Category Archives: Finance

It is scary graduating from school. You have to make major decisions regarding your career and education that you may not entirely be ready for. Should join a course immediately or should you take a gap year? Maybe, you are scared, unsure, and hesitant. That’s alright. It’s normal for you to be scared when making such major decisions. After all, there are so many things to be decided. Is studying abroad worth it or should you stick to India? Self-financing, scholarships, or education loans? Besides, what do you want to do anyway? You don’t have to have these answers all at once. In fact, a gap year is exactly what you need to find these answers. A gap year can give you the time and insight you need to make the right decisions for your career and for yourself. Guide to spending a year gap Gap Year Explore 1. Getting to Know Yourself The most important thing to do in a gap year is to get to know yourself. What kind of a person are you? What kind of a person do you want to be? What kind of a career do you want? These are questions you may not know the answers to while you are still fresh out of school. Going straight from school to college can be emotionally taxing and cause burnout. It doesn’t give you the space to find out what you really want to do. This is where a gap year can be life-changing. You don’t get dumped from one rat race to the next. Instead, you can take the time to figure out what you want to do. Your parents could be pressuring you to go for a safe field like engineering. But do you have something else in mind? Perhaps you want to go for something less traditional? A gap year gives you the time to figure these things out. It gives you time to come up with an education plan or a career plan for yourself.  Travel Gap year 2. Travel and Explore the World Travel can change you. It is very likely that up until now you have been a very sheltered child and have never ventured outside your parents’ supervision. Well, you are an adult now, and you should go out and experience the world.  Traveling during your gap year will help you grow and mature as a person. Coming out of school, most people are still children. They have never lived on their own or outside their parents’ care. They haven’t learned how to take care of themselves or deal with people on their own. Traveling helps you meet new people and learn new perspectives. But more than that, traveling teaches you how to plan and organize, how to budget, how to save money, whom to trust, and how to think on the fly to overcome a sticky situation. These are all important real-world life skills that are required by an adult. Travel helps you learn how to become a well-rounded adult. 3. Learn a Language or Skill Schools often put an emphasis on just academics. Good academics are necessary for cracking entrance exams and putting forward a shining CV for foreign universities if you are planning to study abroad. However, academics should not be your only skill. If you have not been able to focus on any extracurricular activity or skill outside of your studies, your gap year may be the perfect opportunity for you. You could enroll yourself in a music or dance class, or learn a more practical skill like automobile repair. Gap years can give you the time you always wanted but never had to learn a new skill or language. You could even take beginner-level online courses in programming languages, data science, artificial intelligence, and other such courses. These courses teach you extra skills and pad your CV. They could also introduce you to disciplines and concepts that you can dabble in, before deciding to pursue them seriously in college.  Learning a language is even more advantageous if you have hopes of studying abroad. It can help you mix in and make friends more easily when you move abroad to study at your dream college or university. Even if you have no plans of studying abroad, having a command over foreign languages can help beef up your CV and improve your chances of landing a particular job or university. Gap year internship 4. Take up an Internship You can also garner some work experience during your gap year by taking up an internship. Internships offer practical work experience that schools and colleges are often unable to give their students. The world of academics is often very different from the practical world of the job market. Employers want practical, employable skills that schools often do not teach. This is why an internship can be an invaluable experience for you during your gap year. You can use sites like Internshala to look for internship opportunities in fields that you are interested in. For example, if you are interested in media, you could look for a media house that is looking to hire some interns. By doing this, you learn first-hand the kind of work and responsibilities you can expect while working for a media house before you even start college.  You could also talk to the people at your place of internship to find out what kind of degrees, courses, and career paths you can take. An internship is a treasure trove of knowledge, experience, and potentially beneficial professional relationships. Talking 5. Talk to People This is perhaps the simplest yet most important thing you can do during your gap year. You should talk to people and get some advice, counseling, and guidance for your career. You need not approach a professional education and career counseling service for this, you can simply talk to the people around you. You should talk to your parents and seniors about your career and education. You should also talk to them about their careers and the steps they took to get where they are. Ask them about what they did right and the mistakes they made, or what they would do differently given the chance. You can learn from their experiences. You should also contact the alumni of the universities you want to apply to as well as the universities themselves. Ask them about the admission process, student life, and about career prospects. Also, ask them about funding and how students usually go about fundraising for education in these universities. If you want, you can also take the time to see a professional education counselor.  Talking to people helps you make better decisions about yourself and your career.  A gap year is not really a gap, in fact, it is filled with important lessons and adventures. Good luck to you as you embark on your gap year adventure! FAQs Why is a gap year worth it? Yes, a gap year is worth it if you utilize it well. There are multiple opportunities for students in a gap year such as interning at a company, volunteering in your own country or abroad, and even upskilling with short courses. These are some helpful and excellent ways of growing and making the best of your gap year. How do you explain a gap year? The best way to explain a gap year is by being truthful and helping your interviewer understand why you choose to take time away from college/work. It is also good to show that you utilized that time productively and developed skills and knowledge that can help you in the long run. What to do in a gap year in India? There are multiple opportunities for Indian students in a gap year such as interning at a company, volunteering in your own country or abroad, and even upskilling with short courses. These are some helpful and excellent ways of growing and making the best of your gap year.

