Pros and Cons of using abroad education loans to finance studies

Pros and Cons of using abroad education loans to finance studies

The expense of attending your dream university is already high due to the rising cost of education. Recent research found that the price of contemporary education is rising quickly, on average, by 12 – 18% annually. Given this, obtaining an education loan for your child's future is unquestionably the finest choice without sacrificing the caliber of their education. This blog will discuss the pros and cons of using education loans abroad to finance your studies. Pros of using education loans abroad to finance studies The following are the benefits of study abroad education loans:  1. Tax benefits on education loans  One of the most significant benefits of an education loan taken out for courses in India and abroad is the tax benefit. Spending less money and giving your kids a brighter future is a fantastic method. This is one factor that favors student loans over self-financing for educational expenses. Section 80E of the Income Tax Act of India allows applicants for education loans to deduct interest paid on loans, decreasing the interest rate. The deductions allowed by this section may be made for eight consecutive years, starting with the year the loan is taken out and continuing until the loan's interest is entirely returned, whichever comes first. It should be emphasized that these deductions only apply to loans obtained from financial institutions that have been gazetted. Any Indian citizen may deduct the interest paid on any school loans they have taken out for themselves, their spouses, their children, or any other children over whom they have legal custody. It should be emphasized that Section 80E tax deductions do not apply to student loans obtained from friends and family. 2. Upto 100% expense coverage During their higher education abroad, students frequently incur additional costs in addition to the tuition fee. One-time registration fees, library dues, lab and equipment fees, housing costs, and other personal expenses are a few of these costs. Most students have access to full education loans, which also give them money to live healthily while studying abroad. This frees parents and students from worrying about money, and fast tuition payment to the university or institution ensures that a student's study term will go without any problems. 3. Education loans will help you build your credit score Yes! Students and recent graduates may improve their credit ratings by wisely using student loans. Student loans may be the only opportunity to establish their credit history because many college students need other payments or debts attached to their identities. Throughout the remainder of your life, having a decent to an exceptional credit score will be helpful when you apply for jobs, credit cards, apartments, and even purchase a house. But to take advantage of these fantastic advantages, you must use student loans properly.  https://www.youtube.com/watch?v=4gTQkdePOWM&feature=youtu.be&ab_channel=EduFund Cons of using education loans abroad to finance studies The following are the few disadvantages of study abroad education loans:  1. You have to start your career with debt You will begin your adult life in debt if you rely on student loans to pay for your education. Yes, having a college degree may enable you to earn more overall than someone with merely a high school graduation. However, depending on how much you borrow, it might be difficult for the first few years after college, particularly if, like millions of other college graduates, you need help finding a job that compensates enough to cover your expenditures.  2. Defaulting on your education loans can tank your credit score Missing payments, defaulting on student loans, and taking on more debt than you can afford to repay after graduation can all have a major negative effect on your credit score or co-borrower's credit score. The worst case scenario is defaulting since it indicates that you could not repay the loan you received from a lender. 3. Education loans might not cover all your expenses Most federal student loans have yearly borrowing caps, and some private lenders could also. You might still need to hunt for additional sources of income to finish your degree, depending on the cost of tuition, fees, materials, lodging and board, and other expenditures. How to choose the right education loan for higher education?  Research and thorough comparison are necessary while selecting the best education loan for higher education. Before choosing an education loan, compare several institutions' interest rates and repayment options. You may also get in touch with an expert. They can assist you in negotiating a lower interest rate and organizing your repayment plan to help you save money. Before taking out an education loan, ascertain how much money you require to fund your higher education. Our College Cost Calculator will help you determine how much additional money you'll need to live comfortably in your college city by providing information on the tuition and living costs there. And make sure you've done your research, decided which course of action is best for you or your child, and then finalized a sound education strategy to create a bright future! Consult an expert advisor to get the right plan TALK TO AN EXPERT
UTI Banking & Financial Services Fund

UTI Banking & Financial Services Fund

UTI is one of the pioneers of the Indian Mutual Fund Industry. With over Rs 2.4 lakh crore, the AMC is one of the most trusted names in the mutual fund space. The AMF offers products across asset classes.   Let us talk about the flagship product – UTI Banking & Financial Services Fund.  About the UTI Banking & Financial services fund  The investment objective of UTI Banking & Financial services fund  The objective of UTI Banking & Financial Services Fund is to generate long-term capital appreciation by investing predominantly in equity and equity-related securities of companies/institutions engaged in banking and financial services activities.  Investment Process of UTI Banking & Financial services fund  This fund has a bottom-up approach to stock picking. It looks for companies that are having sustainable growth models and are well-capitalized. It focuses on well-managed companies with a balance between compounders and turnaround opportunities.  Portfolio composition of UTI Banking & Financial services fund  The portfolio holds the major exposure in large-cap stocks at 89%. The major sectoral exposure is to financial services and banking companies, which comprise around 96% of the portfolio as this is a sectoral fund. Note: Data as of 31st Dec 2022. Source: UTIMF  Top 5 Holdings of UTI Banking & Financial services fund  Name Sector Weightage % HDFC Bank Ltd. Financial Services 19.25 ICICI Bank Ltd. Financial Services 17.7 Axis Bank Ltd. Financial Services 9.74 State Bank of India Financial Services 9.25 HDFC Ltd Financial Services 6.42 Note: Data as of 31st Dec 2022. Source: UTIMF  Performance over 19 years  If you would have invested Rs. 10,000 at the inception of the fund, it would be now valued at Rs. 1.28 lakhs. Note Performance of the fund since launch; Inception date - 07th April 2004. Source: Morningstar The fund has given consistent returns and has outperformed the benchmark over the period of 19 years by generating a CAGR (Compounded Annual Growth Rate) of 14.59%.  Fund manager  Amit Premchandani: is Senior Vice President & Fund Manager - Equity. He holds PGDM from IIM Indore and CFA charter from CFA Institute, USA. He has completed CA from ICAI. He graduated with a Bachelor of Commerce in 2001 from Heramba Chandra College, Kolkata. Amit joined UTI AMC in 2009 as Senior Research Analyst  Preethi R S: is an Associate Vice President and research analyst in the domestic Equity Division of UTI Asset Management Company Ltd. She tracks the non-banking finance and automobile-ancillary sectors.  Who should invest in UTI Banking & Financial Services Fund?  Investors looking for a portfolio investing in companies engaged in banking and financial services activities.  Investors are willing to have a tactical allocation to their overall equity portfolio.  Why Invest in UTI Banking & Financial Services Fund?  The Fund predominantly invests in stocks of companies engaged in the banking, insurance, and financial services-related activities of the Indian economy.  The Fund endeavors to invest across the existing and evolving sub-sectors in the space.  Time Horizon  One should look at investing for a minimum of 5 years or more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The UTI Value Opportunities Fund is one of the oldest funds with a proven track record of 19 years and has delivered 14.59% CAGR consistently. Thus, it is best for investors looking for a tactical allocation with a sectoral concentration in banking and financial services. 
Investing for the unborn child

