6-ways to Calculate Monthly Interest on ₹1 Lakh Fixed Deposit

Did you know that more than 95% of Indian families prefer Fixed Deposits (FDs) as a secure investment option? If you are unsure of where to invest and want to keep your money safe while getting a regular passive income, then knowing the structure of monthly interest for ₹1 lakh fixed deposit is very important. FDs are the most preferred amongst the population of the Indian households due to safety and return on maturity which is pre-defined.   In this blog, we will show you how to calculate monthly interest for ₹1 lakh fixed deposit and discuss the advantages of various types of Fixed Deposits.  Interest Payout Options for Fixed Deposits When considering the monthly interest for ₹1 lakh fixed deposit, it's essential to know the two primary types of FDs:  Cumulative Fixed Deposits  On cumulative fixed deposits, the interest earned is taken and added to the initial deposit principal and paid at the end of the maturity period. This makes your earnings to be paid in a way that they are compounded where, your interest earned is taken back to your initial sum and then used to calculate future interest. This type is best suitable for wholesale investors who do not need their money in the short term and who seek high yields at the end of its term.  Non-Cumulative Fixed Deposits  Non-cumulative fixed deposits, meanwhile, pay out interest monthly, quarterly or annually. And if you require a steady supply of income, this avenue can be especially advantageous. Cumulative FDs are more suited for those looking to create a corpus. Non-cumulative FDs suit them who need regular income, such as retirees.  Significance of Monthly Interest Pay-outs Opting for monthly interest for ₹1 lakh fixed deposit can yield several benefits.  Steady Cash Flow- The regular income helps in keeping monthly expenses at bay as you can get a monthly interest payout. This can be good for retirees, or anyone on a fixed income to have monthly interest for ₹1 lakh fixed deposit for financial stability.  Financial Flexibility- The requirement of a more constant flow of cash is beneficial for all-purpose expenditure control. You can use it to pay for recurring expenses such as water bills, rents, or hospital bills.  Consideration of the proposed model for yearly distributions  Though the annual pay-outs look decent, you have to stick with your money until the end of the year before you can touch it. How much practical use are monthly payouts for most investors? They are a form of security with the capacity to broaden or narrow the number of payouts in accordance with the investor’s needs; thus, incorporating the feature of providing funds when required in their structure.  How to Calculate Monthly Interest for ₹1 Lakh Fixed Deposit To determine the monthly interest you can expect from a ₹1 lakh fixed deposit, you can use simple formulas for both simple and compound interest.   Basic Formulas:  Simple Interest (SI):  SI=P×r×t/100 =   Where:   P = ₹1,00,000 (Principal amount)  r = Annual interest rate  t = Time in years  Compound Interest (CI):  A=P(1+rn)nt  Where:  A = Maturity amount  P = ₹1,00,000  r = Annual interest rate  n = Number of compounding periods per year  t= Time in years  Understanding the Calculations: Let’s try and understand with an example using an interest rate of 6% to illustrate how to calculate the monthly interest.  For Simple Interest:  If you invest ₹1 lakh at an interest rate of 6% for one year, your monthly interest for ₹1 lakh fixed deposit would be 500 using Simple Interest.   The annual interest would be ₹6,000.  For Compound Interest:  If you invest ₹1 lakh at an interest rate of 6% compounded monthly, the total maturity amount after one year will be slightly higher due to compounding.  After using the formula, you would find that the monthly interest is approximately ₹513.98. Using Our FD Calculator to Estimate Monthly Interest At EduFund, we offer an FD calculator that simplifies this process. With just a few inputs—your deposit amount, interest rate, and tenure—you can get an accurate estimate of your monthly interest.  Benefits of Using Our FD Calculator: Quick and Accurate: This service delivers accurate results in terms of seconds within zero human interference.   Comparative Analysis: Subscribe and easily compare how different interest rates can affect your monthly payouts.   To make a wise decision regarding which fixed deposit plan is closest to your requirements you need to understand these calculations and apply FD calculator.   Factors Affecting Monthly Interest Rates: Several factors determine the monthly interest for ₹1 lakh fixed deposit:   Bank Policies: The interest rates on loans can vary from one bank to another due to established regulations and competition. This means that one should compare our rates of the various banks to select the best sector that will suit him/her.   Tenure Amount: Fixed deposits as a type of investment are typically reliant on the amount to be invested and the duration for which it will be invested; this is because the length of the fixed deposit and the amount of money deposited substantially determine the interest rates to be given. Usually, duration of the account and the amount of deposit determines the interest rate that a particular account will first be charged or offered.  Market Conditions Economic factors, such as inflation and changes in monetary policy, can also impact the interest rates offered by banks. Keeping an eye on these factors can help you make informed investment decisions. Real-Life Scenarios Understanding how monthly interest for ₹1 lakh fixed deposit can impact personal finances is crucial:   Scenario 1: Retirement Planning An individual who invested in a non-cumulative FD with monthly payout of ₹500 can manage daily expenses from this income without touching the principle, which gives a retiree financial security.   Scenario 2: Emergency Fund An individual saving for emergencies would go for monthly interest payouts for example in case of an emergency one will not need to break the FD and thus have access to that money.   Conclusion  Understanding the monthly interest for ₹1 lakh fixed deposit is important for effective financial planning. By calculating your potential earnings and exploring various Fixed Deposit options, you can ensure a steady income stream that aligns with your financial goals.   Take advantage of our FD calculator at EduFund to make informed decisions about your fixed deposit investments today! With the right information and tools, you can maximize your returns and achieve financial security. 

What are child education investment plans? What is the best investment plan for your child’s education? When should you start investing for your children? Let’s explore all the facts in this blog.  A child education investment plan is a plan to systematically invest for your child’s higher education. The costs of education are skyrocketing. A recent twitter post by a father in Delhi showed how the playschool fees for his son’s one year of schooling was nearly ₹4,30,000!   Inflation in the education sector is nearly 10-11%. More than the average retail inflation in our country. From school to college fees to living expenses related to education are increasing faster than our average salaries. Thus, the need for a child education investment plan that can help parents tackle this cost is tremendous. A child education investment plan includes a series of investments that you can consider in order to save for your child’s education.  These investment options and plans can help you easily save for your child’s college and school fees. Without compromising your current savings or limiting your expenses, you can start investing in these plans with a minimal cost and eventually increase your investments as your child grows and your salary maximizes. Let’s look at some child education investment plans and the various investments within its gambit.  Best Investment Plan for Child Education in India in 2024  What is the best investment plan for child education? What asset should you choose for your child’s higher education savings? Which asset can help you keep up with the growing education costs in India? The answer is simple and highly convenient – it is Mutual Funds.   Mutual Fund is the best investment asset for saving for higher education. Mutual funds have historically given returns of 10-12% over a long horizon. Successfully keeping pace with education inflation rate which is at 10%. Mutual funds are affordable, you can start investing with just ₹100 monthly and increase your investments systematically.   The greatest benefit of Mutual funds is that they are managed by professional fund managers. At minimal cost, you have experts watching your portfolio and making the necessary adjustments to ensure your money grows at the intended pace. Mutual funds’ transparency over costs and its investment strategies is another major benefit. Here are some mutual funds that you can consider you are planning to invest for child education and their college needs.  Sr. No. Scheme Name Category Sub-Category Inception Date AUM Expense Ratio 1Y Return 3Y Return 5Y Return 1. Nippon India Small Cap Fund Equity Small Cap 1/1/2013 43,816 0.67% 59.3% 42.60% 31.57% 2. HDFC Mid-Cap Opportunities Fund Equity Mid Cap 1/1/2013 56,033 0.80% 53.99% 33.89% 25.41% 3. SBI Contra Fund Equity Contra 1/1/2013 21,482 0.69% 45.69% 33.46% 26.70% 4. HDFC Balanced Advantage Fund Hybrid Dynamic Asset Allocation 1/1/2013 73,349 0.80% 38.43% 27.55% 19.72% 5. DSP Nifty 50 Equal Weight Index Fund Equity Index (Large) 10/27/2017 1,004 0.40% 33.31% 23.64% 18.89%  Note: All are Direct plan and growth option; AUM and Expense ratios are as on December 31, 2023; 3Y/5Y returns are annualized and as on January 30, 2024.   Source: Value Research  Note: Mutual fund investments are subject to market risk, please read all scheme related documents before investing. Past performance is not indicative of future results. This is not an investment recommendation.  