE OF BSE SENSITIVITY INDEX - Equitie s not risky in long run
SENSEX
Years YEAR END 1 year 3 years 5 years 7 years 10 years 12 years 15 years
level
1 31-Mar-80 128.57 28.57% 31-Mar-79
2 31-Mar-81 173.44 34.90% 100.00
3 31-Mar-82 217.71 25.52% 29.61% As Time Increases
4 31-Mar-83 211.51 -2.85% 18.05%
5 31-Mar-84 245.33 15.99% 12.25% 19.66% Volatility & Range
6
7
31-Mar-85
31-Mar-86
353.86
574.11
44.24%
62.24%
17.58%
39.49%
22.44%
27.05% 28.36%
Decreases
8 31-Mar-87 510.36 -11.10% 27.66% 18.58% 21.77%
9 31-Mar-88 398.37 -21.94% 4.03% 13.50% 12.61%
10 31-Mar-89 713.60 79.13% 7.52% 23.81% 18.48% 21.72%
11 31-Mar-90 781.05 9.45% 15.24% 17.16% 20.52% 19.77%
12 31-Mar-91 1167.97 49.54% 43.12% 15.26% 24.97% 21.01% 22.73%

Harshad Mehta Scam

13
14
31-Mar-92
31-Mar-93
4285.00
2280.52
266.88%
-46.78%
81.76%
42.93%
53.04%
41.76%
42.80%
21.78%
34.71%
26.84%
33.94%
23.95%
15 31-Mar-94 3778.99 65.71% 47.90% 39.57% 33.11% 31.45% 26.85% 27.40%
16 31-Mar-95 3260.96 -13.71% -8.70% 33.09% 35.03% 24.87% 25.60% 24.05%
17 31-Mar-96 3366.61 3.24% 13.86% 23.58% 24.81% 19.35% 24.39% 21.86%
18 31-Mar-97 3360.89 -0.17% -3.83% -4.74% 23.18% 20.74% 20.63% 20.02%
19 31-Mar-98 3892.75 15.82% 6.08% 11.29% 18.77% 25.60% 17.29% 21.43%
20 31-Mar-99 3739.96 -3.92% 3.57% -0.21% -1.92% 18.02% 18.05% 19.92%
21 31-Mar-00 5001.28 33.73% 14.17% 8.93% 11.87% 20.40% 23.47% 19.31%
22 Tech Bubble
31-Mar-01 3604.38 -27.93% -2.53% 1.37% -0.67% 11.93% 14.45% 13.03%
23 31-Mar-02 3469.35 -3.75% -2.47% 0.64% 0.89% -2.09% 13.23% 13.63%
24 31-Mar-03 3048.72 -12.12% -15.21% -4.77% -1.41% 2.95% 8.32% 14.53%
25 31-Mar-04 5590.60 83.38% 15.76% 8.37% 7.54% 3.99% 2.24% 14.71%
26 31-Mar-05 6492.82 16.14% 23.23% 5.36% 7.58% 7.13% 9.11% 15.16%
27 31-Mar-06 11279.96 73.73% 54.67% 25.63% 17.08% 12.85% 9.54% 16.32%
28 31-Mar-07 13,072.10 15.89% 32.73% 30.38% 14.71% 14.55% 12.27% 7.72%
29
30
Sub Prime Crisis
31-Mar-08
31-Mar-09
9,647.31
17,464.81
-26.20%
81.03%
14.11%
15.69%
25.91%
25.59%
15.10%
25.97%
9.50%
16.66%
9.17%
14.72%
10.09%
10.74%
31 31-Mar-10 20,509.09 17.43% 16.20% 25.86% 31.30% 15.16% 14.85% 13.04%
32 31-Mar-11 15,454.92 -24.64% 17.01% 6.50% 15.63% 15.67% 12.55% 10.69%
33 31-Mar-12 19,426.71 25.70% 3.61% 8.25% 16.95% 18.80% 11.97% 12.41%
34 31-Mar-13 21,170.68 8.98% 1.06% 17.02% 9.41% 21.38% 15.90% 11.95%
35 31-Mar-14 22,386.27 5.74% 13.15% 5.09% 7.99% 14.88% 16.81% 12.67%
36 31-Mar-15 27,957.00 24.88% 12.90% 6.39% 16.42% 15.72% 20.28% 12.16%
37 31-Mar-16 25,341.86 -9.35% 6.18% 10.40% 5.46% 8.43% 13.42% 13.89%
38 31-Mar-17 29,620.50 16.88% 9.78% 8.80% 5.39% 8.52% 13.48% 15.37%
39 31-Mar-18 33,255.36 12.27% 5.96% 9.45% 11.57% 13.17% 9.43% 17.27%
40 31-Mar-19 38,871.87 16.89% 15.33% 11.67% 10.42% 8.33% 9.51% 13.80%
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Probability of Loss 13/40 Dr. Anuj Verma
5/38 3/36 3/34 1/31 0/29 190/26
Average Returns 23.24% 17.09% 16.44% 16.28% 16.19% 16.14% 15.51%
Probability of Loss (%) 32.50% 13.16% 8.33% 8.82% 3.23% 0.00% 0.00%
 PERFORMANCE OF NSE NIFTY INDEX - Equities not risky in long run