Investing for the unborn child

Investing for the unborn child is not a luxury but a necessity because you need to be prepared for the additional expenses that will occur as soon as your child is born. Investing for an unborn child is quite different from investing for newborn babies or minor kids because an unborn child does not legally exist before their birth; hence how can you invest something in their name? Although unborn children cannot own bank accounts or properties until they arrive in this world, there are provisions in place for parents interested in saving and investing in the child’s welfare. Why is it necessary to invest in the unborn child?  Children are a bundle of joy that spreads happiness around them even if they are in their mother’s womb and are yet to take their first breath. In these turbulent times, when inflation is at its peak, and the cost of living is also very high, it is normal for parents to be concerned about the future of their children.   Parents need to discuss beforehand how many children they want and also, most importantly, how many children they can afford to have in this expensive environment. Other important queries that need to be addressed before planning a family are the costs involved in raising their child, the contribution of each parent, and how they will deal with all the additional expenses successfully.  Children need care and pampering, and it is not only about the love you shower on the unborn child or the baby when it is born but the various related expenses that you have to incur on the materialistic things like food, clothes, and medicines, etc. and education when they join Montessori or play schools or a preschool and so on.  Thus, planning and investing for the unborn child from the word go will help to meet the related expenses and eventually result in a better future. Investment schemes for an unborn child 1. Opening a savings account Bank accounts cannot be opened for an unborn child as they are not legally present, but either/both mother and father can do so in their name. Several banks in India give parents the option to open an account in the name of the father or mother and add the name of the child after birth or later on when the child gets older.  This account acts as a joint account where the adult parent is the account holder who operates in the name of their minor child, who is the secondary account holder.  Parents can encourage their friends and relatives to provide cash gifts instead of typical gifts for the baby during special occasions like the baby shower or the baby registry. The total amount can be later deposited in the account of the child.  This way, all the cash gifts the baby receives in the later years can also be deposited in that account so that it grows and creates a good sum that can be used for either education or any other important buy.  2. Custodial accounts Parents can set up custodial accounts for the baby under the UTMA account. The funds are controlled by the parent or the operator of the custodial account, and all the related decisions are theirs. The funds in the UTMA custodial accounts are invested for growth purposes and are generally used for big expenditures like the child’s education. Initial gains in the UTMA account are tax-free, and the subsequent gains are taxable up to a certain limit.  The UGMA account is also a tax-efficient custodial investment account that enables adults to hold assets for their children until they are of age. As soon as a UGMA account is set up, the adult has to appoint a child beneficiary who becomes the legal owner of every asset invested from that time onwards. The financial decisions are made by the account’s custodian, who is responsible for managing the account on behalf of the child until they come of age and can handle the account themselves. 3. Trust Funds Trust funds can be opened for future generations and are considered an excellent investment for the coming babies. Trust funds prove beneficial while planning for future expenses like tuition fees for college or overseas higher education.  Conclusion Parents are often worried about the financial future of their kids because living life to the fullest is an expensive business. Planning and investing in the unborn child helps to create a nest egg that will keep on growing and bearing fruits year after year.  Take the help of investment experts on the Edufund App to know more about the investment opportunities for your unborn child so that once they are born, they can experience a better life. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Parent's guide to education loans