Investment tips can be a life savior. Especially when life today is expensive and getting costlier. Education, housing and other costs of living are certainly not getting any cheaper. Your savings will only take you so far and thus, financial planning and investment have become a necessity today. Education planning in India is getting popular, especially for parents looking to send their kids to study abroad without taking out education loans. If you are a beginner investor, and thinking about child investment plans or other strategies, here are some things you should know. 1. Invest with a plan You should always invest with a plan. It is very important to be clear from the get-go about what your financial goals are. Investments in a house, investments for buying a car, investments for retirement, and investments for child education are all very different financial goals. Some financial goals require short-term planning while others require planning long-term.  For example, buying a car is a short-term goal, while creating a proper education plan for your child or planning for retirement are long-term goals. A diversified short-term investment plan is much more suitable for the former and a long-term investment scheme will be more useful for your long-term goals. If you are a beginner, it can be a good idea to invest with a financial service that manages your investments for you. A personalized and customized financial plan created by experts is useful when you are short on time or expertise yourself. If you want to create a solid education plan for your children, you can invest your money in mutual funds and ETFs through EduFund.  2. Educate yourself about the stock market While it may be tempting to leave everything to the experts and rest stress-free, that is not a very good attitude to have. You should educate yourself about what you are investing in and why. A lot of beginner investors follow trends and invest in whatever is being talked about the most. There is a chance of this being profitable in the short term but this definitely not a good long-term strategy. For that, you will need to educate yourself on the stock market. You need to understand how the stock market works and what it means when a stock rises or falls. What is a stock and what does it mean when you buy a stock? You should also educate yourself on the jargon. What is BSE, NSE, Sensex, Nifty, etc.? What is the difference between investing and trading? First-time investors also need to specifically look at what they are investing in and learn as much as possible about it. If you are investing in ETFs, it is important to first understand what an ETF is and why they are so popular with beginner investors.  Sometimes, the experience can also be a teacher. When you enter the market as a rookie, you may make mistakes and suffer losses. Take these losses as a learning experience to understand what to do and what not to do. Knowledge is your friend when you are an investor and not all of this knowledge needs to be bookish. 3. Understand market risk When you invest your money into the market, you can either make a profit or suffer a loss. The more money you have invested, the more your exposure and consequent risk.  Volatile or trendy stocks and options can be risky. Balanced mutual funds, real estate, and high-income bonds are relatively low risk. Bank savings deposits, fixed deposits, and government bonds are the lowest-risk investments. As an investor, what you need to do is determine how much risk you are willing to take. It is always a good idea to start slow. Do not speculate too much too quickly. Rather, plan things out and invest according to your goals. Your risk tolerance will also differ depending on your financial goals. If you are investing to fund your child’s education plan, which is an expensive, long-term investment, you should not take unnecessary risks.  Diversification is a great idea to lower risk as this ensures that your invested principal is not tied up in only one thing. This balances out your risk. Investing in ETFs and mutual funds is a great way to do this. These funds are already diversified and their investment portfolio is structured and balanced to ensure relatively lower risk. 4. Invest in what you know We have recently seen big booms and falls in the prices of certain stocks like GameStop. A lot of people invested in these stocks due to the hype and media attention. While many of them made huge profits, when the stocks eventually fell, many investors ended up losing a lot of money as well.  This is a great example of what happens when you invest out of herd mentality, without fully understanding what you are investing in and why. While these types of investments can be good for a quick and sudden cash fall, they are completely inappropriate as a long-term investment strategy.  When you invest in a stock, you purchase yourself a stake in the company. As a stakeholder, you should do your due diligence about the company and its stocks. Understand how the company makes its money and stays profitable. If you don’t do this, you will not be able to predict or understand when a company’s stock may fall and put you in a financial crisis. If you don’t understand how or why a particular stock shot up, it's not a good investment. 5. Stay calm This is perhaps the most important aspect of investing. The stock market with its highs and lows can lure you into making impulsive, emotion-driven decisions. It is important to have self-control in these matters and stick to proven investment strategies rather than variable market trends. It is also equally important to understand that short-term market fluctuations, by and large, don’t affect your long-term investments in the long run. With financial goals like education plans and home ownership, any rise and fall in stock prices can make you nervous. However, it is important to have faith in your long-term investments. If you have done your due diligence and research in picking the right plans and strategies for yourself, the only thing you need to do is relax and keep faith in your investments. Conclusion Investment is a strategy for creating wealth in the long term and requires patience, faith, knowledge, and planning. It is important to educate yourself as much as possible about all relevant issues and keep in touch with experienced advisors and analysts. FAQs What is the best strategy for a beginner investor? You should always invest with a plan. It is very important to be clear from the get-go about what your financial goals are. Investments in a house, investments for buying a car, investments for retirement, and investments for child education are all very different financial goals. Some financial goals require short-term planning, while others require long-term planning.    How can I invest smartly? Stay calm. This is perhaps the most important aspect of investing. The stock market, with its highs and lows, can lure you into making impulsive, emotion-driven decisions.   It is important to have self-control in these matters and stick to proven investment strategies rather than variable market trends.   It is also equally important to understand that short-term market fluctuations, by and large, don’t affect your long-term investments in the long run. What should beginning investors invest in? Invest in what you know. When you invest in a stock, you purchase a stake in the company. As a stakeholder, you should do due diligence on the company and its stocks.    Understand how the company makes its money and stays profitable. If you don’t do this, you will not be able to predict or understand when a company’s stock may fall and put you in a financial crisis.    If you don’t understand how or why a particular stock shot up, it’s not a good investment.   What are 5 tips for beginner investors? Invest with a plan   Educate yourself about the stock market   Understand market risk   Invest in what you know   Stay calm  