Fund Details  Fund Details Nippon India Small Cap Fund:  This fund is being managed by Mr. Samir Rachh (Since January 2017) and Mr. Tejas Sheth (Since February 2023) who is an assistant fund manager.  The fund has provided 27.07% of return since inception and it has outperformed the category over the last 1/3/5/7/10 years.  It has delivered the highest returns in the category over the last 7 and 10 years and has been in the top 3 over the 3 and 5-year period.  The fund has delivered the best risk-adjusted returns over the last three years, depicted by the highest Sharpe ratio.   HDFC Mid Cap Opportunities Fund:  This fund is being managed by Mr. Chirag Setalvad who has been the head of equities since June 25, 2007, and Mr. Dhruv Muchhal who is an Equity Analyst and Fund manager for Overseas investment.  HDFC Mid Cap Opportunities Fund is the largest fund in the mid-cap space with an AUM of Rs. 56,033 crores and is the only fund in the category to have an AUM of more than Rs. 50,000 crores.   The fund has provided a 21.76% return since inception and has outperformed its category and the mid-cap index in all the time horizons of 1/3/5/7/10 years.  The fund has delivered better returns per unit of risk depicted by the lower standard deviation and the beta compared with the category average.   SBI Contra Fund:  The fund has been in existence for approximately 25 years and has been managed by Mr. Dinesh Balachandran since May 2018 who has 17 years of rich experience in this field.  This fund has provided a whooping return of 19.59% since its inception date and has outperformed its benchmark S&P BSE 500 TRI in all the time horizon.   The fund follows a contrarian strategy while investing in equity and provides exposure to companies of all sizes.   The fund has delivered the best risk-adjusted returns in the category, as depicted by the highest Mean Return, Sharpe Ratio, Sortino Ratio and Alpha.   HDFC Balanced Advantage Fund:  HDFC Balanced Advantage Fund is one of the oldest funds in India and is the largest fund in the balanced advantage category, with an AUM of Rs. 73,349 crores.  The fund has been the top performer in the category for over 1/3/5 years and has delivered an impressive return of 16.04% since inception.   Although the fund has been volatile more than the category, it has delivered a significantly higher alpha of 10.34% compared to the category average of 1.35% over three years.     This fund has been managed by Mr. Srinivasan Ramamurthy, Mr. Gopal Agarwal, Mr. Anil Bamboli, Mr. Arun Agarwal, and Mr. Nirman Morakhia.  DSP Nifty 50 Equal Weight Index Fund:  This fund is being managed by Mr. Anil Ghelani (since July 2019) and Mr. Dipesh Shah (since November 2020).  This fund tracks the Nifty 50 Equal Weight TRI, allowing us to have exposure to large-cap equities where the probability for alpha generation is very low.   Compared with Nifty 50 TRI, Nifty 50 Equal Weight Index TRI has delivered better returns with lower volatility over a long-term period from June 2000 to April 2023.   The fund delivered an alpha of 3.75% whereas the other funds in the category struggled to outperform the benchmark over the last three years.   Important Note: These mutual funds are not our recommendations. Please consult your financial advisor before investing money in mutual funds.  Benefits of Child Education Investment Plan  The cost of education is rising rapidly, making it crucial to plan and invest early for your child's future. Tuition and fees increased more than 2,200% from 1970 to 2020. Meanwhile, inflation was around 600%. Here are 7 benefits of child education investment plan:  Beat Inflation: Education costs are outpacing inflation. By starting early, you allow your investments to grow and counter the rising costs of universities, colleges, or specialized programs.  Peace of Mind: Knowing you have a dedicated fund for your child's education reduces financial stress and allows you to focus on other aspects of their upbringing.  Power of Compounding: Starting early allows you to leverage the power of compound interest. Even small regular investments can grow significantly over time, thanks to interest earned on interest.  Flexibility: Many child education plans offer flexible payout options. The corpus can be used for various education-related expenses, including tuition fees, accommodation, or study materials.  Discipline & Habit Building: Regular contributions inculcate financial discipline in you and teach your child the value of saving for long-term goals.  Freedom of Choice: A well-funded education plan empowers your child to pursue their desired educational path without limitations due to financial constraints. This could mean attending a dream university, pursuing a specific program abroad, or taking on internships without financial worries.  Secures Your Child's Future: Investing in your child's education is an investment in their future. A good education opens doors to better career opportunities, financial stability, and a brighter future.  Best Investment Options for Child Education   Best Investment Options for Child Education   Let’s look at some of the best investment options for child education available to parents in 2024.  Education Savings Plan   Education savings plans are investment plans that allow you to save for your child’s education costs. Some plans are incentivized and may offer tax benefits such as Sukanya Samriddhi Yojana in India offers tax exemptions under section 80C of the Income Tax Act of 1961. Some are extremely affordable with minimal investments starting at ₹100 or 1000. Let’s cover some education savings plan that you can utilize.   Sukanya Samriddhi Yojana  It is a unique child investment plan for parents of a girl child. This is offered by the Indian government to encourage parents to save and invest in their daughters early on. The main objective of the SSY program is to encourage parents to make substantial financial commitments to a strategy for their daughters’ future education and marriage.   Parents who have girls under the age of ten can invest in the SSY program. The SSY program investment is locked in for 21 years post-account opening. Investments made in SSY accounts are eligible for tax deductions under Section 80C of the Income Tax Act of 1961. Each year, a minimum investment of ₹250 must be made, and a maximum investment of ₹1,50,000 may be made. SSY accounts can be opened and utilized at any location of an accredited bank or the India Post Office.   529 Plans  529 plans are a powerful tool for US residents to save for a child's future education.  529 plans are tax-advantaged investment accounts. They are designed specifically to encourage saving for education expenses.    The beauty of 529 Plans is that contributions to a 529 plan grow tax-free federally.  This means all earnings on your investments compound without being reduced by taxes, maximizing your potential returns. Similarly, withdrawals from a 529 plan are completely tax-free at the federal level if the earnings are used for qualified education expenses.  Some states also offer additional state tax benefits.   Contributions to a 529 plan can be made by anyone, not just the account owner. This allows grandparents, relatives, or friends to contribute towards a child's education. This plan is not available for Indian citizens and only open for American citizens.   Coverdell ESAs  Coverdell ESAs are another tax-advantaged investment account option in the US for saving towards a child's education. The contributions are not tax-deductible federally, but earnings within the account grow tax-free if used for qualified education expenses. The annual contribution limit for a Coverdell ESA is capped at $2,000 per beneficiary per year.  Coverdell ESA funds can be used for a wider range of qualified K-12 expenses like tuition, fees, tutoring, and even some educational materials. You can open a single Coverdell ESA for multiple beneficiaries if they meet the eligibility criteria.   This investment option is not for Indian citizens.   Tax benefits and withdrawal rules   Tax benefits as well as withdrawal rules depend on the type of education savings plans you have chosen.   Some plans offer tax deductions for contributions, reducing your taxable income.   Investment earnings within the plan typically grow tax-free.  In the case of 529 Plans and Coverdell ESA, withdrawals used for education expenses are usually tax-free. Under Sukanya Samriddhi Yojana Scheme, the girl child can make an early withdrawal of up to 50% of the balance in the account at the age of 18 years before the maximum maturity tenure of 21 years. However, this amount can only be withdrawn for her higher studies or marriage.   Important Note: It's crucial to research the specific plan you're considering understanding its contribution limits, investment options, tax implications, and withdrawal rules.  Mutual Funds  As mentioned earlier, mutual funds are a game-changer. They are the best investment asset in India to save for your child’s education needs. The ease of investing in mutual funds, transparency, affordability as well as the tax benefits may them an amazing investment tool for your long-term goals such as your child’s college savings.   When saving for your child's education through mutual funds, you need to consider the investment horizon (timeframe until the funds are needed) and your risk tolerance. Here's a breakdown of suitable mutual funds and how they differ:  Types of Mutual Funds for Education Savings:  Equity Mutual Funds: Invest primarily in company stocks. They offer the potential for higher long-term returns but come with higher risk due to market fluctuations. Suitable for: Long-term investment horizons (10+ years). Investors who are comfortable with market volatility. Within Equity Mutual Funds, you have a special fund category called ELSS (Equity Linked Saving Scheme). They tax deductions under Section 80C of the Income Tax Act, 1961 and have a lock-in period of 3 years.  