Parent's guide to education loans

The parents’ guide to education loans helps to make sense of the loan process and understand how they can mold the terms and conditions to suit their specific needs and requirements.  If you ask an Indian parent about his priority then the obvious answer will be providing a good education for his children. With education inflation at 11% - 12% and expenses escalating consistently, it is no longer a reality without the help of education loans.   Even after creating a sizable education corpus for their children, parents can fall short of the money. Taking out an education loan can bridge the shortfall, provide quality education, and offer tax benefits.  What is an Education loan? An education loan is a loan taken out for completing the studies. It can be either for studying in the home country or abroad at a foreign university.  The education loan includes tuition fees, caution deposit, travel expenses, cost of books, uniform if applicable, laptop if required, hostel fees, food expenses, and in some cases traveling and other miscellaneous expenses. https://www.youtube.com/watch?v=4gTQkdePOWM&feature=youtu.be&ab_channel=EduFund Guidelines for parents taking education loans Parents often worry about the burden of repaying the education loan at the beginning of their children’s careers but in reality, it is a good thing. Repaying the loan amount on time will create good credit scores and instill financial discipline in the students. Let us go through some of the important things that parents taking education loans need to look for beforehand.  1. Loan interest How much interest you have to pay on the education loan matters a lot and this is the first thing parents should find out. Private lenders, banks, and NBFCs are the perfect choices for an education loan hence parents should shortlist three to five lenders with the minimum loan interest. If the student has exceptional grades or has been admitted to a STEM course in a reputed and ranking university then parents can talk to the financial institution of their choice because banks often reduce 1% interest in such cases.  Choose from the multiple banks and NBFC partners at the Edufund App for higher loan amounts and lower interest rates.  2. Time or duration of the loan The lenders have extended the duration period from 7 years to 15 years. This means a minimum EMI which is easy to repay even if the initial salary of the applicant is low. Parents can choose the longest possible loan repayment duration as there is no penalty.  3. Collateral for the loan Defaults are very common in education loans hence financial institutions or lenders insist on the collateral if the loan amount exceeds INR 7.5 lakhs. The collateral can be fixed deposits or houses etc. Collateral often reduces interest costs. Take an education loan through the Edufund App as the hassle-free loan process does not require collateral for an amount up to INR 75 lakhs.  4. Co-applicant  Financial institutions insist on a co-applicant or guarantor so that the risk is divided in case of late payment or default. Parents, guardians, or elder siblings working in a reputed company should serve as guarantors or co-applicant as it will help in reducing the interest cost.  5. Margin money The margin money often depends upon the loan amount and the place where the university is located. It is better to know beforehand the contribution of the lender and how much margin money the parents will have to pay. Banks often charge 5% for loan amounts above INR 4 lakhs for studying in India and 15% for overseas studies.  Parents need not pay the margin money if they take out an education loan from the Edufund App.   6. Moratorium period The moratorium period lies between 6 – 12 months after the course study and it is important for parents to sort out beforehand that if the interest is paid in this period then the EMI will be based only on the principal amount and if not then it will be added up and EMI will be loan plus additional interest. 7. Documentation The parent’s guide to education loans emphasizes proper documentation. It is necessary to submit all the related papers and check the details with an expert to avoid any discrepancies.  8. Start the process as early as possible The loan application process takes time whereas the universities will give you little time to deposit the fees. Parents should start the process as early as possible to avoid any mishaps later on.  Conclusion Quality education ensures breaking the shackles of poverty with the help of a good job but it comes at a cost. The parent's guide to education loans refers to the guidelines that encourage parents to take the necessary step and apply for the loan.  Parents can apply for education loans through the Edufund App. Use the education calculator on the site to know about the required loan amount and talk to the counselors to compare loan offers and get a clear picture of why taking the loan makes sense. The best thing is that parents will not have to pay any fees for the consultation. Consult an expert advisor to get the right plan TALK TO AN EXPERT
DSP Strategic Bond Fund

DSP Strategic Bond Fund

One of the largest AMCs in India, DSP has been helping investors make sound investment decisions responsibly and unemotionally for over 25 years. DSP is backed by the DSP Group, an almost 160-year-old Indian financial giant. The family behind DSP has been very influential in the growth and professionalization of capital markets and the money management business in India over the last one-and-a-half centuries  Let us talk about the flagship product – DSP Strategic Bond Fund.  About DSP Strategic Bond Fund  The investment objective of the DSP Strategic Bond Fund  The primary investment objective of the Scheme is to seek to generate optimal returns with high liquidity through active management of the portfolio by investing in high-quality debt and money market securities.  The investment process  of the DSP Strategic Bond Fund DSP Strategic Bond Fund invests in high-quality government & corporate debt securities. It is a highly liquid portfolio with actively managed portfolio duration based on future interest rate movement predictions (lower duration in rising interest rates market and vice versa).  Portfolio composition of DSP Strategic Bond Fund The portfolio major exposure of more than 30% in IND A1+ to maintain liquidity. The major instrument exposure is to Money market instruments at around 53%. Note: Data as of 31st Dec 2022. The pie chart shows the credit rating profile of the fund’s portfolio holdings. The bar graph shows the Instrument Break-up of the fund’s portfolio. Source: dspim.com  Top 5 Holdings for DSP Strategic Bond Fund Name Category Weightage % TREPS / Reverse Repo Investments / Corporate Debt Repo TREPS 15.22 HDFC Bank Ltd. Money Market 9.88 Bank of Baroda Money Market 9.88 ICICI Bank Ltd. Money Market  9.72 State Bank of India Ltd. Money Market 9.58 Note: Data as of 31st Dec 2022. Source: dspim.com  Performance over 15 years  If you would have invested 10,000 at the inception of the fund, it would be now valued at Rs. 27,389. This fund has outperformed the benchmark in all time horizons.  Note: Performance of the fund since launch. Inception date – May 9th, 2007. Source: Morningstar The fund has given consistent returns and is in line with the benchmark over the period of more than 15 years generating a CAGR (Compounded Annual Growth Rate) of 7.39 %.  Invest Now Fund managers  Vikram Chopra - Total work experience of 14 years. He joined DSP Investment Managers from L&T Investment Management. He has also previously worked with Fidelity, IDBI Bank, and Axis Bank Ltd.  Sandeep Yadav - Total work experience of almost 20 years. He joined DSP Investment Managers in September 2021 as Senior Vice President - Fixed Income Investments.  Who should Invest in DSP Strategic Bond Fund?  Investors who  Understand and trust the fund manager's ability to judge the direction of interest rates.  Recognize investing in longer-duration debt securities could generate higher returns but comes with higher interest rate risk.  Why invest?  Can help you navigate rising or falling interest rate scenarios.  Earn potentially better returns than bank FDs.  Horizon  One should look at investing and holding the investment for more than 3 years.  Investment through SIP (Systematic Investment Plan) or Lumpsum should both be okay as the NAV of the fund does not fluctuate much.  Conclusion  DSP Strategic Bond Fund invests in high-quality government and corporate debt securities. It is one of DSP's oldest debt funds with a 15+ years track record. Best suitable for people with either a short investment horizon. This scheme has generated returns that have beaten inflation and have performed much better than Fixed Deposits
HDFC Large and Midcap Fund

HDFC Large and Midcap Fund

HDFC AMC is the Investment Manager of HDFC Mutual Fund, the largest mutual fund in India, with over Rs 4 lakh crores as Assets under management. HDFC AMC has a diversified asset class mix across Equity and Fixed Income/Others.   Let us talk about the flagship product – HDFC Large and Mid-Cap Fund About the HDFC Large and Mid-Cap Fund  The investment objective for HDFC Large and Midcap Fund The Scheme aims to generate long-term capital appreciation/income from a portfolio of equity and equity-related securities of predominantly large-cap and mid-cap companies.  Investment process for HDFC Large and Mid-Cap Fund  This fund aims to invest in companies that are good at executing their operations effectively and are available at reasonable valuations at the entry point. The fund invests in the companies that operate in markets where the Total Addressable Markets (TAM) provide them the potential of being runways for growth.  Portfolio Composition of HDFC Large and Midcap Fund  The portfolio holds the major exposure in large-cap stocks at 56%. The major sectoral exposure is to Finance which is at around 25%. The top 5 sectors hold around 65% of the overall portfolio Note: The pie chart on the left shows the market cap composition of the equity portfolio and the bar graph on the left shows the instruments composition of the overall portfolio.  Data as of 31st Dec 2022. Source: Morningstar  Top 5 holdings in HDFC Large and Mid-Cap Fund  Name Sector Weightage % HDFC Bank Ltd. Financial Services 5.48 ICICI Bank Ltd. Financial Services 4.41 Infosys Ltd. Information Technology 3.46 State Bank of India Financial Services 3.20 Reliance Industries Conglomerate 3.15 Note: Data as of 31st Dec 2022. Source: Morningstar  Performance over 28 years  If you would have invested Rs. 10000 at the inception of the fund, it would be now valued at Rs. 2.70 lakhs.  Note Performance of the fund since launch; Inception date - 18th Feb 1994. Source: Morningstar  The fund has given consistent returns and has outperformed the benchmark over the period of 28 years by generating a CAGR (Compounded Annual Growth Rate) of 12.09%.  Invest Now Fund manager Gopal Agrawal: Collectively over 17 years of experience in Fund Management and 2 years in Equity Research.  Priya Ranjan: Collectively over 15 years of experience. Senior Equity Analyst and Fund Manager for Overseas Investments.  Who should invest in HDFC Large and Mid-Cap Funds?  Investors who are seeking:   to generate long-term capital appreciation/income.  investments in a mix of equity and debt instruments.  Why Invest?  The fund offers exposure to mid-cap for good opportunities for wealth creation.  At the same time, it offers large-cap diversification and steady portfolio growth.  Horizon  One should look at investing for a minimum of 5 years or more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  This is the oldest fund with a proven track record of 28 years and has delivered 12.09% CAGR consistently which is better than most equity funds. Thus, it is best for investors looking for a diversified portfolio with exposure to large and mid-cap for wealth creation as well as steady growth. DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only. 
UTI Value Opportunities Fund

UTI Value Opportunities Fund

UTI is one of the pioneers of the Indian Mutual Fund Industry. With over Rs 2.4 lakh crore, the AMC is one of the most trusted names in the mutual fund space. The AMF offers products across asset classes.   Let us talk about the flagship product – UTI Value Opportunities Fund.  About the UTI Value Opportunities Fund  The investment objective of UTI Value Opportunities Fund The primary objective of the UTI Value Opportunities Fund is to generate long-term capital appreciation by investing predominantly in equity and equity-related securities of companies across the market capitalization spectrum.  The investment process of UTI Value Opportunities Fund The UTI Value Opportunities Fund carries a blend of a top-down approach for sector concentration and a bottom-up approach for stock picking. It follows a barbell approach while picking stocks which means that it invests in those stocks that the market underestimates. Portfolio composition of UTI Value Opportunities Fund The portfolio holds the major exposure in large-cap stocks at 68% and sectoral major exposure is to financial services that account for roughly one-third of the portfolio. The top 4 sectors hold nearly 61% of the portfolio. Note: Data as of 31st Dec 2022. Source: UTIMF  Top 5 holdings UTI Value Opportunities Fund Name Sector Weightage % HDFC Bank Ltd. Bank 9.63 ICICI Bank Ltd. Bank 6.98 Infosys Ltd. Information Technology 6.45 Axis Bank Ltd. Bank 5.19 Bharti Airtel Ltd. Telecom Services 3.86 Note: Data as of 31st Dec 2022. Source: UTIMF  Performance over 15 years for UTI Value Opportunities Fund Below are the rolling returns of the fund since inception. Note: Data as of 31st Dec 2022. Source: UTIMF  The fund has given consistent returns and has outperformed the benchmark over the period of 15 years by generating a CAGR (Compounded Annual Growth Rate) of 14.38%. Invest Now Fund Manager  Amit Premchandani: is Senior Vice President & Fund Manager - Equity. He holds PGDM from IIM Indore and CFA charter from CFA Institute, USA. He has completed CA from ICAI. He graduated in a Bachelor of Commerce in 2001 from Heramba Chandra College, Kolkata. Amit joined UTI AMC in 2009 as Senior Research Analyst  Who should invest in UTI Value Opportunities Fund?  Investors looking to  build their core equity portfolio with a good risk appetite.  marginally increase their risk spectrum with a concentrated sector allocation portfolio strategy.  Why invest in this Fund?  Fund emphasizes fundamental characteristics of the company such as return ratios & healthy cash flows.  The Fund has the flexibility to position itself more actively across the market cap spectrum.  Horizon  One should look at investing for a minimum of 5 years or more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The UTI Value Opportunities Fund is one of the oldest funds with a proven track record of 15 years and has delivered 14.38% CAGR consistently. Thus, it is best for investors who are willing to take some additional risk for good returns over a long-term spectrum. DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only. 
Best way to invest INR 5000 for a child

Best way to invest INR 5000 for a child

Systematic investment plans, or SIP, are a great tool to invest. It has helped create a significant amount of wealth over time for many investors. Some basic investment plans have the potential to create substantial wealth over time. Three basic principles work in favour of a SIP -   The earlier you start investing, the more the return accumulates over time. This leads to more profits. This phenomenon is also known as the power of compounding in financial parlance.   Time plays a more crucial role in SIP than timing. The earlier you start, the more you make; the longer you remain invested, the more you gain. This phenomenon also supports why a regular SIP has a better wealth ratio than a step-up SIP. For our novice readers, step-up SIP is where you tend to increase the amount of SIP every year when your inflows increase.   An investor needs to remember two things to get the power of compounding. Firstly, leveraging the power of equities helps in the long run, and secondly, the accumulated profits should remain reinvested to reap further benefits. Can a small SIP of Rs 5,000 make a big difference?  Yes, very much! Even a tiny amount can make a huge difference. How much difference can a SIP of Rs 5,000 per month make to your wealth? The answer is that it can make a big difference if you continue the investment for the long term in a disciplined manner without withdrawing any investments and investing in a powerful asset class such as equities.   Now, the question is, how much wealth can be accumulated?   For the answer, consider the chart below.  How the monthly SIP of Rs 5K grow over 15 years Source: www.mutualfundssahihai.com  Source: www.mutualfundssahihai.com  As seen from the above chart, a SIP of Rs 5,000 can grow your wealth to Rs 33.43 Lakh in 15 years. We have considered the annual return to be around 15%.  15% may look on the higher side, but remember, when you have a long-term horizon, such as 15 years, you can avoid the conservative plan altogether. If you have a conservative approach with a long-term horizon, it is nothing but not utilizing the true potential of capital. Your risk appetite and investment horizon should trickle down to your expected returns. Also, risk appetite should be computed by taking into account the cash inflow, minimum essential expenditure, age, number of dependents, and the like.  How to choose the SIP instruments?  Once you have understood your risk appetite and investment horizon, you need to map the same with the funds. Equity funds are best suited for a horizon over five years, particularly the ones that invest in mid and small-cap names.   Team EduFund has mapped the ideal time horizon and risk levels for the different fund categories (refer to the table below). <1 year1 - 3 years3 - 5 years>5 yearsLow riskDebt: LiquidDebt: Ultra-short termDebt: Short termDebt: Long termHybrid: BalancedMedium riskDebt: Short termDebt: Long TermHybrid: BalancedHybrid: BalancedEquity: Large-capEquity: MulticapEquity: Large-capEquity: MulticapHigh riskDebt: Long termEquity: SectorEquity: Large capEquity: SectorEquity: MidcapEquity: SectorEquity: MidcapEquity: SmallcapSource: EduFund Research  Considering the same, let us see the corpus you may make when your risk appetite differs. Risk AppetiteInvestment categoryExpected returnsInvested amountExpected amountLow riskHybrid: Balanced10%9 Lakhs20.72 LakhsMedium riskEquity: Midcap12%9 Lakhs23.98 LakhsHigh riskEquity: Small Cap15%9 Lakhs33.43 Lakhs As seen in the table above, the returns are highest in the high-risk category, and even a small amount of Rs 5000 per month for 15 years could help you fetch nearly 4x wealth in 15 years.  Should you invest Rs 5000 in one fund?   The answer is No. If you do that, you will get into concentration risk where your capital will be invested only in one fund. Remember, you need to have a diversified portfolio to benefit from each of them and, at the same time, reduce the volatility at the portfolio level by having smaller portions in each.   You should select 1-3 funds to make it Rs 5000 per month.   At this juncture, let us introduce a very cool feature of your app EduFund - the Educases. The Educases in EduFund are devised to ensure you invest systematically over the very long-term/long-term/short-term/very short-term for higher education goal, short-term goals, etc. Besides, the investment strategies section also highlights the five risk profiles and accordingly recommends the funds for investment. The tool uses its proprietary AI-backed engine that goes through multiple permutations and combinations before throwing any funds that suit the investor best. Not to mention that every result is back-tested to ensure that the EduFund recommended funds do a great job in outperforming the benchmark and inflation by considerable margins. The following are some of the funds recommended by EduFund that an investor could look at if they are willing to invest in the long-term and has a high investment horizon of 15 years and a high-risk appetite. The above-mentioned Rs 5000 SIP could be invested in the following funds to achieve 4x growth. Fund Name Amount Objective Canara Robeco Small Cap Fund 2500 The fund seeks to provide long-term capital appreciation by investing predominantly in small companies PGIM India Midcap Opportunities Fund 2500 The fund seeks to achieve long-term capital appreciation by investing primarily in equity and equity related instruments  Consult an expert advisor to get the right plan TALK TO AN EXPERT
Tips to consider before applying for an abroad education loans

Tips to consider before applying for an abroad education loans

An education loan is no longer a choice but a necessity for most students aspiring to study abroad. Although there are several financing options like banks, private lenders, and NBFCs open, it is not an easy feat to get the loan sanctioned. There are numerous criteria to meet that confuse the applicant.  In this blog, we will go through some of the important tips for maximizing your chances of getting approved for an abroad education loan so that the loan journey remains smooth, quick, and easy. 10 tips to consider before applying for an abroad education loans 1. Study courses and university  Financial institutions put a great deal of emphasis on the course a student wants to pursue and the university they have been admitted to. The most important tip for maximizing your chances of getting approved for an abroad education loan is that the study course should be accredited otherwise, the loan application can be rejected.  STEM courses like mathematics, engineering, and science have higher earning potential compared to arts, humanities, or commerce; hence the chances of a loan being approved are high. If you are considering the other courses, make sure you balance them out with a good and reputed university. It should be a top-notch place to study with a good reputation or ranking.   2. Academic history of the applicant Academic history matters as it will give a fair idea of the student’s capabilities, whether they are serious about their studies, and do they have the intelligence to get exceptional marks.  A student with consistently good grades has a better chance of loan approval than an average student or an applicant with an academic gap or backlog. Applicants seeking an overseas education should be serious about their studies from the word go, as it will improve their chances of loan approval.  3. Applicant and co-applicants age Financial institutions generally do not have an age limit for a secured loan, but for unsecured loans, the maximum age limit is 28 years. The co-applicant should not be close to the retirement age as lenders are hesitant in sanctioning them the loan. Applicants should be aware of the age criteria and apply for the loan accordingly.   4. Genuine and complete documents Fake or incomplete documents will result in the cancellation of the loan application; hence never try it. Read the guidelines carefully and submit each document as per the requirement. These include the loan application form, academic records and mark sheet, entrance test scores, address and identity proof like Aadhaar and Pan, admission letter from the university, and statement of costs.  5. Good CIBIL score CIBIL scores of the applicant and the co-applicant matter as a good score suggests that the previous loans have been paid on time and the chances of getting back the loaned money are high. A bad score means a delay in repayment or a cheque bounce. A good score will increase the chance of securing a loan; hence applicants should be conscious of maintaining a good CIBIL score from the beginning. https://www.youtube.com/watch?v=4gTQkdePOWM&feature=youtu.be&ab_channel=EduFund 6. Too many loan enquiries are harmful Students should not apply to numerous financial institutions as they, in turn, inquire with CIBIL Agency which mentions the number of enquiries in the credit report. This has an impact on the CIBIL score; thus, the applicants must research beforehand and apply for the loan at the appropriate place and at the right time after going through all the pros and cons. 7. Must fulfil the income criteria Applicants must find out the minimum income required by the lender and then fill out the loan application; otherwise, it will be rejected.  8. The repaying capacity Lenders will look at the repaying capacity of the applicant and their total income. In case the loan is passed and is mid-way, and the co-applicant has lost or left their job, the loan can still get rejected. 9. Types of collateral  Financial institutions have a list that defines which properties are considered collateral and which are not; hence applicants must go through the list before naming that property as collateral.  10. Meet the set policy Every lender has a specific set of rules, and the applicant must go through them in detail and then fill out the form and submit the required documents.  Conclusion Lots of students apply for an education loan every year, but only a handful of them manage to get it sanctioned. In most cases, the applicants are not even aware of the true reason for the loan rejection. Knowing about the above-mentioned tips can maximise your chances of getting approved for an abroad education loan.  Reach out to the counsellors or experts on the Edufund app for an abroad education loan, and they will guide you through the whole process in quick and easy steps. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Invest INR 500 every month for child education

Invest INR 500 every month for child education

If you want to make the life of your child safe, secure, and rewarding, start investing INR 500 every month for the child as early as possible, say financial experts. Even a small amount of INR 500 will go a long way in creating a solid financial corpus if it is backed by good planning and a strong investment vehicle.  The right kind of investment is of utmost importance because it will safeguard the future interest of the child and lessen his financial burden. Best investment plan to invest INR 500 every month for the child Planning an investment of INR 500 every month for a child is a huge thing; hence investors need to consider many factors before finalizing the perfect investment vehicle.  1. Systematic Investment Plan or SIP Invest INR 500 every month for the child in mutual funds with the help of SIP, as the small amount will keep on adding and compounding to create a very large financial corpus. SIPs are one of the best vehicles because it encourages investing and saving consistently in a disciplined manner.  Start as early as possible because it will provide a large window for the fund to accumulate. For example, if the investment period is 20 years and the expected rate of return is 10% per annum, then a monthly sum of INR 500 can result in nearly INR 3,82,848.  Invest through the Edufund App, as it offers a choice from 4000+ direct mutual funds. It is easy to start and stop a SIP anytime you desire.  2. Direct Equity For investors who are not afraid to take high risks, the amount of INR 500 can be used to buy direct equity. Choose growth stocks as they will yield better returns (in the average range of 50%) than average equity, which is expected to yield a return between 13% - 15%. Remember, patience is the key to growth equity, and you have to remain invested for the long term to get solid returns.  3. Public Provident Fund (PPF) The PPF investments are for investors that do not want to take risks and are looking for safe investment vehicles. With a 7.1% interest rate, PPF is a long-term tax-saving investment scheme that can be opened in a bank or a post office.  4. Recurring Deposit Account The interest rate on recurring deposits is nearly 6.5% to 6.9% depending on the bank. The RD account can be opened in a bank or a post office where an investment of INR 500 will keep on accumulating and earning interest throughout the investment period. The RD account is for investors who want to keep their money in a safe environment and simultaneously earn some money. 5. Child Insurance Plans  Child Insurance Plans are some of the best vehicles to invest INR 500 every month for a child. There are child life insurance plans that can be paid on a monthly basis.  With an amount of INR 500, you can buy a term insurance plan that offers high death benefits.  Child investment plans are very advantageous because if in some cases the policyholder dies then the future premiums are waived. The insurance company then keeps on investing the premium amount on behalf of the policyholder, and the amount is given to the child as per the terms and conditions of the policy. Examples of child insurance policies with a premium under INR 500 per month are SBI Life’s Term Insurance Plan, where the minimum premium is only INR 365 per month, and the ABSLI DigiShield Plan, with a minimum premium of INR 477 per month.  If you have a girl child, then there are also several investment schemes just for the girl child. The government-backed scheme Sukanya Samriddhi Yojana was introduced specially to save the future of a girl child. You can invest INR 500 per month and the amount is payable after the maturity period of 21 years.  6. Stocks & ETFs Although stocks are considered risky, they have an advantage over some of the investment options, like recurring deposit accounts, because of high returns over a long period. ETFs are also high return cost-effective investment vehicles through which the investor can invest in entire sectors.  Conclusion Take a leap of faith and start the journey to invest INR 500 every month for the child because it will go a long way in creating a lump sum amount in later years.  Take the help of the investment experts on the Edufund app to create the best possible personalized financial plan for your child with an amount of INR 500. The strategies are backed by data, research, and appropriate tools like the investment calculator so that you will get better returns on your investment, and that too in a secure and transparent environment. Consult an expert advisor to get the right plan TALK TO AN EXPERT
How do mutual fund work in India?

How do mutual fund work in India?

In this blog, we will discuss how mutual funds work. Before we get into greater details regarding a mutual fund, we shall discuss what it is, followed by the types of funds and their operation.  What is a mutual fund?  A mutual fund is a professionally managed fund. It pools money from different investors, such as individuals, companies, trusts, etc. The corpus accumulated is invested in securities such as stocks, bonds, money market instruments, commodities, etc. While some mutual funds invest in a single type of security, others may have a combination of security types. The objective of a fund  One of the most important objectives of any mutual fund is to beat the benchmark returns and category average. A fund is aimed at generating alpha.  How does an investor earn through a mutual fund?  An investor invests in a mutual fund so that they can generate income. The following sources contribute to this income:  Divided payments – Dividend paid by the fund house  Capital gain – Gains accumulated by the fund upon the selling of any security  Net Asset Value (NAV) – When NAV increases, the investor benefits during redemption.  Types of Mutual Funds  There are multiple types of funds based on the asset class. The Securities and Exchange Board of India (SEBI) categorizes these:  Equity Schemes – These mutual funds invest in equities and equity-related securities.   Debt Schemes – This type of mutual fund invests in debt instruments  Hybrid Schemes – This type of fund invests in a mix of stocks and bonds Solution-Oriented Schemes – These are schemes with a specific goal. Example - Retirement fund  Other Schemes – This includes funds that are not covered above. For example, funds of funds.  How do mutual funds work?  Fund house collects money from investors. This fund is then invested in securities such as equities, bonds, etc. Investors get units of the mutual fund as per the amount they have invested.  Pictorially the entire process can be elucidated as under: Source: Corporate Finance Institute What is the cost of each unit?  The cost of each unit is determined based on the fund's total assets net of all expenses. Expenses include management fees, securities transaction tax, other taxes, and administrative expenses. When divided by the total number of shares, Net Asset gives per-share Net Asset Value (NAV).  How to invest in mutual funds online?  To start investing in a fund, you need to have a Permanent Account Number (PAN), a bank account, and be KYC (know your customer) compliant. You can purchase mutual funds through the following:  Directly with the fund house - You can invest directly with the fund house. This option is available both online and offline.  Through third-party portals – You can always invest in using third-party portals such as EduFund. These portals have tie-up with fund houses and offer an unmatched investing experience.  Consult an expert advisor to get the right plan TALK TO AN EXPERT
How to compare abroad education loans?

How to compare abroad education loans?

One of the most complex problems might be taking out an education loan for overseas studies, primarily if exorbitant interest rates support it. Therefore, your priority should be to look for solutions that allow for fewer EMI payments and a cheaper interest rate before approaching a study abroad education loan. In this article, we'll talk about how to compare and negotiate with lenders over the conditions of student loans for international study. How to compare abroad education loans You may compare your student loans for international study from several lenders based on the following criteria: The rate of interest: ROI significantly impacts the overall sum you will have to pay back to the bank. Before you sign anything on the dotted line, examine the ROI since even a 1% change will significantly influence the amount of interest you pay overall. Additionally, students should determine if their ROI is fixed or floating. Moratorium period: Most lenders provide a moratorium period during which the student is exempt from loan payments. Compare the terms of the moratorium period carefully because they vary from lender to loan. Processing fee: Comparing the processing price is also a wise decision because a lender might impose a processing fee that ranges from 0% to 5% of the loan amount. Imagine obtaining a loan for INR 40 lakhs with a processing charge of 5% instead of INR 2 lakhs without a processing fee.  Penalty on prepayment: Another crucial comparison on our list is this one. On student loans, lenders impose prepayment penalties ranging from 2% to 4%. Knowing the prepayment fees can help students plan their repayment more effectively because many want to prepay their loan balance to prevent future interest costs.  Interest subsidy scheme: If the interest subsidy program covers the loans they are evaluating, students would also compare those loans. Loan tenure: The total interest paid to the bank would grow with a longer loan term. So choosing a shorter loan term would be the better choice. https://www.youtube.com/watch?v=4gTQkdePOWM&feature=youtu.be&ab_channel=EduFund How to negotiate the terms of abroad education loans from different lenders The following advice can help you bargain for a lower interest rate on your student loan: Build a strong profile: Your academic history and the institution you want to attend or decide to study at should be carefully considered if you are applying for higher education since they will significantly impact the interest rate. Try to maintain an attractive profile so that banks will be prepared to offer cheap interest rates on loans since they are confident in your ability to pay the money back. The major financial institutions for studying abroad consider your GPA, your GRE or GMAT score, your course of study, your level of study, your university, and the country where you will be enrolled. Please do your research: Before requesting a reduction in the interest rate on your student loans abroad from the bank, it is sometimes preferable to complete your research. Consider whether you can offer security or the income of your co-signer. You may also use factors like the length of your payback period to your advantage when negotiating interest rates with banks. Additionally, it's crucial to compare the interest rates offered by different banks and NBFCs and identify the lowest ones so that you may use their names to bargain with their rivals. There is a potential that you may prevail in the negotiation if your profile is impressive. Apply early: Before earning admission to a college, it is always advised for students with strong GRE scores to apply for study abroad education loans from banks. This benefits them by allowing them to evaluate other banks and provides them more time to bargain for a low-interest education loan from a foreign country. Applications for student loans abroad submitted at the last minute might have been a better option. Calculate the expenses carefully: Because the loan size can significantly affect the processing fees, it is crucial to estimate your costs before making any final decisions. You may also select an unsecured loan option if you correctly calculate your spending because they provide fewer loans. Balance Transfer: Sometimes, it makes sense to switch banks for your school loan since, after refinancing, the bank you would be moving from could offer you a cheaper rate, which might save you money. Additionally, you might need to transfer your mortgage in some circumstances, which could allow you to benefit from a cheaper interest rate. Most people take out their first loan before making a living for educational purposes. The borrower's credit history is so significantly influenced by it. So, it is advisable to properly compare and negotiate the terms of your education loan Consult an expert advisor to get the right plan TALK TO AN EXPERT
Financial concepts kids should know

Financial concepts kids should know

There are some key financial concepts kids should know because they will have a direct impact throughout their lives. These are life-changing lessons that help children to distinguish between wants and needs.  The practical aspect of finance is a topic that teaches kids about being responsible and managing money from an early age. Remember these are formative years and habits are often formed in the early years. Children who are aware of financial concepts and have even a basic financial understanding turn out to be better at managing their finances in later years. Financial concepts kids should know 1. Value of money The first financial concept kids should know about is the value of money. Parents try to fulfill their child’s wishes through the best of things that money can buy hence children often fail to grasp that money is hard-earned and not easily available.  Explain to the child that money has to be used properly otherwise it will be spent and there will not be any money left even for necessities. This basic lesson from childhood will stop kids from being extravagant at every turn.  2. Difference between need and want Start telling no to most of the demands and explain that money is limited and cannot be spent on every whim. Parents should make the child understand that there is a basic difference between wanting something and needing it.  Encourage your children to become financially sensible and not spend on whatever they want.  3. Savings The most vital financial concept kids should know about at all costs is the importance of savings in life. Start from an early age by giving them a piggy bank and encouraging them to save their pocket money. It is easy for young children to grasp the concept of saving hence keep explaining how money saved can be used later for important things. Saving is not only about money as you can make examples out of toffees or other things that your child likes. With time this will become a habit and the kids will learn to handle finance in a controlled manner.  4. Budget Keeping a track of your money and knowing when and how to spend it so that you have enough left for emergencies and savings is an important financial concept. Explain the idea of budget as it will help kids in planning finances and being organized.  Give the kids a fixed amount of money and small boxes or jars with labels like spending, saving, and even a charity jar where the children can distribute their pocket money for buying things, saving for a later period, and giving it out to the needy in respective jars.  This type of activity will help to budget and encourage them to save and spend accordingly.  5. Keeping track of spending Keeping track of spending is equally important as savings and budgeting. Encourage the kids to keep a tab of their daily spending by writing them down every day. Make sure that all the entries are recorded daily and totaled every week.  The practice of keeping a tab on savings will help children to understand expenses and adjust the budget accordingly so that they have enough left for the whole month.  6. Loan and debts Another financial concept that will help kids in the future is loans and debts and you can explain both quite easily. If your child is hellbent on something and he has spent all the money this is your golden chance to describe both concepts.  Remember borrowing money can lead to financial ruin so children should be aware of this life lesson from an early age. Never encourage children to borrow money even from their parents, siblings, or grandparents as it will become a habit and come back to harm them later on. As parents, you can educate how he can take a loan from you only this time to buy the desired item and how it will put the kid in debt. Explain that the original amount plus interest will have to be returned within a stipulated time frame and it will be deducted from his pocket money. Make sure that the interest amount is high enough to pinch him in the pocket and stop him from taking another loan from you quite easily. 7. Protecting key information Most people are handling money through technology via cards, ATMs, Apps or net banking, etc. Explain to your child the importance of keeping the information secret and not sharing it with anyone even if the person is very close.  Financial concepts kids should know in India Conclusion These are modern times where children often are techno-savvy from an early age so why not teach them about basic financial concepts? Sufficient knowledge about how to handle money, what is budgeting and what is the importance of savings can help to shape a kid’s future in the best possible manner
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