Enrolling overseas to further your study at your dream institution is a remarkable accomplishment. To pass the admission tests and get into college, a lot of work and effort must be put in. It is even more upsetting if your method is unsuccessful in paying your university tuition costs after all of these attempts. In this blog, we will discuss tips to find the best exchange rates and international money transfer options when using an abroad education loan to pay for your studies abroad  Find the Best Exchange Rates & Money Transfer Options The best exchange rates and international money transfer choices may be found by applying the following top suggestions when using an overseas school loan to pay for your studies abroad: 1. Compare the best rates A backup strategy in case your first one fails is a smart idea. You should assess your selections' exchange rates, customer service, and user experiences. 2. Don't use your debit cards at foreign ATMs You would have to pay withdrawals or transaction fees if you used your debit card to make a purchase. Yet, if you were to do an overseas transaction, you would be required to pay for the unfavorable exchange rate, ATM fees at the foreign ATM, and a payment from your bank for using your card at a foreign ATM. The price is about three times what you normally pay with all these fees. Reconsider your necessity before using your card at a foreign bank. If necessary, ask a bank representative about the fees associated with an overseas transaction. 3. Buy items in the local currency This is especially helpful if you're a tourist on the road. Stores frequently offer to accept either dollars or euros in exchange for the amount you'd want to pay. It makes sense, doesn't it? The equivalent will always be a higher exchange rate; that's the problem. Although it might not seem like much at first, it can result in a considerable loss when added together. Instead, do a bulk exchange at a money changer or bank and pay in the local currency. 4. Be wary when there are no currency exchange fees There may be a lot of attempts made by business owners, exchange providers, and money changers to persuade you that there are no additional fees. Even though it could seem like a fantastic deal, give it some thought. It's been a while since I've done that. The answer is straightforward: by raising the already unfavorable exchange rates. How to transfer money from India to abroad? You may select from several techniques to send money abroad from India. The preferred method will be heavily influenced by the reason you are sending the money, as well as any requirements, such as whether you need the money to arrive quickly in case of an emergency, are looking for a cheaper alternative, or would prefer to stick with a single institution, like your bank or online platforms. 1. International money order/ offline money transfer Money orders were the go-to way to transfer money abroad before online wire transfers became popular, even for individuals who had no idea how to do it. It remains a cheap and secure method of sending money outside of India. 2. Online money transfer Western Union is the quickest and most convenient method of sending money abroad. The majority of Indians who send money abroad do it in this manner. The procedure requires the destination account data, the IBAN or SWIFT number of the receiving bank, and details on the account holder, for example. However, remember that you can be charged high taxes and currency rates because this approach uses something other than intermediate organizations. 3. Online wire transfer This is the most recent method to enter the money transfer industry, and it offers inexpensive costs and assessed charges for sending money abroad from India. You may send money through a wire transfer through several financial organizations, including banks and authorized money changers like Western Union, Book My Forex, etc. Although sending money abroad is one of the most expensive, it typically takes longer than internet money transfers. Internet wire transfers use intermediary institutions to transport money abroad, so they may provide low or nonexistent overhead costs. Nowadays, you can access a wide range of businesses and online platforms and are no longer constrained by the possibilities accessible when sending money abroad from India. Whatever option you select, double-check information like the recipient account number and other specifics.  Consult an expert advisor to get the right plan TALK TO AN EXPERT

Studying abroad can be a life-changing experience, providing you with unique opportunities to learn, grow, and explore new cultures. However, the cost of tuition, living expenses, and travel can be significant, making it difficult for many students to finance their education. In such cases, education loans can be a useful tool to cover expenses.   While it may be tempting to quickly sign the loan agreement, it is essential to read and understand the fine print in the document carefully. This is because the terms and conditions of the loan agreement can have a significant impact on your financial future, and failing to pay attention to the details could result in unexpected costs, fees, or penalties.  In this article, we will discuss the importance of understanding the fine print in your abroad education loan agreement and highlight some crucial things to watch out for to ensure that you make an informed decision when borrowing for your education.  1. Do you qualify to apply for a student loan?  To determine eligibility for an education loan, one must identify banks that offer loans for the chosen course. Generally, banks don't offer loans for short-term or vocational courses. However, if an internationally recognized institute has accepted the application, the chances of getting a loan may increase. Extensive research should be conducted to determine the educational loan options available. A list of institutes that provide loans for the desired course should be created. Additionally, it is important to determine whether a co-signer or collateral is needed for the loan.  2. Can you afford to pay your bills?  It is important to note that if the education loan amount exceeds Rs. 4 lakhs, a marginal sum must be paid to the bank. A co-signer is required if the loan amount exceeds Rs. 5 lakhs, and collateral is necessary if it exceeds Rs. 7.5 lakhs. It is crucial to estimate expenses and keep in mind that the loan amount applied may not be the amount received. Research should be conducted to determine if the preferred educational institution has partnerships with banks or lenders and if any concessions are available for international students.  3. Where should you submit a loan application?  Researching various options on the internet is the best way to find a suitable lender for a personal loan. It is crucial to compare personal loan interest rates and examine the repayment options and clauses of different banks and lending entities. Choose a loan that meets all needs without stretching finances too thin. Additionally, it is important to investigate the expenses that these banks cover, which could include tuition fees, travel, living expenses, equipment costs, and other necessary expenses.  4. How does the loan application procedure work?  Applying for a loan typically involves a significant amount of documentation. Lending institutions usually require identity proof, address proof, and signature proof, among other documents, to process the loan application. It is crucial to follow the list and instructions meticulously to ensure that all necessary documents are provided. Lending entities often offer assistance with documentation concerns if requested. Before signing the agreement, it is important to carefully read and understand the fine print of the agreement to avoid any misunderstandings or discrepancies later on.  5. How will the loan be repaid?  The repayment period clause is an important component of the loan agreement with the lender. It typically provides a moratorium period before the borrower must begin making EMI payments. This grace period allows the borrower time to secure a job before beginning repayment. In the event that the borrower is unable to find employment, some lenders may extend the pay-off period based on their relationship with the borrower. It is advisable to discuss repayment options with the lender while applying for a personal loan. It is important to note that not all banks will defer loans, and this is typically done only under exceptional circumstances.  https://www.youtube.com/watch?v=4gTQkdePOWM Advantages of requesting a student loan  There are several benefits to applying for an education loan, including:  Financial assistance: Education loans provide financial assistance to students who may not have the means to pay for their education themselves. This enables students to pursue their academic goals without financial constraints.  Competitive interest rates: Most education loans come with competitive interest rates, which are generally lower than those of personal loans or credit cards.  Tax benefits: Under Section 80E of the Income Tax Act, the interest paid on an education loan is tax-deductible, which can help reduce the overall tax liability.  Flexible repayment options: Education loans typically offer flexible repayment options, such as moratorium periods, longer repayment periods, and customized repayment plans.  No collateral required: In many cases, education loans do not require collateral, making it easier for students to secure funding for their education.  Improve credit score: Timely repayment of education loans can help students build their credit score, which can be beneficial in the long run when applying for other loans or credit.  Conclusion Applying for an education loan can be a great option for those who are looking for financial assistance to pursue their academic goals. With competitive interest rates, flexible repayment options, tax benefits, and the potential to improve credit scores, education loans provide a valuable resource for students who need funding for their education.  It is important to research various lenders and their loan options, carefully review the loan agreement and repayment terms, and ensure that all required documentation is provided to secure the loan. With careful planning and execution, an education loan can be a valuable tool for students seeking to achieve their academic dreams. 