Debt Mutual Funds: Invest in fixed-income securities like bonds and government securities. They offer lower risk and predictable returns, but growth potential is limited. Suitable for: Shorter investment horizons (5-10 years). Risk-averse investors seeking capital preservation.  Balanced Funds: A mix of equity and debt funds, offering a balance between risk and return. They can be a good middle ground, but returns may be lower than pure equity funds. Suitable for: Moderate investment horizons (7-12 years). Investors seeking a balance between growth and stability.  Equity vs Debt Mutual Funds: What’s Better?  Category Equity Mutual Funds Debt Mutual Funds Investment Type Company Stocks Fixed Income Securities Risk  High Risk Low Risk Expected Returns Higher in the long run Lower as compared to Equity Management Costs Lower Higher  Investment Horizon Suitable for long term goals Suitable for long & short-term goals  Mutual Funds via SIPs (Systematic Investment Plan)  A Systematic Investment Plan (SIP) allows you to invest a fixed amount in a mutual fund at regular intervals (monthly, quarterly, etc.). SIPs allow you to invest in the long run without breaking the bank. SIPs offer several benefits for education savings:  Rupee-Cost Averaging: Invests a fixed amount regardless of the market value, potentially buying more units when the price is low and fewer units when the price is high, averaging out the cost per unit over time.  Discipline and Habit Building: Encourages regular saving and instills financial discipline.  Compounding: Allows returns to be reinvested, leading to faster growth over time.  Flexibility: You can start with a small amount and gradually increase it as your income grows.  Convenience: Automates the investment process, making it easier to stay on track with your savings goals.  Fixed Deposits and Savings Account  Fixed deposits and savings accounts are traditional savings options, but how do they stack up for child education savings? Here's a detailed breakdown:  Child-Specific Fixed Deposits   Child-specified fixed deposits offered by some banks; these FDs cater specifically to children. For instance, Punjab National Bank offers the PNB Balika Shiksha Scheme for girls enrolled in government schools. The interest rates for fixed deposits for children are similar to regular FDs. There is a lock in your investment for a fixed term (typically ranging from 1 to 10 years). In case of early withdrawal, penalties may incur.  The biggest advantage is the returns are guaranteed by the bank, making them a safe investment option. These investments provide a sense of security knowing the principal amount is protected. These fixed deposits are ideal for education needs within 5 years where principal preservation is of utmost importance.   The drawbacks are that the interest rates on FDs are generally lower than inflation, resulting in potential loss of purchasing power over time. There are other instrument options that offer better returns. The locked-in period for a fixed term limits access to funds before maturity.  Savings Accounts  Savings accounts are another investment option for parents to save funds for their children. The interest rates are generally between 3 to 4%, there is no lock-in period, some banks require you to maintain minimal funds for operating the account otherwise there may be a penalty. These savings accounts have no risk involved and your child’s savings are protected till they decide to withdraw them. There is no maximum investment; you can invest based on your needs.   Savings accounts can be opened on behalf of the minor, that is your child, and the guardian can operate the account on the behalf of the child.   Interest Rates and Tax Implications   Interest Rates: FD interest rates vary depending on the bank, chosen term length, and prevailing market conditions.  Tax Implications: Interest earned on FDs is generally taxable as per income tax slabs. However, some tax benefits may be available for specific FD schemes. It's important to consult with a tax advisor about the latest regulations.  Stocks and Bonds  Stocks and bonds are fundamental investment tools that can be utilized for your child's education savings plan. Let's explore them in detail:  Stocks   Investing in stocks on your child’s behalf is also a good option. Stocks can potentially beat inflation and are a great source of investment for long-term goals such as college fees. Individual stocks offer the possibility of significant returns over extended periods (10+ years). Owning shares in well-performing companies can significantly grow your capital.  Do not that the stock market is inherently volatile. Individual stock prices can fluctuate significantly, leading to potential losses. A single stock option can be expensive or affordable depending on the company. The price can range from ₹10 to ₹1,00,000. Selecting individual stocks requires in-depth research on company financials, industry trends, and market conditions. Understanding the risks involved is crucial.  Importance of Diversification   Diversification is the key to a good child education investment plan. Every investment advisor would tell you to never put all your eggs in one basket! Diversification helps in minimizing risk. It allows you to spread your investments across various companies and sectors to avoid being overly reliant on the performance of a single stock.   Bonds    Bonds are issued by governments and corporations when they want to raise money. It is a debt security and a safer investment option than stocks. Bond returns are generally lower than stocks, especially over the long term. Bonds provide predictable income streams, making them suitable for investors seeking stability and capital preservation.  Insurance Plans  In India, there are different kinds of insurance plans to protect your child’s future. Insurance plans are a good backup plan that gives you peace of mind.   Child Education Insurance Policies  A child education insurance plan is designed for parents to secure their child's future education. Parents have to pay a certain amount of premium and they will receive a certain maturity benefit for the child's higher education.   In case of the unfortunate passing away of the policyholder (parent), the insurance company provides a lump sum payout. This financial cushion ensures the child's education expenses can still be met. The investment horizon is typically 15-25 years. Upon maturity, the policy pays out a lump sum amount that can be used for the child's education. Some plans may also offer regular payouts to help manage education expenses throughout the child's education journey.  Benefits of Combining Insurance and Investment:  Peace of Mind: Provides financial security for the child's education even in unforeseen circumstances.  Disciplined Saving: Regular premium payments instill financial discipline and help accumulate funds over time.  Potential Tax Benefits: Premiums paid towards child education plans may be eligible for tax deductions under Section 80C of the Income Tax Act (subject to change).  Key Features to Look for in a Child Education Insurance Plan  Sum Assured:  This is the guaranteed death benefit paid by the insurer in case of the policyholder's demise. Choose an amount that would adequately cover future education costs.  Maturity Benefit: Consider the future education costs and choose a plan that offers a sufficient payout to cover them.  Premium Payment Term: Select a premium payment term that aligns with your financial situation. Some plans offer flexible payment options.  Claim Settlement Ratio: Research the insurance company's claim settlement ratio to understand their track record of honoring claims.  Policy Riders:  Consider adding optional riders like waiver of premium rider, which ensures premium payments are waived if the policyholder becomes disabled.   Gold and Real Estate   Gold and real estate investing are some of the oldest and most beloved ways to invest for your child’s education in India. Let’s see why these are a great addition to the child education investment plan.  Investing in gold as a hedge against inflation   Gold is often perceived as a natural hedge against inflation. Its price has shown some tendency to rise alongside inflation. Gold can be relatively easy to buy and sell. Gold is a highly liquid asset; you can even use gold for taking on loans to meet your immediate financial needs. Various investment options exist, including physical gold, gold ETFs, and digital gold.  Like any investment, gold prices can be volatile in the short term. Consider a long-term investment horizon to benefit from potential price appreciation.  Real estate investments for long-term gains   Real estate is a great way to invest for your long-term goals. Real estate can offer significant capital appreciation over the long term, especially in growing locations. Additionally, rental income can provide a steady income stream. You can use your properties are collateral for taking different kinds of loans which makes it a good asset for rainy times.   However, investing in real estate is not easy. Real estate requires a significant upfront investment, which might not be feasible for everyone. Real estate is a relatively illiquid asset. Selling property can take time and involve additional costs.  Risks and returns associated with these investments  Gold and real estate are not typically high-risk investments. Historically, both investments have shown appreciation over the long-term horizon. Both investments do require high capital for your investment to appreciate at the same pace as inflation. They both act as a hedge for inflation.  Both gold and real estate come with their own set of risks and require research before investing. Consider your financial situation, investment goals, and risk tolerance when deciding if these options are suitable for your child's education savings plan.  Need help investing for your child’s education needs? Connect with our experts to get a personalized child education investment plan to secure your child’s future today! 