Years YEAR END NIFTY Level 1 year 3 years 5 years 7 years 10 years 12 years 15 years

1 1-Nov-96 890 -11.00% 1-Nov-95

2 1-Nov-97 1084 21.80% 1000.00
3 1-Nov-98 820 -24.35% -6.40%
As Time Increases
Volatility & Range
4 1-Nov-99 1326 61.71% 14.21%
Decreases
5 1-Nov-00 1242 -6.33% 4.64% 4.43%
6 Tech Bubble
1-Nov-01 991 -20.21% 6.52% 2.17%
7 1-Nov-02 962 -2.93% -10.14% -2.36% -0.55%
8 1-Nov-03 1601 66.42% 8.83% 14.32% 8.75%
9 1-Nov-04 1837 14.74% 22.84% 6.74% 7.83%
10 1-Nov-05 2461 33.97% 36.77% 14.66% 17.00% 9.42%
11 1-Nov-06 3805 54.61% 33.45% 30.87% 16.25% 15.64%
12 1-Nov-07 5847 53.67% 47.10% 43.47% 24.77% 18.36% 15.85%
13 Sub 1-Nov-08
Prime Crisis3043 -47.96% 7.33% 13.71% 17.38% 14.01% 10.79%
14 1-Nov-09 4563 49.95% 6.24% 19.96% 24.91% 13.15% 12.72%
15 1-Nov-10 6160 35.00% 1.75% 20.14% 21.23% 17.37% 18.30% 12.89%
16 1-Nov-11 5265 -14.53% 20.05% 6.71% 16.23% 18.18% 12.18% 12.58%
17 1-Nov-12 5704 8.34% 7.72% -0.49% 12.76% 19.48% 13.55% 11.71%
18 1-Nov-13 6317 10.75% 0.84% 15.73% 7.51% 14.71% 16.69% 14.58%
19 1-Nov-14 8324 31.77% 16.50% 12.78% 5.18% 16.31% 19.70% 13.03%
20 1-Nov-15 8050.8 -3.28% 12.17% 5.50% 14.91% 12.58% 14.41% 13.27%
21 1-Nov-16 8626.25 7.15% 10.94% 10.38% 9.52% 8.53% 13.76% 15.52%
22 1-Nov-17 10440.5 21.03% 7.84% 12.85% 7.83% 5.97% 12.80% 17.23%
23 1-Nov-18 10380.45 -0.58% 8.84% 10.44% 10.18% 13.06% 8.72% 13.27%
Probability of Loss 9/23 2/21 2/19 1/17 0/14 0/12 0/9
Average Returns
12/2/2019 14.77% 12.29% 12.74%
Dr. Anuj Verma 13.04% 14.05% 14.12% 13.79%
20
Probability of Loss (%) 39.13% 9.52% 10.53% 5.88% 0.00% 0.00% 0.00%
 Give Time rather than Timing the Equity market

Investing in the BSE Sensex –

25 years
16.90%
15.07% 16.02%02%

Fixed investment at Fixed investment at Fixed investment on

highest sensex value lowest sensex value 1st day of every month
every year every year

Market timing does not matter over the long term

Data source: ICRA MFIE
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 SECTION 80 C----- Investment Options

•NSC.
•PPF.
•SCSS.
•Life Insurance.
•ELSS Mutual Funds.
•Pension Fund.
•5 years Bank Fixed Deposits.
•5 years Post Office Deposits.

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 Thank You

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