The question of how much salary to invest in mutual funds is a burning question for many salaried professionals.   There are many thumb rules; for example, the 50:30:20 rule is a great example that shows how, typically, on average, a person should invest 20% of a month’s salary.   Before investing in any instrument, the first thing that needs to be taken care of is your fixed obligation-to-income ratio. Fixed obligations are those expenses that are necessary to sustain your life.   So, whatever remains after paying your fixed obligation should go towards investing.   How much in mutual funds?   The question is how much of that 20% of investments should go into mutual funds. Mutual funds are a very popular form of investment giving better returns than your savings account and are also a hassle-free investment strategy.   There are various types of mutual funds depending on your risk appetite. Some of them are index funds, debt funds, multi-cap funds, hybrid funds, and equity funds.   Equity funds are the riskiest because they have the highest exposure to equity markets.   The amount that you will invest in mutual funds will depend upon your salary range and the expenses you will cover. But the percentage, as shown above, is usually 20%.   At least half of it is 10% of the total salary and should be in mutual funds in the form of SIP investments because mutual funds have the power to generate high returns in the long run. Far more than FDs and savings accounts.  Example:   Suppose person A earns ₹40,000 per month.   50% of 40,000 = 20,000   So, ₹20,000 should go towards the necessities like rent, bills, etc.   30% of 40,000 = 12,000   Then, ₹12,000 should be spent on movies, gyms, restaurants, etc.   20% of 40,000 = 8,000   The remaining ₹8000 should be saved or invested.  In that ₹8,000, at least ₹4,000 should be invested in mutual funds, which is 10 percent of the total salary. The remaining 10 percent can be saved or invested depending on your financial goals.  Source: Pexels Long term goals   Your investment in mutual fund SIPs should align with your future goals as an individual or even for your family. It completely depends on how much wealth you would like to have in the long run (given your desired time horizon).   Your long-term financial goals will also decide how much you want to invest and which type of mutual funds you should invest in to get the desired type of returns.   You can arrive at any amount depending upon the type of expenses you will undertake in the future. You must carefully analyze the total amount of your SIP investment in mutual funds.  Investing some portion of your monthly income will go a long way in your dream of wealth creation in the future. You need to remain consistent with your investments.   Also, keep on increasing the size of your investment in your desired instrument with every hike in your salary.  FAQs What % of your salary should you invest in mutual funds? The thumb rule that most investors follow is the 50:30:20 where 20% of your income should be invested. However, the percentage differs based on the individual's salary, financial goals, and assets/debts. How much in mutual funds?   The amount that you will invest in mutual funds will depend upon your salary range and the expenses you will cover. But the percentage, as shown above, is usually 20%.  To figure out how much to invest, you can always consult an expert. Can a salaried person invest in mutual funds? Yes, salaried persons can invest in mutual funds/stocks and ETFs. There are many investment options available to salaried persons in India and even abroad such as investing in US stocks and ETFs. How much to invest in mutual funds and how to choose a mutual fund is best answered with the help of an advisor! Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Many students have aspirations of studying abroad, but the exorbitant fees involved can be a significant barrier. Thankfully, there are nontraditional financing solutions that can help turn this ambition into a reality. Crowdfunding and peer-to-peer lending, including the best peer-to-peer lending in India, are two such strategies that have grown in popularity recently. Peer-to-peer lending has benefits like cheaper interest rates and simpler access to funds, but there are also drawbacks to take into account.   On the other hand, crowdfunding enables students to raise money through social media channels, but success is not always assured. In this article, we'll examine the benefits and drawbacks of these alternate educational finance strategies, such as peer-to-peer lending for student loans and crowdfunding for international education. Crowdfunding for education abroad  For students looking for alternative financing options to pay for their studies abroad, crowdfunding has grown in popularity. Using social media and online fundraising platforms, crowdfunding is asking a lot of people for money to support a certain cause, like studying abroad.  By the use of crowdfunding, students can design a unique fundraising campaign where they can communicate their motivations, objectives, and financial requirements with a larger audience. By the use of social media, students can rapidly and effectively solicit donations from friends, family, alumni, and other possible donors using this strategy.  One benefit of crowdfunding for international education is that it can be a successful approach to generating money without taking on debt. Crowdfunding campaigns, in contrast to traditional loans, do not need repayment, and the money received can be used to pay for a range of costs related to studying abroad, such as tuition, transport, lodging, and living costs.  It is crucial to remember that the success of crowdsourcing campaigns cannot be guaranteed, therefore students should carefully prepare their initiatives and establish sensible objectives. To ensure the success of their fundraising efforts, students should be ready to communicate with potential donors and aggressively publicize their campaigns.  In conclusion, crowdfunding can be a helpful source of finance for students who want to pursue an international education, but it should be combined with other funding options to guarantee that all costs are met.  Peer-to-peer lending for education abroad  Peer-to-peer lending (P2P lending) has become a different kind of funding for students who want to pay for their studies abroad. P2P lending platforms let borrowers engage with lenders one-on-one, bypassing traditional financial institutions and giving them access to lower interest rates.  P2P lending allows students to borrow money from private lenders for their international studies, frequently at interest rates lower than those of traditional student loans. Additionally, this kind of funding offers students more flexible loan repayment terms so they can adjust their loan repayments to their financial situation once they graduate.  P2P lending has a number of benefits, one of which is that it may rapidly and effectively give students access to money for their studies abroad. With loan approval and disbursement occurring in just a few days, the loan application process is often straightforward and efficient. P2P lending can also be a viable choice for students who may not have a good credit history because individual lenders might be more ready to offer loans based on other criteria, like academic performance and possible future earning ability. To make sure they are obtaining the best deal possible, it is crucial for students to thoroughly research and evaluate P2P lending sites and loan terms. Students should also be aware of any hazards related to peer-to-peer lending, such as the absence of governmental monitoring and the possibility of dishonest lenders.  In conclusion, peer-to-peer lending can be a helpful source of finance for students who want to pursue an international education, but it should be combined with other funding options to guarantee that all costs are met.  Microloans for education abroad  Another alternative financing choice for paying for education abroad is microloans. Microfinance institutions (MFIs) give people who would not have access to conventional forms of financing microloans, which are modest loans often between a few hundred and a few thousand dollars.  Students can get tiny loans through microloans for international education to pay for things like tuition, travel, and living costs while they're away from home. Students with low financial resources or those who might not be eligible for conventional student loans because of a lack of credit history or collateral may find these loans to be very helpful.  The ability to rapidly and easily receive microloans for international education is one of their key benefits. Students can now get money in only a few days thanks to the shortened loan application procedures implemented by many microfinance firms. Additionally, microloans frequently have interest rates lower than those of conventional loans, making them a desirable choice for students looking for inexpensive funding.  It is crucial to keep in mind that microloans are frequently only offered in small quantities, which could not be sufficient to pay for all of the costs related to studying abroad. Also, to make sure they are obtaining the best deal possible, students should carefully investigate and contrast microfinance organizations and loan conditions.  Overall, microloans can be a helpful source of finance for students who want to pursue an international education, but they should be combined with other funding options to guarantee that all costs are met.  Conclusion  Finally, while studying abroad might be a once-in-a-lifetime opportunity, it can also be very expensive. Fortunately, students who wish to study abroad but cannot afford to do so have a variety of different financing choices. Students have access to cash quickly and effectively through crowdfunding, peer-to-peer lending, and micro-loans, typically at interest rates that are lower than those of conventional student loans.  To find the one that best meets their needs, students should carefully investigate and analyze the available financing options. Each financing option has benefits and drawbacks. To make sure that all costs are paid, students can also investigate other financial options like grants, scholarships, and work-study opportunities. In the end, students can choose the best funding solution to enable them to fulfill their aspirations of studying abroad without racking up excessive debt with careful planning and research. 