Fixed deposits are amongst India’s most loved investments. India currently has ₹103 trillion saved across 24.23 million deposits. A survey revealed that almost half of the 1.6 million investors chose FDs when they needed money within 3 years with safety.   Fixed deposits are widely loved by Indians because they offer a fixed rate of interest (higher than savings account interest rates), they are reliable, offer liquidity and allow investors to grow their wealth without added fear of risk. But there is a category within fixed deposits that Indians have not yet explored – Corporate Fixed Deposits. Let’s understand India’s best-kept investment secret with this blog!  What are Corporate Fixed Deposits?  Corporate fixed deposits, also known as company fixed deposits, are offered by financial institutions like Non-Banking Financial Corporations (NBFCs) and Housing Finance Companies (HFCs).  Shriram Finance, Bajaj FinServ, Mahindra Finance, LIC Housing Finance and PNB Housing Finance are some prominent companies that offer corporate fixed deposits to Indian investors. They are not issued by commercial banks. Here are some features of corporate fixed deposits:  Higher Returns: You can enjoy higher interest rates compared to bank FDs. Corporate FDs offer over 9% interest rates.  Flexible Interest Payouts: Earn interest at every interval. You can choose monthly, quarterly, annually, or at maturity as your payout option.  Principal and Interest Repayment: Get your principal and accumulated interest at maturity for maximum payout.  Maturity: Invest for a fixed period, ranging from a few months to several years.  Affordable Investment: The minimum investment amount starts at ₹1000 to ₹5000 for most institutions.  Special Offers: Senior citizens and women can earn special returns on these investments. They get an additional 0.25 to 0.50 depending on the institution.   Loan Collateral: Use your fixed deposit as security to access loans when in need and if your provider offers the facility.   Easy Liquidity: Corporate FDs do have a lock-in period, yet they are generally considered liquid investments. You can withdraw your money at any time.  Premature Withdrawal: Early withdrawal might incur a penalty for breaking the lock-in period.  Credit Rating: Corporate FDs rated by companies like CRISIL, ICRA and CARE. The ratings can help you determine a deposit’s quality, performance and financial health.  Corporate Fixed Deposits vs Bank Fixed Deposits   The main difference between corporate and bank fixed deposits are the interest rates, risk factor and provider. Here’s the difference between corporate fixed deposits and bank fixed deposits:  Feature Corporate FDs Bank FDs Issued Authority Non-Banking Financial Corporations and Housing Finance Companies Public and Private Banks  Interest Rates Higher Returns starting at 7-8% Limited Returns starting at 3-6% Risk Factor Moderate Low Tenure Flexible (12 months to 3 years) Flexible (7 days to 10 years) Minimum Deposit  ₹1000 -₹5000 (depending on the provider) Starts at ₹1000 Liquidity Can withdraw with penalties Can withdraw interest-free deposited amount Special Offers Senior citizens & women get addition interest rates for investing Senior citizens & women get addition interest rates for investing Eligibility  Indian investor above the 18 years of age Indian investor above the 18 years of age Safety  Not insured by any company Insured by DICGC up to Rs. 5 lakh per depositor per bank. Tax Liability  Tax Deducted at Source (TDS) at 10% if the interest income exceeds Rs. 40,000 in a financial year.  TDS is deducted irrespective of your income level for corporate FD holders.  Tax Deducted at Source (TDS) at 10% if the interest income exceeds Rs. 40,000 in a financial year.  There is an option to submit Form 15G or 15H to avoid TDS if your total income is below the taxable limit.  Benefits of Investing in Corporate Fixed Deposits Corporate fixed deposits are a valuable addition to your portfolio because of their ability to yield higher interest rates. These deposits offer an edge over bank fixed deposits and allow you to save bigger amounts in the short duration. This is an opportunity to diversify your portfolio and keep up with inflation in terms of long-term goals like your child’s education costs. The biggest benefit of investing in corporate fixed deposits is that the higher returns; you can get 7-8% interest rates on your deposited amount as compared to 3-6% with bank FDs. Let’s examine the benefits closely with this listicle:  Higher Returns: Corporate FDs offer higher interest rates than bank FDs and recurring deposits. These rates start at 7-8% depending on your provider.  Flexible Tenure: Investors can choose how long they wish to stay invested. The tenure is 12 months to 3 years.   Flexible Payout Options: You can choose to withdraw your interest at different intervals, that is, monthly, quarterly, half-yearly, yearly or at maturity.    Special Interest Rates for Women: Women depositors get an additional interest offers yearly for investing in corporate FDs.  Benefits for Senior Citizens: Senior citizens also get concessions for investing in corporate FDs.  Diversification: Corporate FDs help diversify your portfolio and reduce the risk of depending on a single asset class as an investor.  Easy to Invest: Corporate FDs can be opened from the comfort of your home. All you need is your PAN card to start your KYC and investment.  Liquidity: Corporate FDs have a lower lock-in period than Bank FDs and you can enjoy greater liquidity.   Moderate Risk: Corporate FDs offer manageable risks which are backed by reputed rating agencies.  Affordable: The greatest benefit of corporate fixed deposits is that it is open for millions of investors because of its affordability. Minimum investment amount for most corporate FDs is ₹5000.  Disadvantages of Investing in Corporate Fixed Deposits While corporate FDs are considered good investments, they are not devoid of disadvantages. Before you invest your hard-earned money, here are some disadvantages of investing in corporate fixed deposits:  Company Defaults: The biggest risk associated with corporate FDs is the fear of default. There is a chance that the issuing company may default on interest payments or fail to return the principal amount.   Creditworthiness: Every corporate FD is rated by rating agencies. Investors are urged to carefully assess the creditworthiness of the company by examining the credit ratings provided by credit rating agencies before investing.   Limit Liquidity: Corporate FDs have certain terms and conditions around withdrawal. There may be penalties for withdrawing before maturity which can limit your access to your funds.  Factors to Consider Before Investing in Corporate Fixed Deposits Here’s a checklist to help you choose the best corporate fixed deposit for your future financial goals:  Credit Rating of the Provider: The credit rating of an issuer is a crucial indicator of the corporate fixed deposit to repay its depositors. Corporate FDs are rated by CRISIL, ICRA, and CARE. A higher credit rating suggests a lower risk of default. Investing in companies with strong credit ratings minimizes the risk of losing your investment.     Interest Rates and Offers: An important factor behind choosing the right corporate fixed deposit is their interest rates and offers. You can compare the interest rates, find out if there are any special offers for existing clients, women or senior citizens and choose the investment with the highest yield.  Tenure and Payout Facility: Make sure that the tenure offered by corporate FDs align with your goal. Also consider the payout options offered by the facility so that you can withdraw your money without any hassle at the time of need.   Tax Implications: Corporate FDs are taxed in India. Tax Deducted at Source (TDS) at 10% if the interest income exceeds Rs. 40,000 in a financial year. TDS is deducted irrespective of your income level for corporate FD holders.  Minimum investment: Corporate FDs are an affordable and worthy investment for Indians. You can invest a minimum of ₹5000.  How to Invest in Corporate Fixed Deposits? If you are looking to invest in corporate fixed deposits, then all you need is the EduFund App to get started.   Download the App, set up your investment account and complete your KYC process in minutes.   Head over to the fixed deposit table under investments and choose the FD that aligns with your goal and needs.   Choose the investment account, tenure, payout option, select your bank and nominee details.   Read the terms and conditions before depositing your money.  Deposit the money and start your investment journey in under 10 mins!  With the EduFund app, you do not have to pay extra charges to invest in corporate fixed deposits. You can easily monitor your investment progress, withdraw at your convenience, and ensure your family's financial future is secure!  Download the EduFund app to start investing in your child’s future.

Rising school fees and medical expenditures and increasing living conditions have forced several parents to keep saving intensively. Child FD plans are the ideal solution for anybody searching for better options and longer-term investment products to build a foundation. Many government-recognized fixed deposit programs for children in the industry complement independent schemes offered by Indian banking institutions.  How are FDs a secure savings plan for your child’s education?  FD plans allow you to deposit your money with a bank and receive interest on it. The funds grow in line with the interest rate, and you may withdraw them at the end of the FD term. Because of the safe investments, this is a secure investment instrument popular among individuals who prefer little risk.  Minors' parents can now register an FD account on their behalf to save and develop a foundation for their children. These deposits might provide the necessary financial push to a child's hopes and educational goals. When the kid reaches adulthood, they can acquire control of the account and spend the funds as per the requirement for education.  One of the best long-term investment options, especially for customers concerned about the security of their assets, is the traditional savings model of FD investments. You may create a fixed deposit account through any bank with a set sum for a lengthy period, such as three, five, or ten years, at a specified interest rate ranging from 3% to 6.5 % each year. After the term, the capital and interest can be withdrawn. Best FD interest rates are offered basis effective dates From 2015 to 2020, the value of bank fixed deposits as a component of wealth generation in financial assets in India was calculated. In the fiscal year 2020, Indians maintained about 46 trillion rupees in bank fixed deposits as individual assets. This was a significant rise in the value of fixed deposit assets over the previous fiscal year's 44.18 trillion rupees.  Why invest in FD savings for your child's education?  The following essential reasons to invest in child FD plans entice parents greatly.  1. Higher FD interest rates:   Interest Rates from 4% to 7% can be earned on Fixed deposits for children. Furthermore, the yearly compounding of the FD bank rate results in a larger total upon maturity. High-interest rates can meet the expenses to be incurred for educational expenses.  Best fixed deposit with the Highest interest rates in 2022  Planning Fund for Your Child's Education is made easier by the best FD rate on fixed deposit investments. In India, investment terms ranging from 7 days to 10 years are available to suit your needs. 2. Flexibility in FD duration   Several FD schemes enable the investors to choose a tenure typically lengthened ten years or more. To get the gains of compounding, it is best to choose a longer term.   Account holders benefit from flexibility in Fixed Deposit periods, which includes advantages as follows. Thus, investors can plan accordingly to save for a child's education.  Competitive interest - Flexible Fixed Deposits provide more excellent interest rates than Savings Accounts, allowing you to make more money with your money.  Adjustable tenures - Varying banks provide numerous tenures for Flexi deposit programs, guaranteeing that one picks a term that best meets their financial demands.  The amount for investment - Individuals can pick the proportion they want to invest, with different banks accepting varying amounts as deposits.  Early withdrawal - Several banks permit premature withdrawals from Flexi fixed deposit accounts due to particular restrictions.  Loan provision - Depositors can typically obtain loans against flexible fixed deposits, depending on bank restrictions.  3. Assured returns   An FD account's returns are secured and assured. There are no fees associated with obtaining the maturity money. The full payment is paid as a lump sum to the recipient. The monetary benefits that an FD provides are unaffected by market volatility. A loan over gold can be undertaken for a maximum of 80% of the deposit value, while a loan obtained on the FD amount can be taken for a maximum of 90% of the initial deposit. With a fixed deposit, investors may also choose a flexible duration to invest money that meets their needs. Parents as Investors can feel guaranteed the amount they can expect, which helps to plan their child's educational dreams.  4. Low minimum deposit quantity The minimum investment is not significant enough to take away your money. You may also choose a monthly structured investing option with specific child fixed deposit plans. For most banks, the minimum FD amount is as little as 5000 rupees. Certain banks may need a minimum of 10,000 rupees if this is your first fixed deposit. Since the deposit quantity amount is not too huge, parents can start early with their FD savings to meet their future educational expenses.   Conclusion  Start saving for a child's educational fees as early as possible. Parents must also invest wisely to obtain the best results. Parents must set money away regularly to save for their child's education. The decision to invest should be based on the product's expenses, tax-efficient yields, expenses, and volatility. With a well-planned long-term approach and a well-chosen FD scheme, parents may accumulate significant capital and ensure their child's educational aspirations are funded over time.  FAQs How can I save money for my child's education?   To save money for your child's education, consider setting up a dedicated savings account, invest in education-specific savings plans or mutual funds, create a budget to cut unnecessary expenses, explore government-sponsored education savings schemes, and seek advice from a financial advisor to develop a tailored savings strategy.   Which is the best-fixed deposit for kids?   The best-fixed deposit for kids would depend on factors like interest rates, lock-in period, and terms offered by various financial institutions. It's best to research and compare options from different banks and financial institutions to find the most suitable one.  Which is the best saving for children's education?   The best saving option for children's education may vary depending on individual circumstances. Some popular choices include 529 plans (in the USA), Registered Education Savings Plans (RESPs) in Canada, and Education Savings Accounts (ESAs) in some other countries. It's advisable to research and consult with a financial advisor to find the most suitable option for your situation.  TALK TO AN EXPERT

As parents, one of our greatest responsibilities is ensuring a bright and secure future for our children. The foundation of this security lies in thoughtful and strategic planning, particularly when it comes to education and career aspirations. In a world where education costs are skyrocketing, having a robust financial plan is no longer a luxury—it's a necessity.  Financial planning for a child’s future is pivotal in achieving their educational and career goals. By taking proactive steps and investing wisely, parents can provide their children with the resources they need to pursue their dreams without the burden of financial constraints. This blog will explore the best investment plans for your child’s future, highlighting the importance of early and effective planning. We'll delve into the best child future plans, particularly in the context of India, and provide practical advice on how to plan for your child's future to ensure they have every opportunity to succeed.   By the end of this blog, you will have a clearer understanding of the best plans for your child’s future and how to strategically invest in your child's education and career, laying a strong foundation for their success and happiness.  Understanding Child Future Plans Child future plans are strategic financial blueprints designed to ensure that children have the necessary funds to meet their educational and career aspirations. These plans often include a variety of investment options, savings accounts, and insurance policies tailored to accumulate wealth over time, specifically for the child's future needs. In India, some of the best investment plans for child future include child insurance plans, Public Provident Fund (PPF), Sukanya Samriddhi Yojana (for girl children), and dedicated child education savings plans offered by various financial institutions.  Key Components of a Comprehensive Child Future Plan A well-rounded child future plan comprises several critical components:  Educational Savings: Establishing a dedicated savings account or investment plan to cover future educational expenses.  Insurance: Ensuring that there is adequate life and health insurance coverage to protect the child and the family's financial stability.  Investment: Choosing the best investment plan for child future in India, which can include mutual funds, fixed deposits, and other high-yield investments tailored to long-term growth.  Regular Contributions: Committing to regular deposits into the chosen savings or investment plan to steadily build the necessary fund.  Review and Adjustments: Periodically reviewing the plan to adjust for changes in financial circumstances, inflation, and the child's evolving aspirations.  How to Start Planning Early for Maximum Benefits? The earlier you start planning for your child's future, the more time you have to accumulate wealth through the power of compounding. Here are steps to get started:  Set Clear Goals: Define the specific educational and career milestones you want to support, such as college tuition, extracurricular activities, or international studies.  Choose the Right Plan: Research and select the best plan for your child’s future that aligns with your financial capacity and the child's needs.  Start Small, Think Big: Begin with manageable contributions and gradually increase them as your income grows.  Seek Professional Advice: Consult a financial advisor to understand the best investment plans for your child’s future and how to optimize your savings.  By initiating a child’s future plan early, you can leverage time to your advantage, ensuring that your child’s dreams are financially supported without undue stress on your current finances.  Importance of Investing in Education Funds Here's why investing in your child’s education funds for their future is important:   Rising Cost of Education Abroad  Investing in education funds has never been more crucial, especially with the rising costs of education abroad. Tuition fees and living expenses in foreign countries have surged dramatically in recent years. For instance, studying at prestigious universities in the United States, the United Kingdom, or Australia can cost upwards of $50,000 to $70,000 per year, including tuition, accommodation, and other living expenses. Without proper financial planning, these costs can impose a significant financial burden on families, potentially limiting the educational opportunities available to their children.  Securing Academic Opportunities  Investing in education funds is essential for securing academic opportunities. Access to prestigious institutions and programs is often predicated on the ability to afford their high costs. A global education can significantly enhance career prospects, providing exposure to diverse cultures, advanced technologies, and innovative learning environments. By investing early, parents can ensure that their children have the financial resources needed to attend top-tier universities and pursue specialized programs that align with their career aspirations.  Benefits of Early Investment  One of the primary advantages of early investment is the power of compounding. Compounding allows your investments to grow exponentially over time, as the interest earned on your initial investment generates additional interest. Starting early means even small, regular contributions can grow substantially, providing a significant financial cushion by the time your child is ready for college. Additionally, there are various tax benefits and incentives for education investments, such as deductions on tuition fees and tax-free interest on certain savings schemes, which can further enhance your savings.  Early investment also brings peace of mind and financial security for both parents and children. Knowing that there is a dedicated fund for educational expenses reduces stress and allows families to focus on the child's academic and personal development rather than worrying about financial constraints.  Financial Flexibility and Freedom  Investing in education funds provides financial flexibility and freedom, enabling families to meet unforeseen expenses with ease. Whether it's an unexpected fee hike, additional costs for study materials, or expenses for extracurricular activities, having a robust education fund ensures that these costs are covered without compromising the child's educational experience. This financial preparedness allows children to enjoy a stress-free educational journey, focusing solely on their studies and personal growth.  Long-Term Financial Security  Ultimately, building a robust financial foundation through education funds ensures long-term financial security. It allows parents to support their child's dreams and aspirations without compromising on quality due to financial limitations. By planning and investing strategically, parents can make sure that their children have every opportunity to achieve their full potential, regardless of the economic challenges that may arise in the future.  In conclusion, the best investment plan for your child’s future not only secures educational opportunities but also provides a pathway to a successful and fulfilling career. Early and prudent financial planning is the cornerstone of making your child's dreams a reality, ensuring that they can access the best education and career prospects available.  Fulfilling Your Child's Study Abroad Dreams In recent years, there has been a significant increase in the number of students opting to study abroad. The allure of a global education, exposure to diverse cultures, and access to world-class institutions are driving more families to consider international education for their children. Studying abroad not only broadens academic horizons but also enhances personal growth and employability in a competitive global market.  However, the financial challenges of international education are substantial. Tuition fees, accommodation, travel expenses, and everyday living costs in foreign countries can add up to an overwhelming amount. Without proper planning and savings, these expenses can become a formidable barrier, preventing many students from realizing their dream of studying abroad.  Education funds play a crucial role in overcoming these financial challenges. By investing in the best for your child’s future plan, parents can accumulate the necessary funds to support their child’s education abroad. These funds provide a structured savings approach, leveraging the power of compounding and offering tax benefits to maximize savings. With a well-prepared financial plan, families can ensure that the dream of studying at prestigious global institutions becomes a reality, providing their child with the best opportunities for academic and career success. Steps to Create an Effective Education Fund Here are some common steps you can follow to create an education fund for your child’s future -  Step 1: Assessing Your Child's Educational Goals and Aspirations  The first step in creating an effective education fund is assessing your child's educational goals and aspirations. Understand their interests, desired career path, and potential educational institutions, whether domestic or international. This insight will help tailor your financial planning to their specific needs and ambitions.  Step 2: Estimating Costs for Domestic and International Education  Next, estimate the costs associated with both domestic and international education. Research tuition fees, accommodation, travel, and living expenses for various institutions. Having a clear understanding of these costs will provide a realistic target for your education fund, ensuring you save enough to cover all potential expenses.  Step 3: Choosing the Right Investment Options for Education Funds  Choosing the right investment options is crucial for building a robust education fund. Consider the best investment plan for child future in India, such as mutual funds, child insurance plans, Public Provident Fund (PPF), and fixed deposits. Each option offers different benefits and risk levels, so it's essential to select a mix that aligns with your risk tolerance and financial goals.  Step 4: Tips for Regular Contributions and Fund Management  Regular contributions are key to the success of your education fund. Set up automatic transfers to your investment accounts to ensure consistent saving. Additionally, periodically review and adjust your investments to stay aligned with your financial goals and market conditions. Effective fund management also involves tracking the performance of your investments and making necessary adjustments to optimize growth and returns.  By following these steps, you can create a comprehensive and effective education fund that will support your child's educational dreams and secure their future.  Conclusion  Planning and investing in your child’s education is one of the most important steps you can take to secure their future. By understanding your child’s future plans, investing in education funds, and creating a comprehensive financial strategy, you can ensure that your child has the resources they need to achieve their academic and career aspirations. Early and strategic planning not only mitigates the financial burden but also provides peace of mind and financial security for your family.

Have you heard, Indian parents are willing to risk 64 % of their retirement savings to fund their children’s education abroad? Though the increase in this statistic reflects a favorable trend, it also raises knowledge of safe and credible investment alternatives to support one's future. One such option is the Fixed Deposit (FD), which comes in different types of fixed deposits, is clearly defined, promises fixed returns, and has very low risk factors associated with it.   However, there is a small catch, not all types of fixed deposits are created equal. t’s important because the choice of one affects your financial growth in a big way. This blog will help you understand the 6 types of fixed deposits and the right choices to make for high returns.  What is a Fixed Deposit? Fixed Deposit, also referred to as a term deposit, is a product wherein one invests a certain amount of money for a certain period in exchange for certain percentage interest rate. Essential characteristics of an FD are the promised return on investment which is why they are preferred by the cautious clients.  Advantages  Fixed Deposits Investment as an avenue for generating some income has the following advantages. Guaranteed Returns: Unlike stocks or mutual funds investment or any other form of investment, Fixed Deposits secure definitely an assured return that does not get affected by the market phenomena.   Capital Preservation: The principal amount is fully secure; therefore, it will suit the risks-averse investor perfectly.  Low Risk: FDs are with low risk profile which ensures investors to park their funds during stock market fluctuations.  2. Types of Fixed Deposits It is vital to consider the various types of fixed deposits to be in a position of choosing the right instrument to suit its objective. Now, let’s discuss the 6 various types of Fixed Deposits that exist for Indians. 2.1 Cumulative Fixed Deposit   Cumulative fixed deposits reinvest interest gained, taking advantage of compound interest. This strategy can considerably increase returns over time since the interest earned is added to the principle, which yields more interest.  Such types of Fixed Deposits are suitable for those investors who wish to accumulate money over a long period of time because the interest is compounded and results in massive returns.  Interest Payment: Compounded and paid at maturity.  Best For: Long-term savers looking for wealth accumulation.  2.2 Non-Cumulative Fixed Deposit   The FD scheme provides attractive interest rates for both, cumulative and non cumulative fixed deposit customers. The Non-Cumulative Fixed Deposit pays the interest amount back at prior time periods which can be monthly, half-yearly or yearly. This is one of the popular types of fixed deposits for any person especially in his or her dusk years, that is a retiree who wants a fixed ensure from his or her investment.   Interest Payment: To be disbursed on standard periods.   Best For: Low active investors or those who require for periodic use.   2.3 Flexi Fixed Deposit   A Flexi Fixed Deposit actually takes a little from both the savings account and the fixed deposit. They also have a ‘sweep-in’ facility under which any amount available in your savings account is automatically credits to the FD to fetch better interest rates. This gives cash availability while at the same time guaranteeing that your surplus cash does not stay unutilized.  Interest Payment: Depends on how much has been swept into the FD.   Best For: Investors seeking a combination of flexibility and higher returns, as distinct from stakeholders that seek capital appreciation.   2.4 Standard Fixed Deposit   Standard Fixed Deposit is one of the simplest types of Fixed Deposits where a fixed interest rate is provided for the selected fixed term. They are popular because they are easy to understand and not prone to failure, and therefore, best suitable for newcomers to investing.   Interest Payment: Fixed rate for a set period.   Best For: Banking and non-banking financial institutions requirements seeking safer security investment alternatives.   2.5 Tax-Saving Fixed Deposit   The concept of Tax Saving Fixed Deposit is a perfect meal for those who are much worried about saving tax under Section 80C of income tax regulation. It has a minimum maturity period of five years, and those planning on investing for a limited period, it is preferable since it will help in minimizing taxes as earnings a steady income.   Interest Payment: Cumulative, fixed for a period of 5 years, compounded annually.  Best For: Those in search of saving on taxes.   2.6 Fixed deposit for senior citizen  Especially for customers who are 60 years and above, the Senior Citizen Fixed Deposit has higher interest rates than most ordinary FD prices. This makes it favorable for risk-diversifying retirement income since it guarantees both safety and reasonable income return for the elderly.  Interest Payment: Higher than regular FDs.  Best For: Senior citizens looking for stable income with better returns.  2.7 Corporate Fixed Deposit   Corporate FD is available with the companies and Non-Banking Financial Companies instead of bank. While these FDs may earn one more returns than the others, they possess an extra degree of risk. It must be checked how credible the issuing company is before investing because your investment’s safety depends on that company’s credibility.   Interest Payment: Generally, prime rates are usually higher than bank fixed deposit rates.   Best For: High return chasers who are willing to take more risk in their investment.   3. How To Go About Selecting The Right Fixed Deposit The complexity of a fixed deposit relies on factors such as maturity, flexibility, and the risks you are ready to take. Here are some points to consider:   Investment Goals: Long term or short term do you plan to use the money? A Cumulative FD can be suitable if you’re saving for a long-term goal, in contrast, a Non-Cumulative FD may be most appropriate if you require immediate sources of regular income.   Need for Liquidity: If you require regular to your money, a Flexi FD will provide exactly what you need – the ease of a savings account with more benefits and an even better return. Risk   Risk Tolerance: Most FDs are relatively safer; however, a Corporate FD may be more rewarding but charged with risk.  4. How To Open A Fixed Deposit Account Fixed Deposit account can be opened in a very easy way. Here’s a step-by-step guide:   Select a Bank or Financial Institution: Compare interest rates as well as FD options offered by the banks and NBFC’s.  Choose Your FD Type: Depending on your monetary needs, choice of fixed deposit instrument for investment and liquidity considerate, choose the most appropriate type of fixed deposit.   Submit Required Documentation: Any bank would generally call for identity proof, proof of the address of residence, and a PAN card.   Deposit the Amount: After documentation confirmation, you need to add funds and your FD will be activated and ready to be used. Some of them also provide this account opening online by using the bank’s mobile application as well as the bank’s website. Conclusion  Fixed Deposits are one of the most effective ways of protecting your money and the good thing is that you get assured return. There are many types of Fixed Deposits, including Cumulative FDs, Non-Cumulative FDs, Flexi FDs, and Tax Saving FDs, and it is prudent to choose one based on one's investment risk, goals, and perseverance.  For instance, if you are planning for retirement, banking on regular income, under tax savings drive, or just seeking to build wealth over time; there is a fixed deposit to suit your needs. In defining your financial growth path, it is important to comprehend these 6 powerful types of fixed deposits. Fixed Deposits are a great way to safeguard your financial future. EduFund helps its customers make better financial selections that will help them achieve their goals. Contact EduFund now to learn more about Fixed Deposits and allow us to assist you in selecting the best FD investment for maximum revenue success and financial stability. 

Mutual Fund vs FD is a long-standing debate in the financial arena. While one offers fixed and stable returns, the other offers a chance at wealth generation.  Fixed Deposits are the most popular and favored investment mode among Indian households. And why not! It feels safe to have an investment that guarantees a risk-free return. An FD allows you to put a lump-sum amount with the bank with a fixed interest rate and lay back for a good long period. Once the deposit matures, you can withdraw your money and enjoy the interest earned over the selected period.  Mutual Funds enable you to pool your money and earn a return. Every Mutual Fund has a portfolio manager who invests your money into stocks according to your risk appetite and ROI. Therefore, the return on Mutual Funds depends on the market conditions. Unlike fixed deposits, it does not have a lock-in period. Choosing the right investment journey for your child is the primary concern for every parent. If you are confused between Mutual Funds and Fixed Deposits, then look at both these investment options from various standpoints.  Inflation-adjusted rate of return  Inflation is the most crucial yet commonly ignored aspect of investment. It is the rate at which the value of your money decreases with time. Inflation reduces your purchasing power and creates financial instability.  In India, FDs do not offer an inflation-adjusted rate of return. The maximum rate of interest on FDs is 5% to 7%. However, the inflation rate in recent years has been recorded somewhere between 4-6%.  Inflation-adjusted return that you receive adds zero value to purchasing power. Instead, if the inflation rate goes higher than the interest rate, you will likely lose the money you have invested.  On the other hand, Mutual Funds are highly responsive to the market conditions. Also, they come with the benefit of compounding on SIP investments. You can start with an amount as low as Rs. 500, and your money will grow every month. Mutual Funds, especially equity-based mutual funds, are influential enough to adjust the impact of inflation on your money.  Risk Factor Fixed deposits feel safe on the surface because they are government-regulated. But, when it comes down to investing in your child’s education, the risk against this safety goes scary. The need of the hour is to grow your money. FDs may keep your money safe but add nothing to growth.  Mutual funds, however, allow you to mitigate the risk through portfolio diversification. You can identify your risk appetite and stash your money accordingly. Moreover, you have experts who guide you through your investment journey and help you attain your financial goals.  Tax Implications Tax payable on fixed deposits is subject to the Slab rate under the Income Tax Act, 1961, as amended from time to time. Also, the interest that you earn on FDs is tax-exempt under sec 80 TTB to the extent of Rs. 50,000.  Whereas, Mutual Funds listed under Capital Gains are taxable. The tax rate would vary depending on the Mutual Fund and its income. The duration for which the Mutual Funds are held before the sale is significant for taxation purposes.  Source: Freepik Liquidity  Keeping the persistent trend of Education Inflation in mind, it isn’t wise to lock your money into Fixed Deposits. Once you make a choice, you can not withdraw until maturity.  Mutual Funds come with no lock-in and are highly liquid. You can choose between a lump sum and a SIP investment. It enables you to start small but earns high market-based returns. You can take away your money at will! What are mutual funds? Read More Wealth generation With the pace at which the colleges are upscaling their fee structures, it has become challenging to keep up with the cost. Therefore, parents don’t just have to save but ensure wealth accumulation to pay for the price.  Unfortunately, fixed deposits fail here. The ultimate return you receive from an FD would fall far below the level of return you need. However,  if planned early and the right way, mutual funds are incredibly potent to help you reach your target. All you need to do is make the best out of the investment. Start early and extract the magic of compounding! Parents need to look at the broader picture when choosing an asset for their child’s education. Due to their low Inflation-adjusted return, fixed deposits are likely to fail as productive assets. And, it doesn’t matter how safe FDs are if they don’t help you meet your desired goals.  Mutual Funds offer you a safer opportunity to invest in stocks, especially if you don’t have the financial knowledge. Moreover, you don’t have to stress your pocket to invest. All you need is the magic of the 3Ps: planning, patience, and persistence! FAQs What is a Mutual Fund? A mutual fund is a financial trust that collects funds from investors and invests them into different instruments like stocks, bonds, and other money market instruments. How to invest in a Mutual Fund via the EduFund App? Step 1: Log in to the EduFund website or the EduFund app. Step 2: Complete your KYC and move ahead to create your investment account. Step 3: Choose the option of mutual fund investments. Step 4: Analyse your risk profile on the app by answering your household income and expense, the number of dependents you have, the highest level of maturity you have in terms of investments, your period of investment, and similar questions. Step 5: After answering the above questions, you will know what type of investor you are and the degree of risk you might be willing to take. The EduFund website or the EduFund app will suggest some mutual funds you might want to invest in, with a recommended SIP value. Step 6: Choose the fund and start investing. What is an FD? Fixed Deposits are the most popular and favored investment mode among Indian households. An FD allows you to put a lump-sum amount with the bank with a fixed interest rate and lay back for a good long period. Once the deposit matures, you can withdraw your money and enjoy the interest earned over the selected period. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Did you know that 40% of Indian investors prefer fixed deposits over mutual funds, yet only 15% fully realize the long-term growth potential of mutual funds?  While FDs are MCs with assured returns, mutual funds hence open channels for wealth generation through marked based products.   To introduce you to what to expect in this blog, the basis for understand ing the comparison between mutual funds vs fixed deposit will be grounded on the five critical factors so that you make an informed decision to enable you to grow your wealth in 2024.  1. Returns: Fixed and Market-Linked Growth  In terms of returns, mutual funds offer market-related returns, which implies the value of investment can more than triple over long periods especially in equity mutual funds, which on average give around 8–12% annually. On the other hand, fixed deposits provide a fixed interest rate—at present around 6- 7% which does not change with the market conditions.    Example: Supposing you invested ₹ one lakh in a mutual fund which pays 10% each year, your money could reach up to ₹ one lakh sixty-one thousand in five years. But the same investment if kept in an FD with 6% rate will fetch approximately ₹1,34,000 in the same period.   2. Risk and Return: Fixed Income vs. Stocks Fixed deposits are beneficial because they give a guaranteed income. When you fix a rate, you get back the same return on the option at maturity regardless of fluctuations in the market. Any investors who are very cautious should consider investing in FDs because of this reason. When comparing Mutual Funds vs Fixed Deposits, mutual funds, especially equity funds, have more risk because their value is pegged on market prices. Although their returns are higher, they are associated with risks that are not stable in the market, thus the investors willing to take the risk should invest in these structures.  3. Liquidity In terms of liquidity, Mutual Funds vs Fixed Deposits shows mutual funds stand much higher than that of fixed deposits. Anytime you can encash your units without any charges except a few schemes such as ELSS which has a lock-in period of 3 years. RDs, on the other hand, reduce the effective rate by giving premature withdrawal penalty, which is not usually appreciated by dealers. If there is an issue with liquidity, then mutual funds is a better option.   4. Taxation Tax Efficient Gains over Taxable Interest One more difference between mutual funds and fixed deposits is taxation also. The interest accrued in the fixed deposits is further taxable depending on the tax bracket percentage which ranges between 10% and 30%. In contrast, mutual funds provide even higher tax benefits of returns on the money you invest with them. For instance, the LTCG on mutual fund investments in equities is charged at a flat rate of 10% for all gains higher than ₹ 1 lakh per year; further, most debt funds also benefit from the indexation on the LTCG for long term investments.   5. Investment Goal Alignment: Short-Term vs. Long-Term Mutual Funds vs Fixed Deposits shows that fixed deposits are ideal for most short-term financial targets because they promise pre-set and certain returns. For example, it is common to mention it in the event of an emergency or for saving for a certain project that is within a few years’ time frame given the stability of an indexed mutual fund.  Equity funds in particular are not ideal for short term goals such as holidays or emergencies, therefore they should not be used as an investment product when formulating goals like retirement, college funding or building wealth. Long-term investors benefit from compounding in addition to market gains.  Mutual Funds vs Fixed Deposits Comparison Table Factor Mutual Funds Fixed Deposits Returns Market-linked (8-12%) Fixed (6-7%) Risk Medium to High Low Liquidity High (No penalties on withdrawal) Low (Penalties on early withdrawal) Taxation Tax-efficient (10% LTCG) Interest taxed as per income slab Investment Goal Long-term growth Short-term or guaranteed returns Mutual Funds vs Fixed Deposits How To Choose The Right Investment? They may be used as a source of comparison when the investor is in between two choices of investing in mutual funds and fixed deposits. Finally, if you want an almost risk-free investment coupled with sure shot returns, then fixed deposits are your best bet. But if you don’t mind bearing market risks with an expectation of higher returns then long-term mutual funds will be more beneficial.   Conclusion   While there are times when the interest rates might be low in fixed deposits, you may end up being interested in mutual funds for the long run. Each choice has its positive side, yet it is significant to identify the major characteristics of Mutual Funds vs Fixed Deposits that will serve as a major key to the decision of which form of investment is the most suitable for the future. Do not let your money lie in the form of capital – seize the opportunity in this market to invest in mutual funds. Evaluating Mutual Funds vs Fixed Deposits can be the key to identifying which investment is better suited to your long-term financial goals.  Are you ready to make the right decision for your financial situation? Whether you are planning to put your money in fixed deposits to safely park the money or put it in mutual funds for making your money grow, it is always sensible to prepare. EduFund has the relevant tools and materials to compare Mutual Funds to Fixed Deposits, and to choose the right investment process for you.   Contact EduFund today and begin to map out financial progress for yourself! 

Sector funds are mutual funds that invest in companies that belong to a specific sector of the economy. Sectors like Healthcare, Finance, Real Estate, Energy are usually covered by AMCs to expand the market and diverse investors’ portfolio. Sector funds can be a great addition; they follow a focused strategy towards investments. These funds capitalize on the growth and performance of the specific sector by investing predominantly in companies operating within that sector.   Sector funds can also potentially offer high returns when timed wisely. For example, during the pandemic, the pharmaceutical sector and its companies saw prosperity, which resulted in high demand for these companies and increased returns for their investors. Sector funds employ a tactical approach to investing and allocate funds so that the investors can seize the market trends and global political shifts.   Sectoral funds are more effective for long-term investors. Investors who are hoping to invest for long-term goals like child’s education expenses or college should consider this type of investment fund. This is because sectoral funds are high risk funds because they lack diversification within the sector, they require careful market timing so that the investor can determine when to enter and exit the fund, and they can be volatile to changing economic and socio-political sphere. Hence, investors saving for long-term goals and planning to stay invested for the long haul can consider this type of fund to add to their portfolios!  What are Sector Funds? Sector funds are equity mutual funds that invest in companies belonging to a specific sector. Investors get targeted exposure to a specific sector of the economy like healthcare, energy, IT, infrastructure, real estate and many more.   For a sector fund to qualify as one, fund managers need to invest 80% of the fund’s total assets in equity and equity-related instruments of a particular sector. Sectoral funds invest in companies of all sizes from large-cap to mid-cap to small-cap. For example, a sector fund with focus strategy on energy sector would invest in companies such as Reliance Industry, NTPC, ONGC, Adani Green Energy, Tata Power and more. Similarly, a sector fund focused on apparel and accessories would focus on companies that thrive in this sector such as Titan, PC Jeweller, Kaylan Jeweller, Campus and more!    Characteristics of Sector Funds: Here are some characteristics of a sector fund to help you determine if it's a good investment for your goals:  Targeted exposure: Sector funds offer investors concentrated exposure to a specific industry or sector, allowing them to capitalize on the growth potential of that sector.  Higher volatility: They are focused on a single sector like energy or healthcare, sector funds can be more volatile than traditional mutual funds. The performance of the fund can be heavily influenced by the performance of the underlying sector.  Potential for higher returns: If the chosen sector performs well, sector funds can generate higher returns than traditional diversified funds. However, if the sector underperforms, the fund's returns may be lower.  Sector-specific risks: Sector funds are subject to sector-specific risks, such as regulatory changes, economic downturns, or technological disruptions that can negatively impact the performance of the sector.  High risk: Sector funds invest in a specific sector and lack diversification which means these are some of the riskiest funds to consider.   Long term investment: A particular sector may take years to thrive so investors who are planning to invest for long-term goals like their child’s education can consider sector funds. An investment horizon of 5-10 years is good for sector funds.  Who Should Invest in Sector Funds? Here’s how you determine if sector funds investment is right for you and your goals:  Investors with high risk tolerance: Due to their concentrated nature and limited diversification, sector funds can be more volatile. Investors who are comfortable with potential fluctuations in their investments are more likely to benefit from sector funds.  Investors who are looking for long-term growth potential of a specific sector: Investors who have a strong conviction in the future prospects of a particular industry or sector can use sector funds to capitalize on that growth.  Investors who are prepared to accept potential losses: Sector funds are not immune to downturns, and if the chosen sector underperforms, investors may experience losses.  Investors who are seeking targeted exposure: Investors who want to focus their investments on a specific industry or sector, rather than a broad range of assets, can use sector funds to achieve this goal.  Investors who are looking for long-term investments: Investors who are looking to stay invested for 5-10 years and more should look at sector funds. Sectoral growth can take time and hence, staying invested is key to seeking potential growth.   However, sector funds may not be suitable for investors who:   Are risk-averse: If you are uncomfortable with the potential volatility of sector funds, it may be better to invest in more diversified options.  Lack knowledge about the sector: Investing in sector funds without a thorough understanding of the underlying industry can increase the risk of making poor investment decisions.  Are seeking short-term gains: Sector funds are typically more suitable for long-term investments, as the performance of a sector can fluctuate significantly over shorter periods.  Sector Funds vs Traditional Mutual Funds Feature Sector Funds Traditional Mutual Funds Investment Focus Specific industry or sector Diversified across multiple industries and sectors Volatility Higher Lower Potential Returns Higher (if sector performs well) Generally lower Risks Sector-specific risks Diversified risks Suitability Investors seeking targeted exposure to a specific sector Investors seeking diversified exposure across multiple industries Sector Funds vs Traditional Mutual Funds Benefits of Investing in Sector Funds for your Child’s Education Sector funds can also potentially offer high returns when timed wisely. Here are some reasons why adding them to your long-term investment portfolio can be beneficial.   Time horizon: Sector funds are well-suited for long-term investments, aligning with the goal of saving for education. If you are saving for college, you are probably planning to stay invested for 8-10 years which can be a good time horizon for sector funds.   Industry-specific focus: Sector funds concentrate on specific industries or sectors, allowing you to capitalize on the growth potential of a particular field.  Potential for outperforming the market: Sector funds can potentially outperform broader market indices if the chosen sector experiences strong growth. These funds can potentially beat the rising education inflation and help you send your child off to college debt-free.  Potential for higher returns: If the chosen sector performs well, sector funds can generate higher returns than traditional diversified funds. However, if the sector underperforms, the fund's returns may be lower.  How to Invest in Sector Funds? If you are looking to invest in sector funds, you can use the EduFund App to get started. Here’s a stepwise guide:  Download the EduFund App and create an investment account by completing your KYC process.  Explore the variety of sector funds that align with educational goals.  Consider factors like the fund's expense ratio, minimum investment amount, and lock-in period.  Select the sector fund that best suits your child's future educational needs and risk tolerance.  Place an SIP or lumpsum order for the selected fund and start investing for your child’s education.   Risks of Investing in Sector Funds Sector funds carry high risk! Sector funds are heavily invested in a specific industry or sector, making them more susceptible to fluctuations in that particular area. If the sector experiences a downturn, the fund's performance can decline significantly.   Before investing in a sector fund, it is essential to conduct thorough research and due diligence to understand the fund's investment strategy, portfolio holdings, and performance history. You can also consult a financial advisor to help you understand whether it’s the right fund for you and how much you should invest.   This is all about sector funds. If you wish to invest in sector funds for your child’s education or for any other long-term financial goals, then consult a financial advisor before starting. You can connect with our experts on the EduFund app before starting an investment goal for your child’s education.