Goal Based Investing & Asset Allocation - PowerPoint PPT Presentation

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Goal Based Investing & Asset Allocation


It may not be very complicated to determine your financial goal – a comfortable retirement, children’s higher education, a new house or a new car are some of the popular goals but developing an appropriate asset allocation plan designed to meet those goals can be reasonably easy. Using online asset allocators can prove to be valuable to reduce volatility in your portfolio and enhance diversification. – PowerPoint PPT presentation

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Title: Goal Based Investing & Asset Allocation

Goal Based Investing Asset Allocation
Savings Is The Holy Grail
Income Expenses Savings Or Income Savings
Small Regular Savings Fortune in Making
What you save every month For How much did you saved How much it could earn every year You will have (Compounded Annually)
Rs.1,000 20 years Rs.2,40,000 10 Rs.7,23,987
Rs.1,000 20 years Rs.2,40,000 12 Rs.9,19,857
Rs.1,000 20 years Rs.2,40,000 15 Rs.13,27,073
The numbers used in the table above are for
illustrative purposes only
Financial Commitments Brought You Here
Step 1 Define Each Every Goal of Yours
Step 2 Working on Your Financial Goals
Step 3 Identifying the Asset Classes
Consumer Basket 1990 2000 2010 2015 2019E CAGR
TOTAL SPENDING PER ANNUM 23,759 68,923 151,279 280,064 427,619 10.1

Price of gold, INR/10 grams 3,409 4,528 18,268 26,335 52,000 9.5
Units ( Grams) of gold to consume my basket 70 152 83 106 82

BSE SENSEX 730 4,659 15,585 26,557 37,935 14.1
Units of BSE-30 Index to consume my basket 33 15 10 11 11

Fixed Deposit Basket Index Value (Value of initial investment Jan 1, 1990 1000) (SBI 1 Year Deposit Rate) 1,064 2,220 3,550 4,628 5,836 5.8
Units of FD Basket to consume my basket 22 31 43 61 73
  • Quarterly compounding and Tax rate on Fixed
    Deposit assumed to be 30

Source RBI, Bloomberg Past Performance may or
may not be sustained in future.
Step 3 Contd..
Asset Class Horizon Key Outcomes Financial goal catered
Equity Long term More than three years Inflation hedge wealth creation Retirement, childs education, childs marriage wealth creation
Debt Short term Less than one year Liquidity risk reduction Sacred money, liquidity just before goal is accomplished
Gold Long term Capital preservation diversification Childs marriage, childs education retirement
Steps 4 Importance Of Right Asset Allocation
Mr. A Mr. B
Age 35 years 35 years
Time to Retire 20 Years 20 Years
Retirement Corpus Required Rs. 2.20 Cr Rs. 2.20 Cr
Investment Allocation Mr. A Corpus (Rs) Mr. B Corpus (Rs)
Equities 30 95.54 L 60 1.91 Cr
Debt Cash 60 82.46 L 30 41.23 L
Gold 10 10.93 L 10 10.93 L
Total 100 1.88 Cr 100 2.43 Cr
Likely to achieve the goal ? ? ? ?
The above illustration is calculated for monthly
SIP of Rs.24,000/-. Annual Return Assumed Equity
15, Debt 8 and Gold 6. The above corpus
are pre-tax.
Various Asset Classes have done Well and Poorly
There have been years when equity markets had a
brilliant run, years when bonds were dependable,
and years when gold shined the brightest. Stay
invested across asset classes
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Sensex 49 Sensex 49 Gold 26 Sensex 83 Gold 23 Gold 32 Sensex 28 Sensex 11 Sensex 32 Bonds 9 Bonds 13 Sensex 30 Gold 8 Gold 16 Gold 20
Gold 20 Gold 16 Bonds 9 Gold 24 Sensex 19 Bonds 7 Gold 12 Bonds 4 Bonds 14 Sensex -4 Gold 11 Gold 5 Sensex 7 Sensex 14 Bonds 10
Bonds 4 Bonds 7 Sensex -52 Bonds 4 Bonds 5 Sensex -24 Bonds 9 Gold -5 Gold -8 Gold -7 Sensex 3 Bonds 5 Bonds 6 Bonds 11 Sensex -4
YTD - Jan to October 2020 The chart ranks the
best to worst performing indexes per calendar
year from top to bottom Past performance may or
may not be sustained in future. Indices Used
SP BSE Sensex Total Return Index MCX Gold
Commodity Index and CRISIL Composite Bond Fund
Index Source Bloomberg
Imagine someone holding an all equity portfolio
in 2008, or holding none in the equity rally that
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  • The data in this presentation are meant for
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