Investing in equity has never been an easy task. It demands a lot of time and effort from your side to understand the company’s business, analyze the financials, develop the investment philosophy, and whatnot. So, you invest in mutual funds, giving your money to a professional fund manager who will manage and invest it in equity markets. But he is going to charge fees for his professional services, and there is no assurance that he will be able to generate a good return. Then you might ask if there is any way by which you can invest in equities where you will not be required to put the effort like a professional fund manager or pay hefty professional fees, and yet you can earn a decent return. The answer to this question is index funds. In this article, we will see an index fund, its benefits and limitations, how to invest in index funds in India, how to buy index funds in India, and some points about ETFs. What is an Index Fund? Index Fund is a mutual fund where the fund manager invests in stocks that are part of a particular index called the underlying index. Here, the fund manager does not use his professional skills but replicates the index with the objective of earning a return (before fees and expenses) that is commensurate with the return of the underlying index. Since the fund manager does not apply his professional skills and the fund is managed passively by just copying the index, the expense ratios of index funds are also very low. Hence, index funds are the best passive funds. https://www.youtube.com/shorts/78mX8bcNPcM Benefits of Index Funds Lower Fees: Since the fund manager is not required to manage the funds actively and invest by replicating the underlying index, index funds have lower expense ratios than actively managed funds. Zero Risk of Fund Management: The risk of the fund manager's decisions going wrong is eliminated because the fund manager mimics the underlying index. Easy to Invest: Index funds are easiest to invest in because it requires very little application of financial knowledge than actively managed funds. Diversification: Generally, indices are well diversified, and since index funds invest in stocks that form part of that index, you get the benefit of diversification automatically. Due to the benefits mentioned above, index funds are the best passive funds to invest in. Limitations of Index Funds The only considerable limitation of index funds is that you don’t make returns higher than the index; you can make the maximum that index has made but not more than that. How to invest in Index Funds in India? Once you have decided to invest in index funds, you can follow the following approach for investing in index funds. Selection of the appropriate underlying index: Based on the time horizon and your risk appetite, you must select an appropriate underlying index for your investments. Selection of appropriate index fund: Once you have chosen the underlying index appropriate for you, you have to select the index fund with the index that you have chosen as its underlying. With the help of the following factors, you can decide the best index fund to invest in. AUM: Consider the funds with the highest AUM because the higher the AUM, the more the chances of being better managed. Expense Ratio: Since there is no active management of funds, you should consider the funds that have the lowest expense ratio, so you incur lesser costs. Tracking Error: Tracking error measures the difference between the returns generated by the index fund and the underlying index. The lower the tracking error, the better it is, as you get returns like the underlying index as much as possible. How to buy Index Funds in India? After deciding to invest in index funds, you might have a question about how to buy index funds in India. Don't worry. The procedure to buy an index fund is simple and the same as the procedure for buying any other mutual fund. You can visit the official website of the mutual fund, complete the standard KYC procedure, and fill up the required information for buying the index funds. You can also invest in index funds in India using our EduFund App without paying any commission in a simple and hassle-free manner. What is an ETF? ETF is also an index fund. The only difference is ETFs are traded on stock exchanges like normal stocks. There are also ETFs based on commodities like gold, silver, etc. You can consider the parameters of liquidity and volume in addition to the approach given above to decide the best ETF to invest in India. You can also invest in the best ETFs in India through our EduFund App. https://www.youtube.com/shorts/ufTDh0aPOG8 Conclusion Index funds and ETFs are the best way to start investing, considering the benefits and limitations. However, time spent in the market is much more essential to create wealth. Hence, it would help if you focused more on staying invested for a longer duration than deciding which is the best index fund or the best ETF to invest in.  TALK TO AN EXPERT

"Learn from the mistakes of others; you can't live long enough to make them all yourself." Have you heard this Chanakya’s quote? Although applicable everywhere, it has a far deeper reach in investing. Applying this generic quote alone can save you from financial disasters because the repercussions of one mistake can overshadow hundreds of good things you do before investing, like collecting the data, hours of research, analysis, and whatnot. This can be even more severe if you invest in an asset class like US ETF with thousands of options. So, in this article, we will see some common mistakes while investing in US ETFs that you must avoid. 1. Investing in something without understanding what it is Often, investors jump on a particular ETF because of the FOMO (Fear of missing out) without understanding the nature and risks of the ETF. This can lead to disastrous impacts on your financial health if the decision does not go your way because you get exposed to many risks, and you are not aware of them. So, to avoid such a situation, you should first understand the ETF. Know its underlying index, whether it is thematic or not, large-cap or small-cap, the AUM, expense ratio, etc. You will get all this information in the scheme document of the ETF. https://www.youtube.com/shorts/ufTDh0aPOG8 2. Going with the trend This is a very common mistake that investors make. You may get into trouble by investing in an ETF because a particular sector or theme is trending. Thematic investing is good but comes with its own set of risks. If you think a particular sector or industry will flourish, then only you should invest in such ETFs, not because the prices are rising. 3. Ignoring Diversification Diversification is a must to avoid company-specific risks. These risks are avoided partially when you invest in ETFs. But these types of risks remain if you invest only in one ETF. So, it would be best if you diversify your investments across some ETFs of different categories, so the overall risk is reduced significantly. https://www.youtube.com/shorts/UaxxaJeV5jE 4. Not Considering the expense ratio Expense ratios are very important when it comes to ETFs. Since ETFs are often passively managed, the expense ratios are very low compared to actively managed funds. So, you need to consider those funds with the lowest expense ratios because even a tiny difference can have a considerable impact in the long term. 5. Investing in ETFs with very low AUM Sometimes investors invest in an ETF with a low AUM just because it has performed well. Low AUM ETFs are considered risky compared to the ones with high AUMs. ETFs that have considerable AUM are better managed. So, choose those ETFs which have considerable AUM. 6. Trying to time the market The stock market behaves like a drunken man. No one can predict in which direction it will move in the short term. If you wait for markets to come down and do not invest, it may happen that markets will not come down, and you may lose the opportunity. It is better to remain invested and keep investing at regular intervals so that your investments' average cost decreases significantly. 7. Exiting the ETF without any reason Investors need to understand that investing requires patience. If you remain invested long-term, you will witness the magic of compounding. But many times, investors exit the ETFs without any reason. So, only exit with a valid reason. You should exit the ETF only if you need the money or there is an issue with the fund, sector, or economy. 8. Ignoring taxes Taxes can impact your post-tax returns drastically. Many investors earn hardly anything post-tax because of ignoring this factor. You should consider this factor and plan your finances accordingly. 9. Not knowing the forex rates This is a common mistake with Indian investors investing in US markets. Sometimes investors ignore the forex rates in a hurry to invest in US ETFs. The exchange rate is crucial when transferring funds from India to your US trading account. Moreover, a foreign exchange conversion fee will be charged by your bank. So, using a platform that has partnered with banks and provides better exchange rates and a lower markup fee is recommended. 10. Violating the FEMA Regulations As an Indian investor, you are required to adhere to the FEMA requirements when you enter any foreign exchange transaction. Although it has become straightforward to remit outside India due to LRS, violating these regulations can attract severe penalties and regulatory consequences.

