Category Archives: Finance

The expense ratio is one of the most vital aspects of ETF investing. However, many investors are unaware of the fact that a portion of your portfolio is allocated to a charge termed an expense ratio each year. It's critical to understand the costs you're paying no matter what you're investing in.  And, given the prevalence of mutual funds and exchange-traded funds (ETFs), many of us pay an annual expense ratio out of our portfolios. You'll learn what an expense ratio is, why it's essential, and how to spot a good one when you see one. What is an Expense ratio? An expense ratio is a fee that a mutual fund or exchange-traded fund charges investors (ETF). This charge covers the costs of management, asset allocation, marketing, and other services.   These fees calculation are done as a percentage of an investor's annual cost. ETF expense rates are usually less than 1%. That means you spend less than $10 per year on expenses for every $1,000 you invest.  "In the simplest terms, an expense ratio is a convenience fee for not having to pick and trade individual stocks yourself".  - Leighann Miko, certified financial planner (CFP) and founder of Equal Financial, explains expense ratio The expense ratio is the reward for the fund managers for supervising the fund's holdings and coordinating investment plans in actively managed funds.   Activities of the fund manager include time spent choosing and trading securities, reallocating the portfolio, processing payouts, and other procedures necessary to keep the fund up to meet its objectives.  The expense ratio encompasses license fees paid to significant stock indices for passive funds and ETFs that don't actively select investments and instead try to replicate the underlying index.  Calculation of expense ratio  Expense ratio = Total fund expenses / Total fund assets under management How do they work?  The expense ratio is expressed as a percentage of your fund investment. A fund, for example, might charge 0.30 percent. That implies for every $1,000 you put into the fund; you'll pay $3 per year.   If you own the investment for the entire year, you'll have to pay this. However, don't think you'll be able to sell your funds right before the end of the year and escape paying the fee.   The management company for an ETF will deduct the cost from the fund's net asset value daily, making it essentially undetectable to you.  What does a reasonable expense ratio look like?  According to experts, an expense ratio of < 2% is low and > 2% is considered high. The higher your expense ratio, the lower your returns will be.  As per Morningstar, the weighted mean expense ratio for ETFs in 2019 was 0.45 percent. That's less than 1/2 from what it was in 1999, and the trend is anticipated to continue. It's a matter of opinion on what defines a decent expense ratio for an ETF. Investors aren’t liable to pay hefty prices to invest in ETFs, and they should focus on ETFs with competitive and consistent expense ratios.  What else should you think when it comes to the expense ratio?  Experts advise looking for reduced-cost funds so you don't lose a lot of money in fees throughout your investment duration. It's not only the upfront costs; you're also losing the value of those assets as they compound.  Larger funds can frequently carry a lesser expense ratio because some expenditures, such as fund management, can spread over a more extensive asset base.  The smaller fund may need to charge more to break even, but as it expands, it may be able to lower its expense ratio to a comparable price.  Mutual funds may levy a sales load, which can be pretty high (up to a few percent) but is taken into account for the expense ratio. That's a different type of cost, and you must do everything you can to avoid funds that charge them. Major brokers provide many mutual funds with no sales load and low expense ratios. FAQs What is a good ETF expense ratio? According to experts, an expense ratio of < 2% is low, and > 2% is considered high. The higher your expense ratio, the lower your returns will be. Are ETFs expense ratios high? According to experts, an expense ratio of < 2% is low, and > 2% is considered high. The higher your expense ratio, the lower your returns will be. It’s a matter of opinion on what defines a decent expense ratio for an ETF. Investors aren’t liable to pay hefty prices to invest in ETFs, and they should focus on ETFs with competitive and consistent expense ratios. Is the expense ratio charged every day? If you own the investment for the entire year, you’ll have to pay this. However, don’t think you’ll be able to sell your funds right before the end of the year and escape paying the fee. The management company for an ETF will deduct the cost from the fund’s net asset value daily, making it essentially undetectable to you. Is expense ratio important in ETF? An expense ratio is a fee that a mutual fund or exchange-traded fund charges investors (ETF). This charge covers the costs of management, asset allocation, marketing, and other services. These fees calculation are done as a percentage of an investor’s annual cost. ETF expense rates are usually less than 1%. That means you spend less than $10 per year on expenses for every $1,000 you invest.  TALK TO AN EXPERT

A stock exchange is used to sell and buy ETF shares. When you purchase or sell ETF shares, you are dealing with another investor rather than the Fund Provider (e.g., Blackrock, ProShares) via a stock market.  A stock exchange is a platform where several investors can buy and sell shares simultaneously for a set price. Orders are instructions to buy or sell stocks.   It is the responsibility of the exchange to organize all these bids because each investor receives the best possible price that meets their requirements.  When trading ETFs, an investor can employ a variety of orders To purchase and sell ETFs, some investors use market orders. A market order instructs you to instantly buy or sell ETF shares at the prevailing market price.   A market order does not describe the price you wish to trade; instead, it specifies the number of shares you would like to swap. These orders are straightforward to comprehend and carry out. "You want to buy 25 units of the Vanguard Total Stock Market (VTI) at the best accessible price," a market order says. Source: pexels Market orders should not be made because? 1. You have no control over the pricing The price displayed on your broker's website is not always the price upon which the transaction is completed. The purchase can be made at a more excellent or lower price than what you planned.  2. The broker may request more outstanding account balances than required If you wish to buy ten shares at market price, you see a cost of $100, and you have $1000 in your account, your broker may want more significant balances in your account than you need.   Even if your cash amount appears to be sufficient to fulfill a market order for ten shares, your broker may need a more extraordinary account because it does not know when your market order will be fulfilled.  Limit orders do not have these flaws. They give you price control and, as a result, don't force you to keep a more significant amount in your account than is required.  A limit order instructs you to purchase or sell a precise amount of ETF units at a specific price. Only if someone else is willing to transact with you at that price will the limit order be honored.   A limit order is similar to saying, "You want to buy 25 shares of the Vanguard Total Stock Market (VTI) ETF and am ready to pay up to $50 per share" or "You want to sell 25 shares of the Vanguard Total Stock Market (VTI) ETF, and the lowest you will go is $50 per share."  The bid and ask are terms used to describe the price at which market players are willing to swap ETFs. The highest price at which an ETF share can be purchased is the bid.  The lowest price at which an ETF share can be sold is the ask. You can also glance through the order book to get a complete list of current buy/sell orders.  The likelihood of your limited order being executed and the time required for it differ based on your specific price. You can generate orders with prices identical to or better than the bid and ask if you want to fill your limit orders quickly.   A purchase limit order with a price a cent higher than the bid or a sell limit order with a price a penny lower than the ask is what we mean by slightly better.  Just because ETFs can be traded the same way as regular stocks don't imply, they should. Investors should understand the distinction between a market order and a limit order and why one trading approach may make more sense in some situations but not in other contexts. Viewpoints may sometimes turn prospective losses into gains. FAQs What is a limit order for ETFs? A limit order is a range you set when you are about to buy or sell a stock or ETF. It can be easy to make a decision when the stock or ETF is in between the range.   Why use limit order for ETFs?    The bid and ask are terms used to describe the price at which market players are willing to swap ETFs. The highest price at which an ETF share can be purchased is the bid. The lowest price at which an ETF share can be sold is the ask. You can also glance through the order book to get a complete list of current buy/sell orders.    The likelihood of your limited order being executed and the time required for it differ based on your specific price. You can generate orders with prices identical to or better than the bid and ask if you want to fill your limit orders quickly.    How do you set a price limit on an ETF? If you wish to buy ten shares at market price, you see a cost of $100, and you have $1000 in your account, your broker may want more significant balances in your account than you need.    Even if your cash amount appears to be sufficient to fulfill a market order for ten shares, your broker may need a more extraordinary account because it does not know when your market order will be fulfilled. Limit orders do not have these flaws. They give you price control and, as a result, don’t force you to keep a more significant amount in your account than is required. A limit order instructs you to purchase or sell a precise amount of ETF units at a specific price. Only if someone else is willing to transact with you at that price will the limit order be honored.   What is the risk of a limit order? The risk of the limit order is that the investors can never execute their order if the stock or ETF doesn’t fall under the range. There is also the possibility of a lack of liquidity in the stock to fill the order when the stock reaches the range.   

A systematic investment plan or SIP is the best plan that helps you invest in mutual funds on a regular basis.  You can choose to invest weekly, monthly or even quarterly – the most popular choice being monthly. There are multiple reasons why SIPs are the best way to grow your money especially when you have a goal to plan – e.g. your child’s education. SIPs can be bought easily and you can start with a very low amount - Rs. 500 per month. In this blog, we will talk about the ‘Big 5 advantages’ that SIPs offer to you as a parent. But before that, let's understand what a SIP is What is SIP? A SIP or systematic investment plan is an investment mode through which an investor can create a regular mechanism of investment for themselves. Let's take the example of investor X. Investor X wishes to invest Rs. 10,000 every month in a mutual fund. In this case, investor X can create a SIP for a fund they want to invest in and the money will be deducted every month automatically (the deduction can be weekly, monthly, or even quarterly, depending on the investor's choice). Think of it as a recurring deposit, with better returns. Now that we know what a SIP is, let's get to know why investing via SIP is the best choice you can make to enlarge your corpus. CALCULATE MONTHLY SIP 5 Reasons SIP is the best These are the 5 main reasons why you should invest via a systematic investment plan to reach your financial goals 1. Suitable for Long-Term Investment Any financial advisor will tell you that if you want to invest long-term, SIP is the way to go. The reason is simple, regular investing and automatic deductions keep investors motivated to stay invested and reach their investment goals quicker. During the 2008 financial recession, many people withdrew money from mutual funds. However, the ones that remained invested via SIP, attained a huge profit once the markets rose. Long-term investing makes sure that even if the market is down at the moment, once the markets rise, the investor will make profits. 2. Goal-planning ‍SIPs are good tools to plan for a future goal – to buy a 4-wheeler or to pay for college tuition fees maybe 10-15 years from now. When you determine the amount required to achieve your goal, you will know how much you should invest and how long it will take to reach your goal. This will help in planning effectively. Having financial goals is very important to creating a financially secure future. One must have a defined idea about what financial goal one wants to reach by the age of 30, 40, 50, and so on. 3. Effect of Compounding Compounding is one of the biggest advantages of a SIP. Over time your investments grow because you start earning returns not on your principal amount, but on the interest that keeps getting added to it. Let's take an example. Suppose you invest Rs.1,000 in a mutual fund that gives you a yearly return of 10% p.a. Your amount becomes 1,100. at the end of the first year. At the end of the second year, the rate of return is 11%, this time the returns will be calculated on Rs. 1,100 and not the principal amount, which is, Rs. 1,000. ‍This ensures the growth of your corpus and is one of the reasons why experts advise you to not withdraw your investments when the market is down. 4. Curated by Experts With the increasing number of fund types like equity, debt, mixed, gold-based, etc. there is a wide variety to choose from based on your risk appetite and preferred investment duration. This has led to customized offerings based on individual needs, supervised by experts in the SIP domain. All you need is to specify your goal and timeline and you are provided with the best possible funds that can meet your future goals. ‍SIPs have become popular over the past few years, because of the ease of investing and the flexibility provided in terms of the amount of money that can be invested. You can stay invested as long as you want, although average returns have been higher when invested in the long term. Research also shows that the returns offered by SIPs are more than recurring deposits in banks, in the long term. 5. Automates Your Investment Experience SIPs automate your investment experience, which makes you a regular investor. It is easy and convenient and because of the online surge, today, it is super easy to invest via SIP. If you choose the lump sum method, you will have to manually invest an amount and there may be times when you can miss an installment. ‍With automated installments and a streamlined process, investing via SIP has now become an extremely popular method, to reach long-term goals like saving up for your child's education. FAQs Why is SIP investment good? By investing through SIPs, you will do away with the burden of timing the market as you could then avail the benefit of Rupee Cost Averaging. By investing through SIP, you will tend to invest in the up and down markets. This helps you shy away from the volatility of the market. Additionally, you will benefit from the power of compounding, which fundamentally generates returns not only on capital but also on returns. Is SIP good for students? Investing in SIP can be a huge benefit for students. It cultivates a healthy investment habit, and they can invest a small amount to start their journey. SIP is best for beginners and a comparatively safe investment vehicle. What are the features of SIP? A SIP offers the following features: It is best for long-term investment, brings financial discipline, allows small investment amounts, benefits from the power of compounding, and is a comparatively safer investment tool. Why do people prefer SIP? A systematic investment plan helps bring discipline to an individual’s investment habits. A SIP will automatically deduct a pre-decided amount periodically. Investors also do not need to worry about timing the market while investing via SIP. It is one of the best investment vehicles for beginners. Consult an expert advisor to get the right plan TALK TO AN EXPERT

A student loan is likely the first step many students take towards financial independence, and just as with other loan applications, lenders will look into your credit score when considering your application for an education loan. To determine a student's capacity to repay an education loan, lenders investigate their creditworthiness. In this blog, we will discuss the impact of your credit score on your ability to get approved for an abroad education loan and tips for improving your credit score. Importance of credit score for abroad education loan When you apply for an education loan, a lender will check your credit score; this goes for both co-borrowers and students. When applying for an education loan, a student's credit score may be crucial, but if they don't have one, the lender will base their loan conditions on the credit ratings of their co-borrowers. A student's chances of getting financial help might be improved by meeting the lender's other qualifying standards and having a high credit score: a lower interest rate a lender approval that comes more quickly a larger loan sum for schooling an increased credit limit  a lengthier term How is the credit score calculated? Every time a person contacts a bank or other financial institution for a loan of any type, the bank or financial institution will request the CIR (Credit Information Report), which is the person's unique credit history from credit. Their credit history determines their credit score, which ranges from 300 (Worst) to 900. (Best). It is unimportant to be concerned if you haven't applied for any loans yet because your credit score will always be negative or zero. The credit score is primarily based on four factors: Repayment history - One's regularity, consistency with prior EMI payments, and other factors. A mix of loans - Several loan kinds (secured and unsecured) they have previously obtained. Credit limit - use of the credit card's or any other credit line's credit limit. Multiple loans at one time - the frequency with which they've requested or applied for loans recently. How to compare education loans? READ MORE How your credit score impacts your student loan? If you're wondering if taking out a student loan would affect your credit score, the answer is yes. Education loans, like other loans, affect your credit score if they are returned on time; if they are paid late, your score may be negatively impacted. The bulk of student loans is repaid in installments over a defined period of time. You begin to establish a history as a result of the lender reporting this to credit reporting companies. When you pay your bills on time, you'll begin establishing a solid track record for handling credit. Nonetheless, the following credit score levels are suggested for students wishing to get an educational loan to study abroad: RangeLoan Probability300-599If your credit rating is at this level, you should carefully review your financial records and concentrate on any pressing problems that could be the root of your low rating. Your chances of being approved for an education loan are decreased since financial institutions frequently see credit scores of less than 600 as being exceptionally bad.600-749Those with credit scores in this range are still qualified for student loans. Yet, the majority of banks and NBFCs are quite picky about loan applicants achieving the minimal credit score standards for education loans. 750 and aboveA credit score of 750 or above is required to be eligible for an education loan. This credit score may be used by lenders to determine the financial dependability of co-applicants and individual applicants. Tips for improving credit score The following are possible causes of your low credit score as well as suggestions for how to raise it: Overuse of credit limit: Using your whole credit limit is a sign that you lack self-control when it comes to spending. Try to keep your balance between 30 and 50 percent of your total credit limit. You'll use credit less as a result, improving your credit score. Late and failed payments: Your credit score declines if you often skip or postpone loans or credit installments. Set up reminders to pay back all borrowed money on time; this will help you build credit and get better loan conditions in the future. Rejected loan requests: Wait before submitting an application for a new loan if your previous one was rejected. When your credit score declines with each loan denial, there will be a higher chance of a fresh loan denial in such situations. Improve your credit score as a top priority to be eligible for loans. You can then file a loan application with better conditions after doing this. Be aware that the procedure can be lengthy, and loan approval can be quite difficult if you have low credit, but you may still be able to receive any other loan because the banks will keep the collateral as security until you have paid the whole loan amount plus interest. Also, it's possible that you'll only be given unfavorable loan terms and circumstances. Some of them might have greater interest rates or longer payback schedules. Consult an expert advisor to get the right plan TALK TO AN EXPERT

When an ETF's Volatility is taken into account, an investor may find it challenging to determine which fund offers the best risk-reward ratio. Learn about the four most popular volatility metrics and how they're used in different types of risk assessments here. What is Volatility ETF? Volatility is a parameter of how quickly the price of a security fluctuates over time. It expresses the degree of risk linked with a security's price movements.   Investors and traders measure a security's Volatility to assess past price fluctuations and forecast future moves. Types of Volatility 1. Historical Volatility The historical volatility indicator shows how the price of the security has fluctuated. It helps to forecast future price fluctuations based on historical trends.  However, it does not provide insight into the future direction or trajectory of the security's price.  2. Implied Volatility This is the underlying asset's Volatility that will yield the theoretical value of an option equivalent (derivatives) to the option's current market price.  In option pricing, Implied Volatility is a critical factor. It offers a forward-looking perspective on potential price variations in the future.  Most popular volatility metrics Standard Deviation The standard deviation measures an ETF's Volatility or the likelihood for earnings to rise or fall dramatically over a short period. A volatile investment is one that poses a more significant risk since its performance can swing either way dramatically The standard deviation of an Exchange Traded Fund assesses this risk by determining how much the fund varies from its mean return. For example, a fund with a steady four-year return of 7% will have a mean, or average, of 7%. Since the ETF's return in any given year does not depart from its four-year mean of 7%, the standard deviation for such an ETF would be zero.   An ETF that returned -15%, 17%, 12%, and 20% in each of the previous four years, on the other hand, would have an average return of 8.5 percent.  This fund would also have a significant standard deviation because the fund's return departs from the mean return each year.  As a result, this fund is riskier because it swings back and forth between favorable and unfavorable returns in a short period. Beta While standard deviation measures a fund's Volatility based on the spread of its returns over time, beta, another relevant statistical measure, compares a fund's Volatility (or risk) to its index or benchmark.   When a fund's beta is very near to one, it suggests that its behavior closely resembles the underlying index or benchmark. A more extensive beta implies that the market is more volatile than the benchmark, whereas a beta below suggests that the fund is less volatile than the underlying benchmark Let's take a small example about the market; the lower the beta, the less susceptible the underlying instrument is. The QQQE has a beta of 1.04, according to ETF.com, which suggests that if the Nasdaq 100 rises by 1%, the ETF will climb by 1.04 percent. Investors who anticipate a bullish market may buy funds with high betas, increasing their chances of outperforming the market. If investors expect negative demand shortly, funds with a beta of less than one are a suitable pick because they might lose less than the benchmark.  R-squared The R-squared of a fund tells investors whether an ETF's beta is adequate compared to a benchmark.  R-squared explains the degree of association between a fund's fluctuation and market risk, or, more particularly, the extent to which a fund's variability results from the general market's day-to-day variations by calculating the relationship of a fund's movements to those of an index. R-squared values vary from 0 to 100, with 0 denoting no correlation and 100 representing complete correlation. If the R-squared value of a fund's beta is near 100, the fund's beta should be trusted.  An R-squared score near zero, on the other hand, shows that the beta isn't very relevant since the ETF is being evaluated to an inadequate benchmark. More than that, the beta will be skewed by an incorrect benchmark. Because alpha is determined using the beta, it's best not to trust the number provided for alpha if the fund's R-squared value is low. Alpha The amount of additional risk that enabled the ETF to outperform its matching benchmark is measured by alpha.  Using beta, alpha evaluates the fund's return to the risk-adjusted returns of the benchmark and determines whether the fund outperforms the market, being consistent in terms of risk. For instance, if a fund's alpha is one, it exceeds the benchmark by one percent. Negative alphas are wrong since they suggest that the ETF underperformed for the fund's investors' additional, fund-specific risk. These are some factors that should help you evaluate the risk associated with ETFs. However, one must also consider their risk appetite before investing. FAQs How do you calculate the volatility of an ETF? The standard deviation measures an ETF’s Volatility or the likelihood for earnings to rise or fall dramatically over a short period. A volatile investment is one that poses a more significant risk since its performance can swing either way dramatically. The standard deviation of an exchange-traded fund assesses this risk by determining how much the fund varies from its mean return. What is a good volatility ETF? The standard deviation of an exchange-traded fund assesses this risk by determining how much the fund varies from its mean return. For example, a fund with a steady four-year return of 7% will have a mean, or average, of 7%. Since the ETF’s return in any given year does not depart from its four-year mean of 7%, the standard deviation for such an ETF would be zero. An ETF that returned –15%, 17%, 12%, and 20% in each of the previous four years, on the other hand, would have an average return of 8.5 percent. This fund would also have a significant standard deviation because the fund’s return departs from the mean return each year. As a result, this fund is riskier because it swings back and forth between favorable and unfavorable returns in a short period. What is a good volatility percentage? The standard deviation of an exchange-traded fund assesses this risk by determining how much the fund varies from its mean return. For example, a fund with a steady four-year return of 7% will have a mean, or average, of 7%. Since the ETF’s return in any given year does not depart from its four-year mean of 7%, the standard deviation for such an ETF would be zero. An ETF that returned –15%, 17%, 12%, and 20% in each of the previous four years, on the other hand, would have an average return of 8.5 percent. This fund would also have a significant standard deviation because the fund’s return departs from the mean return each year. How does a volatility ETF work? A volatility ETF will move in the opposite direction to the popular stock market indices. When the stock market index moves up, the volatility ETF will decline. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

The education of their children remains an aspirational goal for every Indian parent. Every parent wants and strives to provide the best quality education and seeks to fulfill the dreams of their children. However, the burgeoning cost of education - both in India and abroad has been a cause of concern for parents looking for higher education for their children. While the cost of education in India has grown significantly over the past decade, the cost abroad is no better - owing to inflation in the local currency and rupee depreciation over the years. Now, since education is getting expensive, it is critical to have a defined savings plan from an early age - something that is affordable for parents to keep aside and gives a runaway to accumulate. For example, if parents start to save for their child's education immediately after the birth of the child, they would get a runway of 18 years for a bachelor's and 21-22 years for a master's. Starting early would help the power of compounding to work in your favor and help you get closer to the goal with a smaller sum too. The amount kept aside for this defined and critical goal balloons with every year's delay (see chart below).   2020 2030 Cost of Tuition Fees (Rs Lakhs) 25 49 Cost of Living (Rs Lakhs) 10 20 Total (Rs Lakhs) 35 69 Note: Inflation considered at 7% for both tuition fees and living costSource: EduFund Research Cost of delaying – SIP amount increases with every year skipped Note: A return of 12% is considered for the SIP computationSource: EduFund Research Let us now see an example of two parents - Abhishek and Sneha. The situation at hand –                                                         Objective – To send a child abroad for engineering education·      Abhishek – Looking for Education Loan @ 8%·      Sneha – Looking to invest systematically and accumulate corpus in 10 years, expecting returns of 12%   Abhishek and Sneha want to send their child abroad for engineering education when she turns 18. While Sneha believes in accumulating the amount by investing in a mutual fund every month, Abhishek feels opting for an education loan makes more sense. Both Abhishek and Sneha have a 10-year horizon where Sneha would save for the period aiming to make 12% returns annually, and Abhishek is looking to repay the loan borrowed at 8%. Let us evaluate which is a better plan - The Results Corpus required -   2020 2030 Cost of Tuition Fees (Rs Lakhs) 25 49 Cost of Living (Rs Lakhs) 10 20 Total (Rs Lakhs) 35 69 Sneha's investment plan: Systematic Investment Plan (SIP) – Rs 30799 per month for 10 years Abhishek's loan plan: Equated Monthly Instalment (EMI) – Rs 83716 per month for a time duration of 10 years What we see is to reach her goal of global Education, Sneha set aside Rs 37K through SIP to accumulate the corpus. Abhishek, meanwhile, gets instant access to the corpus but ends up paying Rs 83716 in monthly installments. Also, by the end of 10 years, he pays Rs 31 as interest making education costs rise 45%. Both Abhishek and Sneha would have to make monthly payments, but Abhishek would pay substantially more every month. Abhishek would also spend much more on the same Education than Sneha. When to use an Education Loan? Despite starting to save early for a future defined and aspirational goal, a parent may still face a shortfall in the corpus. The reasons for the shortfall can be varied. For example, one instance could be because of the change in the nature of the goal. For instance, you might have budgeted for sending your child to Singapore but may end up sending them to the US where the cost is comparatively higher. However, this possible shortfall is not an excuse but is a function of change in the plan. In such circumstances, it makes sense to fulfill the gap with an education loan. Also, it gets to avail of a loan for part cost and not the full cost. Is it possible to reduce your SIP initially and pull it up? Of course, yes, you can always go for milestone planning where you can define a start-point, specific deadline, and final goal. This method ensures you map your SIP to your pocket size, and as time passes by, you tend to increase the outlay towards the goal. Thereby following an exponential roadmap rather than a simple straight line which may not be affordable in the initial years due to multiple other expenses. To sum up, we can say the following - Based on the child's currency age, a parent can start planning for higher education. This helps in being pocket friendly and remains disciplined for a defined liability that is due to come in a few years. Dividing the goal into smaller milestones and targeting each milestone helps the parent have a roadmap to the goal. This ensures a pocket, friendly method of investing. Education loan is available on short notice; however, it should be used to fill the gap instead of dependence on the full corpus. This strategy will allow you to fund your child's education with minimal stress. FAQs How much should we save for a child's education? Education inflation has been rising at a steady rate in the past few years. Parents should be aware of the significance of saving early to be in a position to afford their child's future education costs. The cost of education varies depending on the choice of course, so it's better for parents to start saving early, so they can adjust their portfolio once they have a goal in sight.      What is the best way to save money for a child in India? It goes on without saying that mutual funds have been gaining traction over the past few decades, and the burgeoning size of the assets under management has made people think of the investment vehicle. Also, with declining or unfavorable returns on instruments such as fixed deposits, provident funds, and the like, the most lucrative option remains – mutual funds. However, not all mutual funds would be able to help you achieve your target. Thus, you need to plan as per your risk appetite so that you do not derail from the track of your defined event.  Why should parents invest early in their child's education? While the cost of education in India has grown significantly over the past decade, the cost abroad is no better – owing to inflation in the local currency and rupee depreciation over the years.   Since education is getting expensive, it is critical to have a defined savings plan from an early age – something that is affordable for parents to keep aside and gives a runaway to accumulate. For example, if parents start to save for their child's education immediately after the birth of the child, they would get a runway of 18 years for a bachelor's and 21-22 years for a master's. Starting early would help the power of compounding to work in your favor and help you get closer to the goal with a smaller sum too.   What is the best investment for a child's education?   By investing through SIPs, you will do away with the burden of timing the market as you could then avail the benefit of Rupee Cost Averaging. By investing through SIP, you tend to invest in the up-and-down markets. This helps you shy away from the volatility of the market. Additionally, you will benefit from the power of compounding, which fundamentally generates returns not only on capital but also on returns.  

With the rising demand and value of knowledge, education is getting expensive every year. The inflation in education is possibly higher than household inflation which is deterring the financial preparedness of parents for an aspirational and defined event like education. Talking of the primary school, per the data of NSSO (National Sample Survey Office), the annual expenditure on the private child has increased by a whopping 200% over the last ten years. In contrast, the higher education expense has been more amplified during the period. Thus, it is essential to have a dedicated financial strategy in place for education as one has it for retirement. It would help if you base your strategy on the basis of needs, and implement it with a sound investment portfolio so that over the long term, during your child's education (India or abroad), the cash flow doesn't become difficult in your pocket. Plan for your child's future needs 1. Know the cost The most fundamental problem for a parent is not knowing or understanding the total cost that will be incurred in his/her child's education. Given that education inflation is much higher than household inflation, it is crucial to assess the cost of education as the necessary first step. To estimate the cost, a parent should look out for an answer to the following questions - Which country do you want to study in? (for example, US, UK, Canada, etc.) What degree are you targeting – bachelors or Master's? What type of college are you targeting? (example, rank between 1-5, 5-25, etc.) Which course/discipline are you looking at? (for example, Management, Engineering, etc.) What is the tuition fees currently of the selected college? What will be the future value of the tuition fees when your child goes for education? To give a simple estimate, a post-graduate program in IIMs during 2010 was in the range of Rs 4-6 Lakhs. A decade later, the program is costing around Rs 22-25 Lakhs. The same program is likely to cost nearly a fortune a decade from now. Even if the rise in the cost is pegged at 5%, the cost increases to 40 Lakhs for your child's education at a premier university. Now, another essential cost that parents tend to miss is the cost of living. The living cost has been rising exponentially, and thus it would be useful to add to the tuition cost provided the accommodation is not likely to be provided by the university. While the dynamics of the universities may change in a decade or two from now but it is always better to be over-prepared than to be under-prepared and scout for funding options at the eleventh hour using illiquid assets such as real estate. Thus, it is advisable to add the cost of living that is likely to be incurred should your child go to another city/country for his/her bachelor' and/or Masters' degree. 2. Investing in mutual funds for a child's education It goes on without saying that mutual funds have been gaining traction over the past few decades and the burgeoning size of the assets under management has made people think of the investment vehicle. Also, with declining or unfavorable returns on instruments such as fixed deposits, provident funds, and the like, the most lucrative option remains - mutual funds. However, not all mutual funds would be able to help you achieve your target. Thus, you need to plan as per your risk appetite so that you do not derail from the track of your defined event. The following are some tips to get started Make investment your habit. Similar to how you would pay your EMI and bills on time every month, put aside a small amount every month for different goals. The method is called a systematic investment plan. A SIP works best for both - salaried and business class. Now, how do you get how much to invest? Well, it is not very complicated as you may think and neither every number will help you get there. All you need is an investment advisor who can analyze and plan your personal finance. Similar to how Doctor is for a patient, the advisor is for an investor. The advisor focuses on your income, expenses, dependents, liabilities, time horizon, goal amount, and the like to arrive at a risk profile. Based on the risk tolerance, the advisor helps you shortlist the funds that will suit your risk profile. Benefits of investing by way of SIP By investing through SIPs, you will do away with the burden of timing the market as you could then avail the benefit of Rupee Cost Averaging. By investing through SIP, you will tend to invest in the up-market and the down-market. This helps you shy away from the volatility of the market. Additionally, you will benefit from the power of compounding, which fundamentally generates returns not only on capital but returns also. How do you choose the funds for your Child's Education? Deciding to invest in mutual funds is only the first step. Selecting which fund to invest in is a broader choice to make. Hence, you must research how to invest in mutual funds, which funds have delivered remarkable historical returns over the long term, how much risk you can afford, and what your investment horizon is. The choice must be made depending upon your specific requirements of generating adequate corpus in the long term to fund your child's education. You must carefully keep a check on the following before you make your decision- Look at the time that you have to stay invested in a fund to achieve your target amount. If you have more than ten years in hand, you can consider investing fully in equities as it offers the highest growth potential. However, if you have between 5 and 10 years in hand, it might be more suitable to opt for a balance between equity and hybrid funds. Instead of investing in just a single fund, diversify your investments across at least two or three different funds. Closer to the horizon, consider shifting from equity to debt funds and lastly when you reach very close to the goal, consider capital protection as objective and not appreciation and look for safer funds such as liquid funds. When should you plan? “I made my first investment at age eleven. I was wasting my life up until then” -    Ace Investor Warren Buffet When it comes to investing, starting early is the key to ensuring that you're financially secure. For instance, if you start saving at the birth of your child, in 18 years by investing only 21K per month, you can accumulate as much as Rs 1.5 crore which should suffice for the global education of your child (assuming 12% annual returns). To sum up, the following are the key points on how to put mutual funds in the task of your child's education planning - The cost of education is rising. Thus, it is crucial to start saving at an earlier date to avoid a future financial burden. Do not mix insurance with investment - as you would have seen in multiple cases. Insurance provides risk management, whereas mutual funds provide returns. The financial strategy of investing in a mutual fund is a combination of time, risk appetite, income level, and target amount. Investing regularly helps keep the market volatility at bay and inculcates investment discipline in your savings plan. FAQs How to invest in mutual funds for child education?   Deciding to invest in mutual funds is only the first step. Selecting which fund to invest in is a broader choice to make. Hence, you must research how to invest in mutual funds, which funds have delivered remarkable historical returns over the long term, how much risk you can afford, and what your investment horizon is.   Where can I invest money in education?   It goes on without saying that mutual funds have been gaining traction over the past few decades, and the burgeoning size of the assets under management has made people think of the investment vehicle. Also, with declining or unfavorable returns on instruments such as fixed deposits, provident funds, and the like, the most lucrative option remains – mutual funds. However, not all mutual funds would be able to help you achieve your target. Thus, you need to plan as per your risk appetite so that you do not derail from the track of your defined event.  What is the best investment for kids?   By investing through SIPs, you will do away with the burden of timing the market as you could then avail the benefit of Rupee Cost Averaging. By investing through SIP, you will tend to invest in the up and down markets. This helps you shy away from the volatility of the market. Additionally, you will benefit from the power of compounding, which fundamentally generates returns not only on capital but also on returns.   Is SIP good for child education?   With the rising demand and value of knowledge, education is getting expensive yearly. Make investment your habit. Similar to how you would pay your EMI and bills on time every month, put aside a small amount every month for different goals. The method is called a systematic investment plan. A SIP works best for both – salaried and business class.   Consult an expert advisor to get the right plan TALK TO AN EXPERT

With the value of a foreign education increasing by the day, education loans for paying college tuition fees have become very common and easy to avail too. ‍Education loan disbursals from banks and various financial institutions to Indian students, studying in India and abroad increased to 92,711 Crores this year from 90,345 Crores last year. https://www.youtube.com/shorts/4lVk1mKqwaI ‍However, this data hides an important issue – the number of students who are not paying their education loans back has also been increasing. Banks have reported 7-9% of loans as bad loans over the past few years, by Indian students studying in India and abroad. Best Time to Apply for Education Loans Read More Such a high amount of non-repayment is being attributed to a general economic slowdown, changes in immigration policies by various countries, and a supply-demand mismatch in the candidate's skills and jobs available. Not repaying an education loan can get students into many problems and we are not talking about only the legal issues. While education loans have been the answer for many Indian middle-class families to pursue their dream education since they are easily available from banks and other financial institutions. Apply For Education Loans Is taking an education loan a good idea? The rising cost of education has made taking loans to be a decision fraught with concerns. Even payment for an average school abroad can set you back by 40-50 lakhs if you include your cost of living in that country. Quite a few colleges in India have become very expensive over the years. This is quite obvious considering that college tuition fees have seen a steep rise compared to anything else – be it homes, vehicles, or computers – adjusting to inflation that happens in prices year on year. And this is when salaries/wages have seen only a nominal increase. Scholarships and grants are another way that allows students to afford expensive education. However, the sheer number of students who are aspiring to study in a young country like India makes it a formidable task to be eligible for a scholarship. With loans being the only option in many cases to achieve a good education, fresh graduates are taking up jobs that do not match their skills and with less promise, because good jobs are not on offer. The job of their dreams can wait while the loan is repaid first. The huge EMI also makes them less eager to spend on a house and postpone many important purchase decisions. So how do we make education accessible to a vast number of students without them staring at a huge debt burden after graduating? 3 Steps on How Education Loans Work? Read More ‍What's the solution?‍ A little bit of planning, a few years before the time comes to apply for colleges is all it takes to not get into the system of loans. Put away savings for education that you can use to pay for college. These savings should be such that the money grows, while your child grows. While education goals may vary as your child grows and his/her interests change, the fact that he needs a good education will not change. Tips to get Education Loans for Abroad Studies Read More What do you do in this case? ‍There are apps like EduFund that allow you to plan for your child based on future goals. We have the expertise that can help you understand the financial goals you need to set, to send your child to a prestigious college abroad or in India. Our college savings calculator is comprehensive and includes tuition and staying expenses in a particular city too. Investing in SIP mutual funds is recommended to ensure good returns in the long term. So, starting early adds a lot of value to your fund. Conclusion Before you start planning for your child's education, you must have a specific goal. And an education fund is paramount to reaching those goals With this education = corpus, you can ensure that your child doesn’t start his/ her future career with the worry of paying back a loan. And that will be the biggest present you can gift your child, the gift of education! FAQs Is taking an education loan a good idea? Education loan is a great choice for Indian students who wish to study abroad but it's important to do your research before you avail of one. There are interest rates that students must consider and the process of repayment. One must research whether the course is covered by the loan or not if your bank is offering a low-interest rate, how much loan coverage should you opt for, and the ROI of your course. Can you study abroad without an education loan? Yes, it is possible to study abroad without an education loan. You can apply for scholarships, borrow money from your parents, or use an education fund if your parents have started one for you. If you are planning to go abroad for a master's or MBA then you can start saving and investing for your education as well. To keep up with the living expenses, you can opt for a part-time job as well if your student visa permits it. What are some good alternatives to education loans? If you have a time horizon of 10-15 years, then considering mutual funds and investing in US stocks and ETFs is a great alternative. This option is brilliant for parents with children between the ages of 3-10 years.

The Central Bank of the United States - The Federal Reserve, since the beginning of 2020, has printed over $3 trillion with significant printing activity happening between March 4th, 2020, and April 15, 2020, when the assets of the central bank rose by nearly 50% from $4.24 trillion to $6.37 trillion respectively. The printing was majorly carried out to combat the impact the COVID-19, which has resulted in a weakening economic condition. But how does it impact the U.S. economy, currency, and Indian investors? How does the central bank put money into the economy? The Federal Reserve prints money and buys bonds equivalent to the money printed from financial institutions. This leads to a supply of currency in the economy, which is likely to drive down the interest rate (for borrowers), thereby putting an impetus on their consumption pattern. Additionally, lowering the interest rate also compels businesses to borrow and expand their presence. These activities are aimed at reviving the economy. The printing of currency, however, has led to a weakening of the dollar as seen in the dollar index chart (See charts below).  Source: FRED; EduFund Research What happens to the U.S. Dollar Index? The U.S. Dollar Index: It is a barometer for the international value of the U.S. dollar and the world's most recognized, publicly traded currency index. The U.S. Dollar Index measures the value of the U.S. dollar relative to a basket of the top 6 currencies: EUR, JPY, GBP, CHF, CAD, and SEK. As seen from the chart below, the dollar has been weakening. Note: DXY – U.S. Dollar Index; DJI – Dow Jones Industrial Average At what rate is the money printed? The maximum growth in printing was during the weeks ending March 18th, March 25th, April 1st, April 8th, and April 15th. Not surprisingly, the Dow Jones Industrial Average after bottoming out around March 18th, started to gain traction with the week ending April 8th showing a 12% increase over the previous week. During the period between March 18th to June 10th, the DJIA returned as much as 36%. The explanation for the rally is simple the money created by the central bank found its way to the American stock market and also the market outside of the U.S. in some cases. Considering the FPI activity, the data is in line with what one can expect with the creation of liquidity by the central banker. 12 months FPI flow – India in Asia looking for constructive long-term growth Has the newly printed money helped the economy? Well, the extent of the downturn and pace of recovery is uncertain and is likely to remain the same in the days to come. Until a trend for full recovery from COVID-19 is seen, re-instating confidence amongst the citizens remains a daunting task. Only with full recovery in sight, people will be able to re-engage in a broad range of activities. Also, the policy actions, to provide relief and support the economic recovery, at different levels of the government is likely to show some signs in days to come. What does it mean for Asian investors, particularly in India? A weakening dollar signals a higher risk appetite and is considered positive for growth in emerging economies. Further, the likelihood of renewed weakness in the U.S. dollar following Democrat Joe Biden's presidential victory should give another reason for investors to favor Asian stocks, including India. Robust local currencies help bolster the national balance sheet, and borrowers benefit from lower dollar-denominated repayment. Faced with a softening dollar, U.S. investors tend to seek growth and earnings opportunities outside the country. This has shown some improving signs for the economy such as in India where the corporate earnings are responding positively. Conclusion We, at Edufund, believe that the dollar's woes are expected to continue and Asia, including India, is setting itself for a constructive start to 2021. Any positive development on the vaccine front is likely to encourage investors toward riskier assets while shying away from traditional havens. Additionally, the fact that Democrats do not have Senate control may reduce the possibility of future stimulus thereby putting more pressure on the Fed to act aggressively for economic revival. Thus, the currency is likely to depreciate over the longer term, due to less favorable U.S. interest rates relative to other G-10 currencies than in the past. FAQs What is the U.S. Dollar Index? US Dollar Index is a barometer for the international value of the U.S. dollar and the world's most recognized, publicly-traded currency index. How does the central bank put money into the economy? The Federal Reserve prints money and buys bonds equivalent to the money printed from financial institutions. This leads to a supply of currency in the economy, which is likely to drive down the interest rate (for borrowers), thereby putting an impetus on their consumption pattern. What happens to the value of money if it is overprinted? Overprinting can result in the devaluing of money and also cause inflation in the market.

Ever heard of Marijuana ETFs? Marijuana has many nicknames, including weed, M.J., herb, cannabis, and other slang phrases. It's Cannabis Sativa's dried green or grey blooms.   The substance's major psychoactive component is tetrahydrocannabinol (THC), which causes people to experience a mind-altering condition when eaten. Cannabidiol (CBD), the second most crucial ingredient in marijuana, has helped treat pain, anxiety, and other ailments.  Marijuana ETFs are a relatively new and rapidly growing segment of the ETF market. Marijuana ETFs rarely invest in local pharmacies or small-scale farmers. Cannabis ETFs, on the other hand, are more likely to invest in Pharma and Biotech companies that are conducting advanced research into clinical uses for cannabinoids.   They also like to augment their cannabis portfolio with firms that support the nascent marijuana market, such as fertilizers and alcohol and cigarette corporations that have invested heavily in potential marijuana revenue streams.  For instance, the ETFMG Alternative Harvest ETF (arguably the biggest marijuana ETF in terms of AUM) invests in a wide range of marijuana-related companies, including:  G.W. Pharmaceuticals is a pharmaceutical company based in London (cannabinoid-focused medicine).  Cronos Group is a multinational conglomerate based in (production and distribution).  Canopy Growth Corporation is a publicly traded company based in Vancouver, British Columbia (research and product development).  Aurora Cannabis is a cannabis company based in Canada (product development and production).  Even though marijuana remains illegal under federal law, more than half of the states have approved medicinal marijuana, and eight states have legalized recreational marijuana, including California.   Most marijuana ETF issuers, on the other hand, go to great lengths to ensure that their funds only invest in companies that are either federally authorized or based in other locations, such as Canada.   Still, if the US Justice Department follows through on promises to pursue marijuana businesses that are legal in their home states, pot ETFs may face enormous legal risk. The perils of Marijuana ETFs Investing in cannabis, including cannabis ETFs, is fraught with danger. Regulatory uncertainties, funding challenges, and the sheer unpredictability of marketing strategies and operations could all change the future landscape, and thus the valuation of marijuana stocks and ETFs, dramatically and quickly.  1. Regulation  While recreational marijuana use and storage are now legal in some states (and medicinal cannabis use is legal even more), marijuana remains a Schedule 1 drug from the federal government's perspective.   This classification, which places marijuana alongside heroin, ecstasy, and LSD, implies that it has little medical use and is often used in the wrong ways.  This classification may result in legal ambiguity across state and federal regulations.  2. Unpredictability  Since its establishment in 2015, the U.S. Marijuana Index, which measures its largest cannabis companies, has seen both highs and lows. The index's 52-week high is 105.19, and its 52-week low is 19.91 as of July 7.  Marijuana ETFs have a total AUM of $1.94 billion, with 9 ETFs trading on U.S. exchanges. The expense ratio equals 0.71 percent on average. Equity is the underlying asset of marijuana ETFs.   The Advisor Shares Pure U.S. Cannabis ETF MSOS is the largest marijuana ETF, with $943.83 million in assets. PSDN, the finest performing Marijuana ETF in the previous year, was the Advisor Shares Poseidon Dynamic Cannabis ETF PSDN was the most recent ETF to launch in the marijuana market on 11/16/21.  Marijuana ETFs are ranked based on their AUM from highest to lowest  TickerFund NameIssuerAUMExpense Ratio3-Mo TRSegmentMSOSAdvisorShares Pure US Cannabis ETFAdvisorShares$943.83M0.73%-22.75%Equity: U.S. CannabisMJETFMG Alternative Harvest ETFETFMG$632.63M0.75%-18.09%Equity: Global CannabisYOLOAdvisorShares Pure Cannabis ETFAdvisorShares$134.25M0.76%-26.87%Equity: Global CannabisPOTXGlobal X Cannabis ETFMirae Asset Global Investments Co., Ltd.$76.85M0.51%-27.38%Equity: Developed Markets CannabisCNBSAmplify Seymour Cannabis ETFAmplify Investments$65.73M0.75%-23.30%Equity: Global CannabisTHCXThe Cannabis ETFOBP Capital LLC$55.13M0.75%-26.96%Equity: North America CannabisTOKECambria Cannabis ETFCambria$21.82M0.42%-8.73%Equity: Global CannabisPSDNAdvisorShares Poseidon Dynamic Cannabis ETFAdvisorShares$8.24M0.92%-27.61%Leveraged Equity: Global CannabisBUDXCannabis Growth ETFBanhazl$3.22M0.79%-27.10%Equity: Global Cannabis Alternative index funds and ETFs are better suited for beginning investors or those seeking predictability. FAQs Are marijuana ETFs a good investment? Investing in Marijuana ETFs is new and has its set of risks. Investing in cannabis, including cannabis ETFs, is fraught with danger. Regulatory uncertainties, funding challenges, and the sheer unpredictability of marketing strategies and operations could affect one's returns dramatically. Is there a marijuana stock ETF? Some high-performing marijuana stock ETFs are - ETFMG Alternative Harvest ETF, AdvisorShares Pure US Cannabis ETF, and ETFMG U.S. Alternative Harvest ETF What is a good marijuana ETF? Cambria Cannabis ETF (TOKE)AdvisorShares Pure US Cannabis ETF (MSOS)AdvisorShares Pure Cannabis ETF (YOLO)ETFMG Alternative Harvest ETF (MJ)Amplify Seymour Cannabis ETF (CNBS)The Cannabis ETF (THCX)Global X Cannabis ETF (POTX) What is an ETF? An ETF stands for exchange-traded fund (ETF). One single ETF is a basket of securities that can be bought and sold like mutual funds through a brokerage firm. ETFs track a specific index such as S&P, sector, commodity, or other assets. Much like stocks, ETFs can be traded on the market. Is an ETF better than a stock? Investing in an ETF is less risky than investing in a stock, as ETFs are diversified. In the case of ETFs, investors do not control what happens to the portions of the ETFs. ETFs have a diversified profile of assets, and the risk associated with the investment is reduced significantly. In stocks, the risk attached is higher as the stock price depends entirely upon the company’s performance and other exogenous factors of the world. If you can digest the unpredictability of an unpredictable market in return for receiving it at a very early stage and your investment is well-diversified and healthy, cannabis ETFs could be a good fit for you.

Fixed Maturity Plans (FMPs) are close-ended debt funds that are investible for pre-defined lock-in periods. The tenure for different Fixed Maturity Plans can vary based on the time horizon for which the investment is made, ranging from 30 days to 5 years. Many investors, especially those who are just starting their investment journey, are on the lookout for low-risk instruments that provide consistent returns. For individuals who are risk-averse, Fixed Maturity Plans (FMPs) might be an option worth considering. To invest in FMPs, the way to go is through NFOs (New fund offers) or via companies that provide asset management services, making their investment at NFO. Fixed Maturity Plans mainly consist of debt instruments like treasury bills, corporate and government bonds, commercial papers, non-convertible debentures, securitized debt instruments, and certificates of deposit. The main purpose of this plan is to shield investors from interest-rate fluctuations and provide consistent returns. Moreover, FMPs are known for offering better returns than bank fixed deposits (FDs). Characteristics of Fixed Maturity Plans The silent features of Fixed Maturity Plans are as follows: Close-ended scheme: The schemes are close-ended because individuals can invest in these plans only by subscribing to NFOs where a given number of Net Asset Value (NAV) units are issued against the funds. These NAV units are tradeable in the stock market like any other script/share.  Portfolio composition: Fixed Maturity Plans are curated to alleviate the effects of stock market volatility and the interest rate risk on the portfolio. This is possible mainly in the case of debt securities. Interest-rate sensitivity: FMPs are less susceptible to interest-rate fluctuations because extended maturity periods stabilize interest rates in the long run. Quality of assets: The debt instruments issued by big and reputable companies play a significant role. Given their command in the market, these companies can offer good returns on their tools. Besides, fund managers and portfolio managers also have the incentive to choose from the available investments to maximize the returns on FMPs. Lock-in period: Fund withdrawal during the tenure of the investment scheme is not possible. Apart from this, investments in Fixed Maturity Plans are made only once, i.e., a flat sum. The main aim of such rules and regulations is to ensure ample time for the returns to exhibit the magic of compounding. Advantages of fixed maturity plans There are multiple benefits that are associated with investing in Fixed Maturity Plans Lower-risk: The risk associated with FMPs is considered to be lower than several other investment options. The investment is deemed secure because FMPs primarily target the debt securities that well-known listed companies issue in the market. FMPs are backed by high ratings given by renowned credit rating institutions. Investment in highly rated instruments also reduces the risk of default. These plans provide a balance to investors by protecting their capital and acting as defensive investments. Stability: Due to less exposure to equity volatility and lower interest rate risk, these funds fluctuate less than the markets. These plans become attractive to investors in recessionary times because of the safety of capital and the returns offered under the circumstances. Disadvantages of Fixed Maturity plans Lower yields: By now, we all know that higher rewards are linked with higher risks. The returns on these plans are lower than the equity benchmarks as the rate of interest stays the same for the entire timeframe of the investment. Less liquidity: The lock-in period of FMPs means that the investments cannot be withdrawn before maturity. This lack of liquidity might prove to be an inconvenience for some investors. Tax liabilities on FMPs FMPs attract STCG (Short Term Capital Gains) or LTCG (Long Term Capital Gains) tax depending upon the time horizon of the investment. Any investment in FMP is short-term if the lock-in is less than three years and investors are liable to pay STCG based on the income tax slab they belong to. Returns on investments with a lock-in period of more than three years attract LTCG at 20% after indexation adjustments. Indexation incorporates rising prices in the economy, thereby resulting in tax benefits for the investors. Other than the taxes on the appreciated value of the investments, the FMPs with dividend options also require investors to bear the DDT (Dividend Distribution Tax) on the dividends that they receive during their investment. Who should consider investing in FMPs? Every investment option has some characteristic that makes it suitable for particular groups of people. In the case of FMPs, their low-risk feature makes them ideal for investors who are unwilling to take risks associated with the stock market. The comparatively stable returns and capital protection give the investors a sense of comfort. Additionally, the total returns are usually known beforehand because the interest rates of the underlying funds are known at the time of issuance itself. The security of these returns also allows investors to plan financially for these investments. Those who are highly risk-averse often put their entire capital into FMPs, whereas the investors looking for portfolio diversification allot a certain percentage of their capital to such funds. FMPs work well for those looking to mitigate the risk without compromising too much on the returns. FAQs What are Fixed Maturity Plans? FMPs are close-ended debt funds that are investible for pre-defined lock-in periods. The tenure for different Fixed Maturity Plans can vary based on the time horizon for which the investment is made, ranging from 30 days to 5 years. Who should consider investing in FMPs? In the case of FMPs, their low-risk feature makes them ideal for investors who are unwilling to take risks associated with the stock market. What are the advantages of fixed maturity plans? Lower-risk: The risk associated with FMPs is considered to be lower than several other investment options. The investment is deemed secure because FMPs primarily target the debt securities that well-known listed companies issue in the market. FMPs are backed by high ratings given by renowned credit rating institutions. Investment in highly rated instruments also reduces the risk of default. These plans provide a balance to investors by protecting their capital and acting as defensive investments. Stability: Due to less exposure to equity volatility and lower interest rate risk, these funds fluctuate less than the markets. These plans become attractive to investors in recessionary times because of the safety of capital and the returns offered under the circumstances. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Excited to get into the world of investing? Exchange-traded funds or ETFs might be your best bet. It offers a chance for those new to investing to gain exposure to the markets of their choice, without needing to invest exorbitant amounts of money. With ETFs, even a complete newbie can begin buying and selling investment products that could allow you to profit significantly in the long term. It is also a great way to quickly succeed at fundraising for education. You could put your money into several different asset classes like stocks, bonds, commodities, precious metals, and more. For some, SIPs and Mutual Funds may be a better choice, so we recommend reading more about them as well, before pulling the trigger and making a decision. With that said, investing carries inherent risks, so only invest what you are prepared to lose. It isn’t a good idea to bet the farm on a single ETF product that could move against you. However, in the long-term, stock indices like the S&P500, DJI, NIFTY50, and more have been known to trend upwards and be relatively safe bets to invest in. With that said, it is essential to understand exactly what an ETF is before we can delve into who they are perfect for and what their shortcomings are. Exchange-traded Funds (ETFs) - What are they & how can you profit from them? As the name suggests, exchange-traded funds, unlike Mutual Funds, are traded on stock exchanges around the world. Thousands of these ETFs are traded on a day-to-day basis by both professional traders and High-Frequency Trading bots, also known as HFTs. Photo by Anna Nekrashevich from Pexels Does all this sound a little too technical? No need to worry, because we are about to break it down for you and introduce you to the basics, along with the most important aspects that you need to know. First, we are going to dive deep into who might find ETFs a suitable option for investment. Who should invest in ETFs? While anybody above the legal age in their country could invest in an ETF, there are specific types of people that can derive great value from them - 1. Students and beginner investors For those who are completely new to this space, ETFs can be an excellent way to get started and get a feel for investing your money in different asset classes. ETFs form one of the best child investment options available today. As a student who has prior commitments and other occupations, ETFs are a powerful tool to make sure that you get a feel for investing early on. Since they require you to do very little once you have purchased them, you are much more likely to be able to track them and gain valuable experience with minimum effort. 2. Those with full-time commitments In today’s fast-paced world, not everyone has the precious resource of time to go through all of the nuances of investing. Especially for those who work a full-time job, and even potentially two jobs at the same time, it can be overwhelming and even impossible to find the time to delve deep into the financial markets and how to profit from them. In this way, ETFs are a great way for busy professionals and even fully engaged stay-at-home moms to invest their money without investing much of their time. 3. Investors looking to limit their risk in the market If you have the time to keep track of your investments but simply do not want to overexpose yourself to excessive risk, ETFs are a great way to go about investing. Mini and micro ETFs allow you to invest small amounts of money that suit your risk appetite, meaning that you only ever need to invest as much as you would feel comfortable with. This is one of the main reasons that ETFs are so popular worldwide. Are there any downsides to investing in an ETF? Investing in ETFs can be a dream come true if you’re looking to expose yourself to minimize expenses. However, as with anything in life, there are pros and cons to investing in an ETF. It helps to be aware of these downsides especially as a beginner to ETFs so that you can keep yourself better informed and avoid any surprises. Some of the downsides to investing in an ETF are - 1. Transaction costs As the saying goes, nothing in life is free. This could not be more true when it comes to purchasing and holding an ETF. Depending on which exchange you choose to invest your money with, you could be subject to a whole host of fees, including - Order book fees Purchase/sale fees Time-based holding fees Over time, these fees can build up to be a significant amount of money, meaning that you will need to take this into account when calculating your final profit or loss. Fees can eat into your profits drastically, so it is essential to choose a broker or exchange that offers you the best deal when it comes to the added costs of buying and selling ETFs. 2. Tracking errors At times, ETFs can stray far away from the actual price of the index that they track. This can be for a variety of reasons, including supply and demand fluctuations, liquidity difficulties, and other such factors. In such cases, you may find that the particular ETF you have invested in trades at a different price to the particular stock, commodity, index, or precious metal that it tracks. While this is normal and generally accepted in the world of investing, it is a downside to be particularly aware of as you embark on your trading journey with ETFs. 3. Management Fees Since ETFs are products created by exchanges and financial institutions, they often attract management fees that you are likely to be liable to pay when you purchase them. These management fees contribute towards the maintenance of the exchange rate and order book liquidity and also incentivize the broker to provide such products for trading. Keep in mind though, that management fees are in general just a small percentage of the entire amount that you will spend on your purchase. However, it makes sense to shop around for exchanges that offer reduced management rates, special offers, and bonuses that can help you lessen the amount you need to pay. FAQs What is an ETF? An ETF stands for exchange-traded fund (ETF). One single ETF is a basket of securities that can be bought and sold like mutual funds through a brokerage firm. ETFs track a specific index such as S&P, sector, commodity, or other assets. Much like stocks, ETFs can be traded on the market. Is an ETF better than a stock? Investing in an ETF is less risky than investing in a stock, as ETFs are diversified. In the case of ETFs, investors do not control what happens to the portions of the ETFs. ETFs have a diversified profile of assets, and the risk associated with the investment is reduced significantly. In stocks, the risk attached is higher as the stock price depends entirely upon the company’s performance and other exogenous factors of the world. Are ETFs good for beginners? ETFs are generally suitable for beginners as they are inexpensive compared to a few other investment tools. ETFs have a diversified asset profile, reducing the risk associated with the investment significantly. Conclusion Exchange-traded funds are perfect for those looking to invest in the stock market for the first time. It also helps those who have limited knowledge of the stock market and the various intricacies that make up trading and investing. If you’re someone who is just starting or attempting to experiment with the prices of various stocks, commodities, or precious metals, ETFs are a great way to start. Just remember, however, to always do your due diligence and research the products you are interested in, and the associated risks and costs that come with them.

Finding ways to pay for school can be difficult, but attending graduate school is a necessity for your career. Naturally, the programs and location of the university would be your first priorities, but there is no way you can ignore the university's tuition rates. You would naturally assume that your parents could support your schooling, as they may have done throughout the years. However, when they fall short of raising the entire amount, there is always the option of an education loan for international studies.  Keep reading to know more about the various features of a student loan for studying abroad because there are numerous ways that you can support your education abroad!  What is a Study abroad Education Loan?  A student loan for overseas studies is a type of loan created to assist students in covering the costs of post-secondary education, including tuition, books, supplies, and living expenses while studying abroad. In comparison to other loan kinds, it could have a significantly reduced interest rate and a deferred repayment plan while the borrower is still enrolled in school.  Apply for Education Loans Why is a loan for studying abroad advantageous?  Parents may struggle to afford education costs at times. In such circumstances, a student loan can be obtained from banks or other financial institutions (NBFCs). A student loan may be used to cover all or a part of the cost of schooling. A study abroad education loan assures that a student can finish their university education without facing any financial difficulties.  Loans are generally thought of as bad debt. Given that it is an investment in oneself, it differs from a loan for international study. You are making an investment in your own higher education, which will aid in your job search. It allows you to make far more money than the loan's principal. Types of education loans  When searching for an education loan to study abroad, the following two study loan kinds may be of assistance:  1. Secured Credit  The borrower pledges a portion of their assets as collateral for this specific loan for international studies. An individual who applies for a secured loan must mortgage his property to the bank or financial institution. Moreover, the borrower's mortgaged property cannot be agricultural land.  2. Unsecured Credit  Unsecured loans are financial obligations that are not backed by the collateral of the borrower. These might be offered by financial institutions in a variety of forms or marketing bundles. A variety of requirements must be met in order to qualify for an unsecured loan.  Apply for education loans Criteria for eligibility and documents needed to apply for an international study loan  Let's now discuss some prerequisites for being eligible for an education loan to study abroad:  1. Profile of the Borrower  The GRE is a crucial consideration when applying for an international student loan. The total academic performance and professional experience, in addition to the GRE score, are important factors when applying for a loan. Don't forget that Indian citizenship is the most important requirement to qualify for an education loan to study abroad.  2. Co-borrower Information  The co-profile borrower is crucial in obtaining a student loan for international studies. A foreign education loan can be secured depending on a number of variables, including your financial situation, location, and assets you own.  3. Acknowledged university  The university's standing matters as well if you've applied there. Higher university rankings correspond to higher borrowing prospects. The best universities around the world also provide better employment opportunities, increasing the security of international student loans.  4. Norms for Underwriting  Underwriting norms are the standards set forth by loan providers to ensure that only safe and secure loans are made available. They are used to decide whether or not to provide a person with a study loan for overseas study, how much money the company is willing to loan, and at what interest rate.  Let's look at the paperwork needed for an education loan for international students:  An application form that is fully completed   Academic transcripts  Passport pictures  KYC paperwork  Bank statements with residence evidence  Evidence of income  Collateral records  A birth record  Confirmation of enrollment from a reputable university  How to apply for an International Student Loan?  Let's talk about how to apply for an international student loan now:  Decide which loan for international study suits you. Verify all details, such as the moratorium period, the payback time, the interest rate on an education loan provided by the Indian government, etc. Visit the chosen education loan's official website and complete the application. Scan and upload the necessary paperwork and await the result.  Conclusion  Nowadays, obtaining an education loan for studies abroad is not taxing, as long as you have all the necessary paperwork and know which kind of loan for foreign studies is ideal for you. Being accepted into a reputable university as an international student is one of the most important factors which further improves your chances of receiving the finest loan for overseas studies!  Consult an expert advisor to get the right plan TALK TO AN EXPERT