ICICI Prudential Mutual Fund is the second-largest asset management company in India. With over Rs 5 Lakh crore, the AMC is among the most trusted names in the mutual fund space. The AMC offers products across asset classes. Let us talk about the flagship product – ICICI Prudential Small Cap Fund.  ICICI Prudential Small Cap Fund  Investment objective: The scheme's primary objective is to seek to generate capital appreciation by predominantly investing in equity and equity-related securities of small-cap stocks.  Investment Process: The Scheme will invest in 40-60 stocks which will be selected based on extensive research and screening. Some stock filters and parameters include Corporate Governance, Sector Opportunity, Leverage and RoE, Earnings potential, and Valuations, etc. Stocks selected for investment will be reviewed periodically.  Portfolio Composition:  As per its investment objective, the equity exposure is majorly in small-cap stocks at 61.97%. The funds are invested across all the sectors without any specific sector being given more importance. The top 5 sectors hold nearly 36% of the portfolio.  Note: Data as of 28th Feb. 2023. Source: ICICI Pru AMC  Top 5 Holdings for ICICI Prudential Small Cap Fund  Name Sector Weightage % Cyient Ltd. Technology 3.96 PVR Ltd. Services 3.77 Rolex Rings Ltd. Capital Goods 3.5 EPL Ltd. Materials 3.15 CCL Products (India) Ltd. Consumer Staples 3.14 Note: Data as of 28th Feb. 2023. Source: ICICI Pru AMC  Performance since inception  If you had invested 10,000 at the fund's inception, it would now be valued at Rs 52,020.  Note: Fund performance since launch; Inception Date – 23rd May 2008.  Source: icicipruamc.com  The fund has given consistent returns and has outperformed the benchmark by generating a CAGR (Compounded Annual Growth Rate) of 11.36% since inception.  Fund manager  The fund is ably managed by Harish Bihani, who has 11 years of experience and manages four funds.  Who should invest in the ICICI Prudential Small Cap Fund?  Investors who wish to benefit from the higher growth potential and re-rating scope of small companies could consider taking long-term exposure in this scheme.  Why invest in ICICI Prudential Small Cap Fund?  The scheme allows investors to participate in the price discovery of small-cap stocks, usually below their full potential.  The scheme provides access to well-researched small-cap companies with a higher return potential and could grow to become tomorrow's market leaders in their respective segments.   Time Horizon  One should look at investing for a minimum of five years or more.  Investment through a Systematic Investment Plan (SIP) may help tackle broader equity market volatility.  Conclusion  ICICI Prudential Small Cap Fund provides access to well-researched small-cap companies with a higher return potential and could grow to become tomorrow's market leaders in their respective segments. The fund has consistently outperformed its benchmark. Hence, investors seeking to invest for a long-term time horizon to generate high returns with higher risk can consider this fund.  Disclaimer: This is not recommendation advice. All information in this blog is for educational purposes only. 

HDFC Asset Management Company Ltd. (HDFC AMC) is one of the largest mutual fund companies in India. It is among one of the most profitable asset management companies (AMC) in the country. The company manages assets worth Rs. 4,48,493.89 crores as of 31st Dec. 2022. Let us talk about the consumer product – HDFC Top 100 Fund.  About the HDFC Top 100 Fund  Investment objective: To provide long-term capital appreciation/income by investing predominantly in large-cap companies.   Investment process:   The fund follows the investment style of a blend of growth at a reasonable price and value, wherein the stocks are selected using a bottom-up approach. The stocks are filtered based on factors such as Business Models, Management, Financial Metrics, Valuations, etc.  Portfolio composition:  HDFC Top 100 Fund holds significant exposure in large-cap equity at 94%, and only 6% is invested in mid-cap stocks. The significant sectoral exposure is Banks, which account for over one-fourth of the portfolio. The top five sectors hold more than 60% of the portfolio.  Note: Data as of 28th Feb. 2023. Source: HDFC Mutual Fund  Top 5 Holdings for HDFC Top 100 Fund Name Weightage % ICICI Bank Ltd. 8.97 HDFC Bank Ltd. 8.84 Reliance Industries Ltd. 6.34 Infosys Ltd. 6.13 HDFC Ltd. 5.58 Note: Data as of 28th Feb. 2023. Source: HDFC Mutual Fund  Performance: Fund name 1Y 3Y 5Y 7Y 10Y HDFC Top 100 Fund Direct-Growth (%) 5.86 28.16 11.58 14.04 13.82 S&P BSE 100 TRI -0.17 26.67 11.88 13.71 13.26 Data as of 21st Mar. 2023. Note: Returns over one year are annualized Source: Value Research Online  Fund Managers for HDFC Top 100 Fund  Mr. Rahul Baijal (Since 29th Jul. 2022) – Senior Fund Manager - Collectively over 21 years of experience in equity research and fund management.  Mr. Priya Rajan (Since 01st May 2022) – Senior Equity Analyst and Fund Manager for overseas Investments - Collectively over 15 years of experience.  Who should invest in HDFC Top 100 Fund?  Investors looking to invest in an equity portfolio without the very high risk and seeking better returns than the debt instruments can consider this fund. However, investors should remain invested long-term to witness wealth creation.  Why invest in this Fund?  Large-cap funds are relatively lesser risky than mid-cap and small-cap stocks. Since this fund invests most of its funds in large-cap stocks, the downside risk is comparatively less than the other actively managed funds.  Large-cap funds provide an excellent opportunity to generate high returns over the long term.  As per the data released by AMFI for Oct-Dec. 22 quarter, HDFC AMC is the third largest AMC in India.  This fund has consistently generated good returns and outperformed the S&P BSE 100 TRI.    Time Horizon  One should look at investing for a minimum of three years or more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The HDFC Top 100 Fund is one of the oldest funds with a track record of over 25 years and has delivered over 18% CAGR since its launch. Thus, it is best for investors willing to take some additional risk for good returns over the long term. Disclaimer: This is not recommendation advice. All information in this blog is for educational purposes only. 

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. https://www.youtube.com/shorts/35bgR0Abv4w Let us talk about the consumer product – DSP Small Cap Fund.  About the DSP Small Cap Fund  Investment objective: The primary investment objective is to seek to generate long-term capital appreciation from a portfolio substantially constituted of small-cap companies' equity and equity-related securities.  Investment process:  DSP Small Cap Fund invests in some of the smallest, fastest growing & innovative Indian companies.   It considers companies with strong business models in high-growth sectors and efficient management teams focused on utilizing resources wisely to unlock high-growth potential eventually.  Some of these companies could be just starting out and still in the early stages of proving their business plans- generally under-owned, under-researched & under-valued.  Portfolio composition:  The portfolio holds significant exposure in small-cap stocks at 86%, and major sectoral exposure is to Industrial Products, which account for roughly 14% of the portfolio. The top five sectors hold more than 50% of the portfolio.  Note: Data as of 28th Feb. 2023. Source: DSP MF  Top 5 Holdings for DSP Small Cap Fund Name Weightage % Cyient Limited 4.09 Suprajit Engineering Limited 3.66 Ratnamani Metals & Tubes Limited 3.56 Triveni Engineering & Industries Limited 3.29 K.P.R. Mill Limited 2.95 Note: Data as of 28th Feb. 2023. Source: DSP MF  Performance:  If you had invested 10,000 at the fund's inception, it would now be valued at Rs 1,09,789.   Note: Data as of 28th Feb. 2023. Source: DSP MF  Since its inception, the fund has generated a CAGR (Compounded Annual Growth Rate) of 16.46% Fund Manager  Vinit Sambre has been managing this fund since June 2010 as a Co-Fund Manager. Vinit joined DSPIM in July 2007 as Portfolio Analyst for the firm's Portfolio Management Services (PMS) division, which manages discretionary accounts and provides advisory services to institutional clients. As a research analyst, he focused on sectors like Pharmaceuticals, Power Utilities, Chemicals, Fertilizers, and Textiles. Vinit specializes in the small and mid-cap space and has over 16 years of relevant work experience. Vinit is a Chartered Accountant from the Institute of Chartered Accountants of India.  Resham Jain has been managing this fund since March 2018 as a Co-Fund Manager for the Equity portion. Resham joined DSP Investment Managers in March 2016 as Assistant Vice President of the Equity Income Team. He has over nine years of experience. Before joining DSP Investment Managers, he worked for B&K Securities (I) Private Limited, Jaihind Projects Ltd & Arvind Ltd.  Abhishek Ghosh has been managing this fund since March 2013 as a Co-Fund Manager. Abhishek has a total work experience of 14 years. Abhishek joined DSP investment managers in September 2018 as Assistant Vice President of the equity team. His prior experience includes working in Motilal Oswal, IDFC Securities, BNP Paribas, B&K securities, and Edelweiss Financial Services. He has an MBA in finance and holds a Bachelor's in Electronics Engineering.  Jay Kothari has been managing this fund since March 2013 as a Co-Fund Manager. Jay Kothari, Vice President & Product Strategist -Jay has been with DSP Investment Managers since May 2005 and has been with the Investment function since January 2011. Before joining DSPIM, Jay worked for Standard Chartered Bank for a year in the Priority Banking division. Jay completed his Bachelor of Management Studies (Finance & International Finance) from Mumbai University and an MBA in Finance from Mumbai University.  Who should invest in DSP Small Cap Fund?  Consider this fund if you  Are you looking to tactically allocate 10-15% of your portfolio to high-risk opportunities?  Understand that very high risk is involved in this category of funds in the quest for high returns.  Have the patience & mental resilience to remain invested for a decade or more.  Recognize market falls as good opportunities to invest more.  Why invest in this Fund?  This high-risk, high-return strategy offers the potential to 'earn big' returns.  It can help you beat the impact of rising prices over the long term.  It can be a suitable choice for tactical allocation.  Time Horizon  One should look at investing for at least ten years or even more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The DSP Small Cap Fund has a proven track record of more than 15 years, where it has delivered a CAGR (Compounded Annual Growth Rate) of 16.6%. Thus, it is the best option for investors who are willing to take small-cap exposure with high risks for a long-term time horizon.   Disclaimer: This is not recommendation advice. All information in this blog is for educational purposes only. 

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 consumer product – DSP Value Fund.  About the DSP Value Fund  Investment Objective: The primary investment objective of the scheme is to seek to generate consistent returns by investing in equity and equity-related or fixed-income securities which are currently undervalued.  Investment Process   This fund is designed on fundamental value-investing principles & forms its portfolio through a carefully constructed framework.  It aims to invest in 'good' Indian & international companies at 'good', reasonable prices.  It aims to allocate up to 35% to global 'value' stocks via internationally renowned value managers like Berkshire Hathaway, Lindsell Train, Harding Loevner, Veritas, etc.  Portfolio Composition  The portfolio holds major large-cap stocks and global funds exposure at 36% and 26%, respectively. Significant sectoral exposure (apart from the mutual funds) is to Pharmaceuticals & Biotechnology, which account for roughly 10% of the portfolio.  Note: Data as of 28th Feb. 2023. Source: DSP MF  Top 5 Holdings of DSP Value Fund Name Weightage % Veritas Global Focus Fund 7.06 Berkshire Hathaway Inc - Class B 6.87 Harding Loevner Global Equity Fund 5.55 Lindsell Train Global Equity Fund 5.39 WCM GLOBAL EQUITY FUND 5.15 Note: Data as of 28th Feb. 2023. Source: DSP MF  Performance  If you had invested 10,000 at the fund's inception, it would now be valued at Rs 13,075.   Note: Data as of 28th Feb. 2023. Source: DSP MF  The fund was launched on 10th Dec. 2020. Since it has been only two years, investors must stay invested longer to see the fund outperform the index.  Fund manager  Aparna Karnik has been managing this fund since May 2022. Aparna Karnik is Head-Quantitative Investments and Analytics (QIA). Aparna has 17 years of experience in investment, credit and operations risk management. Before joining DSP, she worked with CRISIL Ratings in their Structured Finance Division, Large Corporates Group.  She holds a Masters's in Management Studies from Jamnalal Bajaj Institute of Management Studies.  Prateek Nigudkar has been managing this fund since May 2022. Prateek Nigudkar is a Quantitative researcher at DSP Investment Managers Pvt. Ltd. (DSPIM). Before joining DSPIM, Prateek headed a team of Quantitative analysts in the Equity Smart-Beta team for State Street Global Advisors (SSGA) in India. Prateek holds a Master's in Quantitative Finance from the University of Washington and is FRM certified. He has also cleared all three levels of the CFA examination from the CFA Institute.  Jay Kothari has been managing this fund since December 2020. Jay Kothari, Vice President & Product Strategist -Jay has been with DSP Investment Managers since May 2005 and has been with the Investment function since January 2011. Before joining DSPIM, Jay worked for Standard Chartered Bank for a year in the Priority Banking division. Jay completed his Bachelor of Management Studies (Finance & International Finance) from Mumbai University and an MBA in Finance from Mumbai University.  Who should invest in DSP Small Cap Fund?  Consider this fund if you  Are a first-timer or a relatively new equity market investor?  Have the patience & mental resilience to remain invested for a decade or more.  Recognize market falls as good opportunities to invest even more.  Accept that equity investing means exposure to risk.  Do not chase the highest possible returns at all times.  Why invest in this Fund?  Offers the potential to earn relatively risk-free, stable returns higher than those from pure fixed-income investments.  Get the benefit of equity taxation despite the low-risk orientation.  Time Horizon  One should look at investing for at least ten years or even more.  Investment through Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  The DSP Value Fund is a good option for those who believe in the principles of value investing. Investors investing in this fund should remain invested long to reap the benefits of compounding.   Disclaimer: This is not recommendation advice. All information in this blog is for educational purposes only. 

In the previous article, we discussed taxation in mutual funds. In this article, we will discuss the types of risks associated with mutual funds. Mutual funds are excellent investment options for both novice and seasoned investors; they are currently a very popular investment option due to their capacity to provide inflation-beating returns.   Mutual funds combine money from a range of individuals and institutions and invest in various asset classes such as shares, debt, and other money market instruments after conducting thorough research to maximize capital appreciation or income generation.  The investors are subject to risks like volatility risk, management risk, liquidity risk, interest rate risk, and inflation risk. We shall now discuss all such risks that come up with an investment in mutual fund schemes; a sound knowledge of these is helpful to an investor in making the investments.  There are two types of mutual funds: equity mutual funds and debt mutual funds. Risks associated with mutual funds There are major two types of risks associated with mutual funds that the article will discuss such as risks associated with equity mutual funds and risks associated with debt funds. 1. Management risk A company's management refers to the group steering the organization on the right path.   Changes in the management team and their activities, such as pledging shares, decreasing or increasing promoter stakes, and so on, can impact the price of a company's stock.   While principles such as solid corporate governance and high transparency benefit a company's stock, mismanagement, team conflicts, and other factors depress the stock price and thereby affect your mutual fund investments as well if that particular stock is a part of your investment.  2. Liquidity risk When it comes to equity investments, long-term investing has the best possibility of securing investment profitability.   Thus, it is difficult for equity mutual funds to quickly buy or sell stock investments to profit or minimize a loss leading to a situation where the scheme's liquidity is insufficient to meet investors' redemption requests.   A liquidity crisis like this is most prevalent when investors make a high number of redemption requests due to prolonged bad market inequities.   Many equity funds invest a small amount of their capital in debt and money market instruments to mitigate this risk and ensure more substantial returns.  3. Volatility risk An equity mutual fund invests mainly in the stocks of publicly traded corporations.   As a result, an equity fund's value is in line with the performance of the companies in whose stocks it has invested. Current macroeconomic conditions have an impact on the company's performance.   Government, Sebi, and RBI policies, consumer preferences, the economic cycle, and other macroeconomic changes are all examples of factors that directly impact the price of company stock, either positively or negatively.   The value of an equity fund is affected by this movement. Large-cap corporations, on average, are less prone to such volatility than mid-cap and small-cap market enterprises.   Similarly, when compared to thematic or sectoral equity, funds are diversified. Equity funds are less likely to be influenced by such volatility. Risks associated with debt funds 1. Inflation risk Bonds and money market instruments are fixed-rate instruments because their coupon rates are fixed. As a result, rising inflation erodes the coupon rate-based revenues that the debt fund aims to receive.   As a result, rising inflation causes bonds to trade at a lower price on the bond markets, lowering their potential returns for the debt funds investors. On the other hand, lower inflation tends to push bond prices and debt fund investment values higher.  2. Credit risk Government securities, corporate bonds, certificates of deposits, commercial papers and other debt and money market instruments are among the items that debt funds invest in.   Credit ratings such as AAA, AA+, AA, AA- and so on are offered by credit rating agencies such as CRISIL, ICRA, and Fitch they evaluate the credit quality of these investments, which vary depending upon the issuer.   A specific risk is that the borrower fails; they do not pay the principal and/or interest on the loan.  3. Interest rate risk A risk linked with debt funds is interest rate risk. Bonds are exchanged in the same way as stocks, and their prices fluctuate.   The economies' interest rates mainly influence the movement in bond prices; the link between interest rates and bond prices is the opposite. As a result, as the economies' interest rate rises, the values of current bonds fall since they continue to offer the same interest rate.   Interest rate risk refers to price variation in bonds caused by changes in interest rates it is a market-wide element that influences bond prices and, as a result, the value of all debt mutual funds.   The degree of interest rate sensitivity varies by debt fund type and is shown by the adjusted duration of the debt fund.   In general, debt funds that invest in shorter-term assets are less vulnerable to interest rate risk than those that invest in longer-term products.  With regard to the above-mentioned risks, it is vital to note that while mutual fund performance is always subject to numerous risks, every fund house employs a variety of tactics to reduce, if not eliminate, these well-known dangers.   As a result, even if your investment gains are not guaranteed, your chances of developing your wealth are good if you invest with a well-known fund house, choose a fund with an established track record, and make the investment with a long-term horizon. FAQs What are the three main risks associated with mutual funds? The three main risks associated with mutual funds are: Management risk Liquidity risk Volatility risk Do mutual funds have high risk? All mutual funds are risky. Its terms and conditions specify that mutual funds are volatile in nature and are subject to market ups and downs. There are different levels of risk involved in mutual funds. What is the biggest risk for mutual funds? The biggest risk for mutual funds is inflation. Inflation affects different types of funds differently. Rising inflation causes bonds to trade at a lower price on the bond markets, lowering their potential returns for debt fund investors. On the other hand, lower inflation tends to push bond prices and debt fund investment values higher. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT