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What is a Mutual fund? Mutual funds are investment vehicles that pool money from a large set of investors and invest this net corpus into various asset classes such as government securities, corporate bonds, stocks of companies, money market instruments, etc., to earn the promised returns to its investors. Fund manager who plays the role of the driver to the investment train and channels the pool of investments to align with the investment mandate and objective. Multiple schemes are launched by Asset Management Companies (AMCs) or fund houses to match the investment objectives of various investors. Why are mutual funds better than direct equity? Direct equity or investing in stocks all by yourself requires a detailed study of the company, its business, financials, quarterly earnings, expected growth, and all the recent news updates around the industry and company to make an informed choice. Investing in stocks gives flexibility to the investor to pick and invest in the companies and the sectors. However, the probability of a loss or risk is also very high in these investment vehicles, which is also coupled with a prospect of high return. Investors with a deep knowledge of the markets balance the risk and return of their portfolios, but for the rest of the pool of investors, mutual funds are the most convenient vehicles for investment. These vehicles also provide the diversification required to satiate the risk appetite of the investor by investing in various asset classes, and in various sectors within the asset class in a portfolio. Advantages of Mutual Funds 1. Low ticket size, with good returns Some of the shares of Bluechip companies have high prices, which often tend to be inaccessible to the investor. For example Hindustan Unilever Ltd, the leading FMCG company has a stock price of around Rs 2400. An investor who has a lower ticket size of investment of Rs 500 or Rs 1000, would find this lucrative stock to be out of his/her investment orbit. However, with mutual funds, one can buy units of the fund starting from Rs 500, which invests into these companies with the pool of money collected from the investors, hence providing every penny with diversified returns. 2. Professional management Mutual funds offer the expertise and an army of research analysts who perform a detailed study of the market conditions, industry outlook, company’s business, and financials and make an informed decision of investing the pool of money to earn the best returns. Everyone does not have the time and the knowledge to perform research and identify the right stocks and mutual funds to provide these services on a platter! 4. Liquidity Liquidity indicates the ease of entry or exit into any instrument. For example, Company A, a renowned company with strong financials is traded more frequently than Company B, a stock of an underperforming company, implying that the stocks of Company A are more liquid and easier to trade than Company B. Similarly, mutual funds are also liquid instruments, where an investor can buy units of the fund, and in an open-ended fund, he/she can sell the shares at NAV (Subject to exit load conditions of the fund). This ensures that the investor gets fair value for the units/shares of the fund. 5. Management of risk As individual investors, we often lack the expertise to assess the risk of our portfolio. We could also put all the eggs in one basket and lose our hard-earned money overnight. However, AMCs have risk management guidelines that limit or restrict the fund manager’s investments in some sectors and stocks. This ensures that the risk in the portfolio is well calculated and within the limits as promised to the pool of investors. The fund could also invest in various asset classes – bonds, commodities, stocks, gold, etc, which not only aids in diversification but also in gaining from the high potential returns from the asset classes. The fund manager’s decisions are also backed by strong research and analysis of each sector, asset class, and the conditions of the economy. 6. Choice or variety of funds Each of us has a different personality. Some of us are aggressive with our investments and can withstand a certain percentage of volatility, whereas some of us are risk-averse investors who cannot stand the thought of losing our money. Mutual funds are available that are approximately tailored to our risk profiles. For example, an aggressive investor can choose a diversified equity fund, whereas a risk-averse investor could choose to invest in a balanced fund. 7. Taxation Mutual funds offer indexation benefits for being invested in the fund for more than a year, which finally results in tax-free gains.  7. Transparency As an investor, you can see where your money is being invested. The strategy for investing is publicly declared by the fund. The NAV also updates daily, giving a lucid picture of the investment value to its investors How can mutual funds help in saving for education? Saving for your child’s education can be a daunting task, given the rising cost of education. In our previous generation, our parents depended on FDs, gold, and PPFs to fund our education, but the returns from these asset classes would not be sufficient to beat the current educational inflation. Investment in equity would be the best route for grabbing the maximum returns over every penny. However, investing in direct equity requires detailed analysis and research coupled with the volatility of the asset class. Mutual funds would be the one-stop solution for all your long-term goals providing you with financial discipline (through SIP) and also providing the required returns to beat inflation. If the child wants to pursue his/her higher education in a reputed college for costing around INR 25- 28 lakhs today, it will multiply to a much higher amount of over INR 1-1.5 cr in the next 15 years, given the educational inflation around the globe. To save for this scenario one would have to invest approximately Rs 15,000 – Rs 22,500 per month to accumulate the final corpus. One could also rely on an educational loan in the future but could accumulate 60% of the required corpus by investing Rs 9000 per month as a SIP into the fund.    1 Cr1.5 Cr0.6 CrMonthly saving required 14,959 22,438 8,975 Expected return rate15%15%15%Time Period  15 15 15 Maturity amount      1,00,00,000 1500000060,00,000  Types of Mutual Funds A plethora of options of mutual funds is available in the market, which allows the investor to choose based on the investment horizon, risk appetite, amount for investing, etc. The funds are categorized into the following types based on the - Principal Investments Maturity Period a) Maturity Period Classification 1. Open-ended funds The majority of the funds (approximately 59%) are open-ended. These provide the flexibility to buy and sell units of the fund at any point in time. There is no maturity period. It is like buying a stock, where you transact at the Current Market price – in mutual funds you buy and sell units at NAV. There is no exit load (subject to lock-in conditions). The key feature of these types of funds would be liquidity. 2. Close-ended funds These funds have a maturity period (of 3-5 years). Investors can have an entry into the fund only at the time of the New Fund Offer (NFO). However, the exit has two routes -  Sale of units through the stock exchange: In the case when the investor needs to withdraw the amount, he/she can sell it on the exchange. However, this route could be illiquid, as one may not find enough buyers for the sale of the unit and could also result in a potential loss (by selling the units at a lower price) The second exit route is at maturity. Some mutual funds give the option to sell and exit the fund through the periodic repurchase of units at NAV 3. Interval Funds These funds have the characteristics of both open and closed-ended funds, where the fund allows the purchase/sale of units at pre-defined intervals. b) Principal Investments Classification 1. Equity funds These funds invest in Equity and equity-related instruments. The fund manager aims to beat the market/benchmark by spreading across various sectors or by picking companies across different market capitalizations. They earn more returns than the Debt and Hybrid schemes. SEBI has defined 11 categories of these funds. It has also defined the variation between the categories as follows: Large-Cap: First/Top 100 companies in terms of Market Capitalisation Mid-Cap: 101-250 companies ranked according to Market Capitalisation Small–Cap: Companies ranking above 250 with respect to Market Capitalisation 2. Debt Schemes These funds invest in fixed-income securities such as Government Bonds, Corporate bonds, commercial papers, and other money market instruments. The maturities of these are fixed, implying that the returns are unaffected by the fluctuations in the market if held until maturity. These schemes are hence considered less risky when compared to the Equity Schemes. SEBI has defined 16 categories in these funds. 3. Hybrid Schemes These schemes invest in a combination of debt and equity to create a specific investment objective. Each hybrid fund has a different % of the allocation to debt and equity. Equity Oriented These invest >65% in equity and equity-related instruments. The remaining 35% is invested into debt and other money market instruments.  Debt Oriented These invest >60% of assets in fixed-income instruments or debt instruments such as G-secs, bonds, debentures, etc. The remaining 40% is invested in equity. 4. Balanced Funds These funds invest a minimum of 65% in equity and equity-related instruments. The remaining is invested in cash and debt securities. For taxation purposes, these are considered equity-oriented funds where a tax exemption of Rs 1 lakh can be obtained on the long-term gains from the fund. Conclusion Having a financial discipline aids in having a corpus for all your long-term goals. Mutual funds act as a convenient vehicle for driving you to your financial destinations (goals). As an investor one must consider their risk profile, investment horizon, goals, and investment amount before jumping into any fund. FAQs What is a Mutual Fund? Mutual funds are investment vehicles that pool money from a large set of investors and invest this net corpus into various asset classes such as government securities, corporate bonds, stocks of companies, money market instruments, etc., to earn the promised returns to its investors. Why Are Mutual Funds Better Than Direct Equity? Both mutual funds and direct equities have their merits and demerits. If you understand the market and have a well-researched strategy then direct equity can be beneficial. If you are a newbie, then mutual funds can be helpful. These are managed by experts who monitor the market regularly to ensure the best returns for their investors. Another difference is that direct equity gives you exposure to a single stock while mutual funds can offer exposure to multiple stocks and industries at once. What are the advantages of Mutual Funds? Low Ticket Size, With Good Returns Professional Management Liquidity Taxation Transparency Reduced management risk How Can Mutual Funds Help In Saving For Education? Saving for your child’s education can be a daunting task, given the rising cost of education. In our previous generation, our parents depended on FDs, gold, and PPFs to fund our education, but the returns from these asset classes would not be sufficient to beat the current educational inflation. Investment in equity would be the best route for grabbing the maximum returns over every penny. However, investing in direct equity requires detailed analysis and research coupled with the volatility of the asset class. Consult an expert advisor to get the right plan TALK TO AN EXPERT

A benchmark in mutual funds measures the overall performance of the fund against a set standard in the market. Let us explain! We all have a “Sharma Ji Ka Beta” in our lives, who has always been 'our benchmark' for the best academic performance, best campus placement, or the one who possesses the best car, etc. He is used as the SI unit for Success by our Indian parents. Similarly, the Mutual Funds are also compared with their respective Benchmarks, to assess their performance.  What is a benchmark? Benchmark in mutual fund or finance parlance is an index or a group of unmanaged stocks which are used to assess the fund’s performance, which is directly linked to the efficiency of its fund manager. Market indices like Sensex, Nifty, and others, serve as benchmarks with which the annualized returns generated by the funds are compared against. For example, ABC fund generates an annualized return of 12.3%, whereas its benchmark generates 15% annualized returns, then the fund has clearly underperformed.  SEBI mandates the declaration of benchmarks to the fund houses (Asset management companies that manage mutual funds such as HDFC, ICICI Prudential, etc.). This aids the investor in making an informed choice about investing or exiting from the fund. The current return assessment of the benchmark returns incorporates the dividends to provide accurate information to the investor. Fund houses select the benchmark that they would like to beat, by considering various factors such as - 1. Market Capitalisation If the investment strategy of the fund is to majorly invest in large-cap securities, then it would compare itself with the Nifty 50; if it is a Small-cap fund – S&P Small Cap Index, etc. (Link to refer to the information on mutual funds, their benchmarks, and annualized returns)  2. Sector/Thematic Focus where a mutual fund invests only in a specific sector of the economy such as energy, infra, real estate, etc. One can use the benchmark to have a common yardstick for the funds that are in the same category (Large-cap, Small-cap, Mid-cap, etc). For example, Mutual fund A outperforms the index or benchmark by 6% whereas Mutual Fund B beats it by 2%; hence providing a vivid picture to the investor.  How is this a report card of the fund manager? Mutual funds promise to deliver a higher return than the market on your invested amount (also called “beating the market”) and even charge a management fee known as expense ratio for the same. The fund manager actively sells, buys, hunts for opportunities to pounce, and takes informed choices on the behalf of thousands of investors invested in the fund. If a mutual fund is delivering lower returns when compared to its benchmark – an index, it indicates that one would have earned more by investing in an Index fund (passive fund) which mirrors the stock allocation in the indices. Hence, the performance against the respective benchmark becomes the report card of the efficiency of the fund manager. Benchmarks should be used to assess the performance of the fund only after a reasonable duration of 1 year. This also provides a larger window to measure the risk associated with the fund. One also needs to assess the consistency in performance. For example, due to market downturns, the index has declined by 20%, but if the fund has declined by 15%, and also outperformed the benchmark in previous years, it can be considered for investing.  FAQs What is a benchmark? Benchmark in mutual fund or finance parlance is an index or a group of unmanaged stocks which are used to assess the fund’s performance, which is directly linked to the efficiency of its fund manager. Who sets the benchmark of mutual funds? In India, SEBI mandates the declaration of benchmarks to the fund houses (Asset management companies that manage mutual funds such as HDFC, ICICI Prudential, etc.). Conclusion There could be a Benchmark error, where the mutual fund compares itself against a wrong yardstick. This could lead to an incorrect evaluation of the performance due to the large difference in the returns. However, as an investor, I could compare the returns of the fund with the category average which abides by the same rules of asset allocation (E.g., large-cap funds are required to invest 60% of the total portfolio into large-cap/ blue-chip companies). For example, I would like to invest in a Small Cap fund, hence taking an average of the returns of the Small Cap funds, I arrive at an average that shows if my fund has outperformed or underperformed with respect to its peers). One can also compare the annualized returns with benchmarks provided by research institutions such as Morningstar. They conduct detailed research into the investment portfolio, assess the asset allocation, and declare the appropriate benchmark. (Link to an example of Morningstar tool to assess fund performance) DisclaimerThe above article is only for educational purposes. It is not an endorsement or recommendation to the investment strategies. Hence, no information in this article constitutes investment advice. Past performance is not indicative of future returns. Investments are subject to market risk.

Most of us grapple with the big question – how much % of our salary should we save and how much of it should we invest? However, there is no thumb rule or fixed mantra for this (I really wish that there was). How much of your salary should go into your SIP entirely depends on your goals or the future expenses that you want to plan for. We would like to illustrate this by using some personas. PERSONA 1 (Details in the table) NameHari KrishnanAge25Salary (per month)INR 40,000Family DetailsUnmarried. Plans to get married in the next 2 yearsPlans for future (Expected Expenses)Wedding Expenses – 10 lakhsEducation Expense for kids – 30 lakhs (Above expenses are according to the current level of expenses)Total expected expenses = 40 lakhsInflationInflation = 6% Educational Inflation = 12% Hari has lifestyle expenses which include rent, food, clothing, etc., which would add up to 30% of his salary, which would be Rs 13,500. Also, he has taken a vehicle loan for purchasing a car for his parents and contributes 10% of his income to the EMI/loan repayment, which would be Rs 4500. The expenses that are foreseeable in the future are education and wedding expenses. Assuming the inflation rates as mentioned in the above table, the expenses would be as follows: ExpensesRate and Corpus requiredNumber of yearsWedding Expenses - Economy Inflation 6%Marriage expensesINR 11,91,016 3Educational Inflation11%Education ExpensesINR 2,41,86,935 20                           INR 4,07,56,391  As the wedding expenses are due in a shorter time frame, he can invest in short-term debt funds which offer an average return of 9% per annum, which would beat the inflation of 6% and offer him better returns than the fixed deposits in a financial institution. For education, which is investing for a longer time frame, he can cultivate a discipline of saving every month to keep up with the constantly evolving dreams of a child and to have enough corpus to fulfill the dreams of his child, how much of his salary should he invest into a mutual fund?  Follow the calculations in the following table. A regular Equity Mutual Fund promises a return of 12-15%. Taking an average to be 13.5% - Monthly Saving                                          19,702 Expected Return13.5%Time period20Maturity Amount (As calculated in the above table)                                2,41,86,935  Hence, Hari would have to save Rs 19,700 of his salary into an equity mutual fund to create a corpus of Rs 2.41 Cr for his child’s education. He would be still left with Rs 7000 after excluding his lifestyle expenses and his investments. As a parent, we should start as early as possible to ensure that we do not burden our child with a mountain of interest payments and principal payments from his or her educational loans. It is our responsibility as a parent to provide a stress-free and debt-free life for our children. NameRajat BhattacharyaAge45Salary (per month)INR 70,000 INR 50,000 (Wife’s Income)Net Family Income = INR 1,20,000Family DetailsMarried with two children (Ages 12,15)Plans for future (Expected Expenses)Children's Wedding Expenses – 20 lakhs per childEducation Expense for kids – 30 lakhs per child(Above expenses are according to the current level of expenses)Total expected expenses = 100 lakhsInflationInflation = 6%Educational Inflation = 12% PERSONA 2 (Details in the table) The following could be the monthly inflows and outflows of the family - Salary120000[-] Lifestyle expenses (Food, rent, clothes, celebrations, travel, etc) 40% of Salary48000[-] EMI (Loan payment) (6% of Salary)6000[-] Invest for Future expenses?? The future expenses can be detailed as follows - ExpensesRate and Corpus requiredNumber of yearsWedding Expenses - Economy Inflation 6%Marriage expensesINR 85,31,713 13Educational Inflation11%Education ExpensesINR 1,38,27,227 8Total Corpus RequiredINR 2,23,58,940  Assuming that Rajat invests in an Equity Mutual fund for the long-term expenses of the wedding and education of his children, which earn a return of 12%-15% per annum. How much would his family have to save to ensure that they have a large enough corpus to cushion the future of their children? Monthly SavingINR 62,067 Expected Return13.5%Time period12Maturity Amount (As calculated in the above table)INR 2,23,58,940  In both personas, the estimated returns offer a higher benefit and enable a smooth sailing journey to reach your destinations.  Start early and reap the benefits of compounding. Also, do not shy away from equity markets. Index funds and other mutual funds charge a premium to manage your money to offer you a promised return. They can be considered as one of the best financial products for long-term investing to reach your milestones in life. FAQs Should I invest 20% of my salary? There is no fixed percentage that you should invest in a given year. Based on your needs and aspirations as well as budget, one can determine the available investment percentage from their income. Most investors ideally follow the 20-30-50 rule wherein 20% is for investing, 30% for savings, and 50% for spending. What is the 15x15x15 rule in mutual funds? A popular rule to become a crorepati via investing in just 15 years. If an investor decides to invest 15,000 rupees every month for the next 15 years assuming 15% returns from his/her investments then there is a high chance you will be able to earn a crore. How much of the salary should be invested in equity? Ideally, one should invest 20 to 30% towards equity investment from their salaries. Starting early and taking advantage of compounding interest can

Mutual funds have been the buzzword in the investment arena and a large number of budding investors are exploring this vehicle. Despite the awareness around this vehicle, the level of understanding of the nuances that exist in this investment route is very minimal. If you have been boggled by the jargon in the industry and would like to understand “What are mutual funds?” and the various benefits of investing in them, you have clicked on the right link – as this article provides you with a starter kit to navigate the financial jargon labyrinth. What is a Mutual Fund? Mutual funds are investment vehicles that pool money from a large set of investors and invest this net corpus into various asset classes such as government securities, corporate bonds, stocks of companies, and other money market instruments to earn the promised returns to its investors. A fund manager is the one who plays the role of the driver to this investment train and channels the pool of investments to align with the investment mandate and objective. Multiple schemes are launched by Asset Management Companies (AMCs) or fund houses to match the investment objectives of various investors. The profits (or losses) earned are apportioned according to the amount invested. For example, as shown in the figure below, 4 investors invest 1 to 4 coins in a mutual fund. After a year, the fund generates profits through these investments (capital gains or dividend earnings from the equity instruments or interest income through debt instruments). These are apportioned accordingly as 1 to 4 stars (representing units of profits) to the respective investors. As an investor, when you invest in mutual funds, you receive units of the fund in return representing your investment – similar to buying stocks of a company (however, one does not get voting rights into any company). These units are easily redeemable in the market. The price of each unit is known as Net Asset Value (NAV) and is obtained after the profits earned from the fund are adjusted for expenses and liabilities of the fund. Net Asset Value NAV = Fund Assets - Fund Liabilities or Expenses / Number of Units For example, XYZ Asset Management Company has launched a new fund and collects Rs 1 lakh from 10 investors. The fund house determines the NAV of the fund to be Rs 10. Hence each of the 10 investors receives Rs 10,000/10 (Units = Investment Amount/NAV) = 1000 units. Over a period of 1 year, the fund invests in multiple securities and earns profits which translates to an increase in NAV to Rs 15. Now, the investment value of each of the investors would have increased to Rs 15 * 1000 = Rs 15000 (New NAV * units held by the investor). Why should you invest in a mutual fund? Diversification, management of your money by financial experts, flexibility, and higher returns than typical bank deposits are some of the reasons which make mutual funds an ideal investment option. 1. Money managed by experts The fund managers who manage the pool of money are financial experts who are well-versed with the market and its patterns and have an excellent track record of managing funds. An enormous amount of research is done by the research analysts on each of the stocks or assets or sectors. This aids in handpicking the best stocks in the market. 2. No lock-in period Mutual funds do not have a lock-in period where an investor cannot withdraw the funds. Some of the instruments in the market do allow a withdrawal but charge a fat penalty for the same. Most of the mutual funds are categorized under the umbrella of open-ended schemes and have different levels of exit loads (small fees charged by the AMC for exiting the fund). ELSS, which is a tax-deductible instrument comes with a lock-in period of 3 years. 3. Flexibility Mutual funds provide the flexibility of entering and exiting the fund which is a highly desired option for most of the investors and is not available in most of the options in the market. This is owing to the high liquidity in the secondary markets (buying and selling over exchanges) for the mutual funds. Investors have also started considering mutual funds as a vehicle to save for their emergency fund.  4. Liquidity With the absence of a lock-in period, an investor can redeem his/her investments in case of a financial emergency. There is also a high level of convenience of completing the process within a few button clicks when compared to the long procedures of other investment counterparts. Post the request, the fund house credits the money into your account within 3-7 business days. 5. Diversification As a retail investor, one cannot mimic the market as our ticket sizes for investments would be very low compared to the level of diversification required to beat the market. Mutual funds invest across various asset classes or various sectors in the case of securities thus providing you with the benefit of diversification. Hence, an investor need not lose his sleep, over market volatility and fluctuations as the fund takes care of such market shocks.  6. Lower cost Due to the economies of scale of managing a large pool of money, the funds charge a very small % of the fees (also known as the expense ratio) from the investors for managing their investments. The fees range from 0.5% - 1.5% and do not exceed 2.5% which is the maximum fee that a fund can charge as per the mandates of SEBI. 7. Fund switch options Mutual funds also provide an option to the investor to switch to another fund under the fund house. It gives a smooth option to enter and exit the fund and to transfer the investments into another fund with another sector/objective of his/her choice based on the risk appetite and other factors. Systematic Transfer Plans are also available in the category which facilitates a smooth transfer of Debt to Equity hence enabling a reallocation of the portfolio of the investor. 8. Tax saving Equity Linked Savings Scheme (ELSS) can be used for tax deductions up to Rs 1.5 lakhs under Section 80C of the Income Tax Act of 1961. The instrument comes with the lowest lock-in period of 3 years when compared to other tax-saving instruments. It offers the benefits of wealth accumulation and tax savings. 9. Rupee cost averaging Investing into mutual funds through SIPs averages the cost of purchase of the units of the fund. In a bull market, where the prices are high, one purchases a lower number of units, whereas, in a bear market, one accumulates the units. Hence over a period of time, the cost of the units gets averaged providing the best price for the investor and eliminating the need to time the market. 10. Regulation SEBI strictly monitors the functioning of the mutual funds and has sacrosanct guidelines to the AMCs, ensuring the safety of the investments of a large number of retail investors. How to invest in mutual funds? There are multiple routes through which one can make investments in Mutual Funds 1. Fund houses Online website: Most fund houses provide the facility for opening an account through the fund house’s official website. The KYC or e-KYC process needs to be completed by filling in the details – PAN and Aadhar number. Post the verification of information, the fund house intimates you, and you can start investing. This hassle-free and the quick route is preferred by most investors. Apps: Fund houses also allow investors to invest, sell and buy through mobile devices. A detailed account of your portfolio can also be viewed on these apps. Offline: By visiting the nearest branch office of the fund house, where an application form is provided to initiate your account. Ensure to carry the following - Passport Size Photograph Identity Proof Canceled check Address Proof 2. Broker Also known as a mutual fund distributor, they will aid you through the end-to-end process of your investment. Information regarding the documents required and other guidelines will be provided to you along with guidance on the funds to invest in. A fee is charged by this intermediary for his/her services and is deducted as a % of your investments. 3. EduFund EduFund is a simple-to-use app that helps you invest in over 4000 mutual funds in India from all the leading fund houses in the country. The process to begin takes very little time and is quite intuitive. You just have to download the app from the app store and fill in some information to get started. FAQs What is a Mutual Fund? Mutual funds are investment vehicles that pool money from a large set of investors and invest this net corpus into various asset classes such as government securities, corporate bonds, stocks of companies, and other money market instruments to earn the promised returns to its investors. Why should you invest in a mutual fund? Diversification, management of your money by financial experts, flexibility, and higher returns than typical bank deposits are some of the reasons which make mutual funds an ideal investment option. How to invest in mutual funds? To invest in mutual funds, you can approach a broker, invest directly with the AMC and through financial investment app. Conclusion It is nearly impossible to time the market. However, with mutual funds, you need not hunt for the right time to invest because the right time would be now! Consult an expert advisor to get the right plan TALK TO AN EXPERT

Are you interested in investing in stocks with a range of market capitalizations? Do you wish to build your portfolio flexibly? Consider investing in Flexi-Cap Funds. It is a type of mutual fund that invests without limitations, primarily in large, mid, and small-cap companies. Fund managers optimize exposure to a specific market segment depending on the state of the market.  What are Flexi-Cap Funds? Flexi-Cap Funds make stock investments in various market capitalizations, topics, industries, and sectors. The fund must invest at least 65% of its assets in equities and securities related to equity, per SEBI regulations. Depending on the state of the market, the fund manager may choose to increase or decrease exposure to a particular market segment.  According to AMFI data, Flexi-Cap funds received the most money from equity funds in June 2022, amounting to Rs 2,511.74 crore. In addition, the Flexi-Cap Fund sector had a 31% average return for 2021. For example, Flexi-Cap Funds beat Multi-Cap Funds, ELSS, Small-Cap Funds, Mid-Cap Funds, Thematic Funds, and Thematic Sectoral Funds. Should you invest in Flexi-Cap Funds? If you have a more significant risk tolerance, consider investing in Flexi-Cap Funds. It is appropriate for individuals familiar with the market and may have a large allocation to mid-cap and small-cap firms. If this is your first time investing in the stock market, stay away from this one.  The stock market has been highly turbulent after Russia invaded Ukraine. It's because India imports over 80% of its energy needs, and global crude oil prices have also risen. Inflation in India is skyrocketing as domestic gasoline, diesel, and LPG costs increase. In the current market environment, Flexi-Cap Funds have chosen a novel strategy. For instance, the average asset allocation for Flexi-Cap fund schemes was 65% of assets allocated to large-cap stocks. Large-cap stocks have better stability and increased liquidity in a turbulent stock market; therefore, investing in them is a wise strategy. Large-cap companies are also more risk-adjusted during a market crash since they are more established and offer larger returns.  Flexi-Cap funds have less risk to mid-cap and small-cap firms when the markets are unstable. It gives the portfolio more stability than mid-caps and small-cap stocks, which tend to tumble in a declining stock market. If you're looking for credible alternative investments in the present market since large-cap funds have recently underperformed, consider investing in Flexi-cap funds. Why invest in Flexi-Cap Funds? You can build a diversified portfolio with the aid of Flexi-Cap Funds for every market scenario. You are exposed to equities from various sectors, industries, and themes.  To maximize investment returns, Flexi-cap funds combine various investment strategies. For instance, the value style concentrates on inexpensive companies to maximize long-term profits, whereas the growth style concentrates on growth potential.  The Flexi-Cap funds are an option; they have outperformed peers and the benchmark index over time. Additionally, seek performers that deliver in both bull and bear markets. Whenever the stock markets are down, choosing Flexi-Cap funds, which have performed well, pays off. Examine the portfolio of the Flexi-Cap fund because some are more conservative and have a bigger risk to large-cap stocks. If your time horizon is greater than five years, only then are Flexi-Cap funds required. It's because equities funds can provide long-term gains that outpace inflation. Nevertheless, pick Flexi-Cap funds with a lower expense ratio, representing the fund management cost. Over time, it contributes to rising overall returns. In summary, Flexi-Cap funds are a wise investment in a turbulent stock market.  What is the difference between Flexi-Caps and Multi-Caps?  Fund managers for multi-cap schemes must ensure that 25% of their assets are invested in each of the three market caps, large-cap, mid-cap, and small-cap. Flexi-cap funds are exempt from this restriction in all three parts.  Who should invest in Flexi-Cap funds? Long-term investors with some investing experience should consider Flexi-cap funds. It allows owners and fund managers the flexibility to make asset investments based on their perception of the market.  It might be appropriate for investors with a five to seven-year investment horizon because it might offer better returns and possibly outperform inflation. They ought to be ready for potential ups and downs in their investments, though. Flexi-cap funds taxation  Flexi-cap funds are taxed under the Income-tax Act of 1961 as equity-oriented schemes. Regardless of the slab rate, profits from a Flexi-cap scheme are taxed at a flat rate of 15% within a year. After the first exemption of Rs. 1 lakh relates to all long-term capital gains, profits over 12 months are subject to a flat 10% tax rate. Conclusion  Investors should choose a Flexi-cap program very carefully. Before investing, they must be aware of their risk appetite and tolerance. Flexi-cap plans, for instance, may be conservative. Therefore, it is up to you if you are a risk-averse person or the opposite. Flexi-cap schemes, like other schemes, are subject to various market risks, including volatility, economic decline, and geopolitical conflicts. Other than that, if there's any confusion or you need any information, our team of efficient financial advisors is always available for you. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Investing is no longer associated with wealth. To protect one's future it has become essential. In this blog, let's compare Public Provident Funds (PPF) and mutual funds to see which is a better option for you. What are public provident funds(PPF)? The Public Provident Fund, popularly abbreviated as PPF is used as a tax-free savings vehicle to save aside a portion of one’s annual income for the future. PPF investors may get tax-free interest income on their capital if the amount was received on maturity. PPF is a risk-averse person's saving tool that is supported by the government. What are Mutual funds? Mutual funds, a popular method of investing, pool client money to purchase a range of securities, such as stocks, bonds, and money market instruments.  Mutual funds are governed by the Securities Exchange and Board of India (SEBI). Through mutual funds, investors have access to professional fund management. The fund management staff carefully considers the fund's objective before making any investing decisions. Assets like bank savings accounts and fixed deposits perform better than more traditional ones, thanks to skillful management. Equity and debt mutual funds are the two main types of mutual funds. Equity mutual funds' primary investments are equity and equity-related goods. The many forms of equity funds include large-cap, mid-cap, small-cap, multi-cap, sectoral or thematic, tax-saving, etc.  Conversely, debt mutual funds make investments in corporate bonds, government securities, and other financial goods. There are many different types of debt mutual funds, including liquid funds, dynamic bond funds, and short- and ultra-short-term funds, among others. Mutual Funds Vs PPF (Public Provident Funds). PPFs and mutual funds, each have their own set of perks and drawbacks. Therefore, it is a good idea to take into account their distinctions before choosing one at random. ParametersMutual FundsPublic Provident Funds (PPF)Investment run byFunding institutions or asset management firmsBy The Government of IndiaRequirementsTo achieve short- or long-term objectivesTo amass a retirement fundReturn on investmentsThe performance of the underlying assets affects the returnsAnnual returns calculations are madeTax benefitsThe sort of mutual fund investment and the length of the investment are what define itUp to INR 1.5 lakh of PPF investments are tax-free under Section 80C of the Income Tax ActMaturity PeriodNo fixed tenure15 years, which may be extended in 5-year chunks.LiquidityA high degree of liquidityLow degree of liquidityRisk/safetyRiskier than PPFsPPF is a risk-free investmentLock-in periodNo concrete lock-in period15 yearsDiversificationYesFixedPremature withdrawalThere are certain mutual funds that have a lock-in period; in these instances, SIP payments can be stopped, but withdrawals are not allowed prior to the maturity date.Only after the end of six fiscal years is a partial withdrawal permitted. PPF vs Mutual fund - Which is better for you? The decision between a PPF and a mutual fund relies on the objectives or aims of the investor. The latter operates more like a savings plan whereas, the first is a market-linked program.  While PPF delivers predictable returns and is most suitable for investors who are risk-averse. Conversely, mutual fund companies invest in a variety of securities, including government bonds, debt, and shares. As a result, it offers the potential for bigger profits, but because it is market-linked, the risk is also higher. FAQs Is PPF still a wise choice for investments? One of the most popular long-term and tax-saving programs for depositors is the PPF program since it offers a variety of benefits. If a person can make consistent investments for 15 to 25 years, compound interest might help them amass a sizeable wealth of about Rs 1 crore. The PPF interest rate is modified every three months. Which is preferable, PPF or SIP? SIP and PPF are both long-term investing strategies. They vary, nevertheless, in terms of maturity and lock-in time. A PPF has a tenor of 15 years and a 7-year lock-in period, whereas SIPs can be stopped and redeemed at any time. You can then take out a portion of the money after that. Which investment is good for a child's future? It is a great idea to start investing in equity mutual funds when your child is still young and you have at least 15 to 20 years before retirement. This makes it possible for you to resist shocks like volatility and stock market crashes. When developing investment plans, each person has their own way of thinking and attitude. While some people want larger profits, others want financial security. It's critical to assess your financial status before making any form of investment, including those in mutual funds or Public Provident Funds (PPF). Consult an expert advisor to get the right plan TALK TO AN EXPERT

Investment objective: TATA Digital India Fund's investment objective is to seek long-term capital appreciation by investing at least 80% of its net assets in equity and equity-related instruments of the companies in the Information Technology Sector in India. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The Scheme does not assure or guarantee any returns AUM₹ 5583 CrNAV₹ 35.83Launch Date28-December-2015Min SIP Amount₹ 150Expense Ratio0.35%BenchmarkS&P BSE ITNote: Report as of 3rd June 2022.Source: Value research online Performance: Trailing Returns %FundBenchmarkCategory3 Months-10.76-9.83-10.866 Months-15.24-13.31-15.611 Year17.4310.6413.873 Years Annualized30.2323.9029.895 Years Annualized30.0524.2627.22Note: Report as of 3rd June 2022. Source: Morningstar Riskometer: Fund Review: Market CapFund %Large Cap86.37Mid Cap12.28Small-Cap1.35Note: Report as of 30th April 2022.Source: Morningstar Top 10 HoldingsNameWeightage %Infosys Ltd23.92Tata Consultancy Services Ltd9.68HCL Technologies Ltd6.81Tech Mahindra Ltd6.57Bharti Airtel6.01Larsen & Toubro Infotech Ltd4.33Persistent Systems Ltd4.28Mphasis Ltd4.19Wipro Ltd3.37Coforge Ltd3.09 Note: Report as of 30th April 2022. Source: Morningstar Sector AllocationWeightage %Basic Materials-Consumer Cyclical1.10Financial Services-Real Estate-Communication Services10.00Energy-Industrials3.98Technology84.78Consumer Defensive0.13Healthcare-Utilities-Note: Report as of 30th April 2022. Source: Morningstar Fund profile: The categorization of the stocks in this fund is based on information technology majorly. The fund largely follows a growth-oriented style of investing and invests across market capitalizations – around 86.37% in large-cap, 12.28% in mid-cap and 1.35% in small-cap with 6.64%. This fund is for investors with advanced knowledge of macro trends who prefers to take selective bets for higher returns compared to other equity funds. ProsConsHigh returns compared to other equity funds. Low Expense RatioChances of facing moderate to high losses.Exit Load 0.25% before 30 Days How much would you have made with SIP? Monthly SIP AmountTotal InvestmentCurrent ValuationNet ProfitCumulative Returns₨ 5000/-₨ 3,85,000/-₨ 10,00,464/-₨ 6,15,464/-435.39%Note: SIP Start Date – 28/12/2015, SIP End Date – 30/04/2022. Past performance does not guarantee future returns.Source: Morningstar About the fund managers Meeta Shetty since Nov-2018. She is a CFA Charter holder. She joined Tata Asset Management Ltd. in March 2017 as Research Analyst, tracking the IT, Pharma, and Telecom sector. Venkat Samala since May-2019. After completing his MBA, he joined Tata Asset Management Ltd as a Research analyst and worked up to be the fund manager. He has more than 7 years of industry experience. DisclaimerThe data in this presentation are meant for general reading purposes only and are not meant to serve as a professional guide/investment advice for the readers.This presentation has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable.Whilst no action has been suggested or offered based upon the information provided herein, due care has been taken to endeavor that the facts are accurate and reasonable as of date.The information placed on the presentation is for informational purposes only and does not constitute an offer to sell or buy a security.The Company reserves the right to make modifications and alterations to the content available on the presentation. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investment.Investment in the securities market is subject to market risks, read all the related documents carefully before investing.The valuation of securities may increase or decrease depending on the factors affecting the securities market. EduFund and the EduFund App are the brand and product of Helena Edtech Private Limited “An affiliate of the Company, i.e., Samyama Advisors Private Limited, is registered with the Securities and Exchange Board of India (SEBI) as an investment adviser under the SEBI (Investment Advisers) Regulations, 2013 bearing the registration number [INA000015321]. Samyama Advisors Private Limited may provide investment advice to the clients through the Company's platform.” Registered Address: 30, Omkar House, Near Swastik Char Rasta, Navrangpura, Ahmedabad Gujarat, India – 380009.Transaction Platform Partner: BSE Star MF (with Member code-51573). CIN No: U67100GJ2020PTC112589. RIA Number: INA000015321 GST No: 24AAFCH2122L1ZU© EduFund | All rights reserved | 2022 Last Updated – May 19, 2022 FAQs Is Tata Digital India Fund good? TATA Digital India Fund has AUM is ₹5583 Cr and a NAV of ₹35.83. It is managed by one of the oldest and most trusted AMCs in India. Based on your financial goals, you can consider it as an investment. How to invest in Tata Digital India Fund? You can invest in TATA Digital India Fund via the EduFund. Just download the App and place a lumpsum or SIP order to get started. EduFund is a SEBI-registered app and your investments are protected. You can view your order status, and pause or cancel the SIP at your will. Is it safe to invest in Tata digital mutual fund? Tata digital mutual fund is listed as a high-risk investment. Which digital fund is best? Tata Digital India Fund is considered one of the best digital funds in India.

A bull market can be caused by a variety of variables, but economic expansion is the most frequent. Businesses often make more money when the economy is strong, and stock market investors have more faith in the market. Let’s explore if a bull market is a good time to invest or not! What is a bull market? When prices are rising or are expected to rise, a market is considered to be a bull market. Although everything that is traded, including bonds, real estate, currencies, and commodities, can be described as being in a "bull market," the stock market is the one to which the term is most usually applied. Bull markets are often defined as extended periods during which a sizable portion of asset values are rising. This is because the prices of securities rise and fall almost continually during trading. Bull markets sometimes linger for several months, if not years. Is a bull market a good time to invest? In a bull market, when there is more possibility for larger returns, it is ideal to have a bigger equity allocation. Buy equities early and sell them before they reach their peak to benefit from a bull market's growing values. Growth companies often do well in bull markets, whilst value stocks are frequently a superior investment in down markets.  Your time horizon will largely determine how you invest in equities throughout bull and downturn markets. It doesn't matter if the market is now bullish or negative if you won't need the money for decades. If you are a buy-and-hold investor, you shouldn't typically change your investing strategy in reaction to the state of the market. The stock market may be negative even when other asset classes are going through bull cycles, and vice versa. If the stock market is increasing and you are concerned about price inflation, you could make a prudent choice to allocate a portion of your portfolio to gold or real estate. If the stock market is down, you can consider increasing the proportion of bonds in your portfolio or even converting some of it into cash. To benefit from bull markets that occur throughout the world, you should also consider regionally diversifying your holdings. How to invest in a bull market Following is the detailed guide to investing in a bull market. You can also download the EduFund app and create an account to start investing in a bull market. With zero charges and no hassle account opening process is from the comfort of your home. Evaluate personal goals – Making educated selections begins with evaluating your objectives. Your age and other aspects that affect your investments will be considered in a personal examination. For instance, a 30-year- old's risk-taking will differ from that of a 60-year-old. Therefore, their selection of equity will also differ. Long positions – When you take long positions with your stock, you buy it at a lower price and sell it at a higher one. The stock is bought with the expectation that its value will rise. Buy companies with strong fundamentals – Invest in businesses that have a history of expansion. Check the company's sales, profitability, and demand for the product it produces. Buy fallen stocks – The bear market before the bull run allows investors to purchase equities at a discount to their book value. In this stage, shares of firms with strong growth are available for less money. Choose various industries – When the economy is strong and people start spending again, certain industries will recover. Economic expansion is projected to benefit cyclical companies including those in the housing, automotive, technology, and industrial equipment industries. Adopt a phased approach to selling too – In the same way that investing must be done in stages, selling out of stock must also be done in stages. Indeed, even more so! The better it is when you sell a stock, the higher the price you receive. If you decide to sell a stock in stages during a bull market, you'll probably get a lot higher price. That indicates that while you might not always exit at the peak, each subsequent departure will occur at a higher price. Additionally, you don't need to stress perfectly timing your escapes! What makes stock prices increase during a bull market? Bull markets frequently coexist with a powerful, healthy, and expanding economy. Both expected future profits and a company's ability to generate cash flow have an impact on stock prices. Rising stock prices show the expectation that earnings will expand going forward, which is supported by a growing GDP, high employment, and a strong production sector. Corporation profitability benefits from both low-interest rates and corporate tax rates. There are several tools to generate money in both bull and downturn markets. Choosing the finest investment for each market and utilizing them wisely are the keys to success. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Investment Objective: The investment objective of the scheme is to provide capital appreciation and income distribution to the investors by using equity derivatives strategies, arbitrage opportunities and pure equity investments. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The scheme does not assure or guarantee any returns. AUM₹ 4863.41 CrNAV₹ 15.21Launch Date28-January-2019Min SIP Amount₹ 150Expense Ratio0.28%BenchmarkCRISIL Hybrid 50+50 Moderate IndexNote: Report as of 3rd June 2022.Source: Value Research Online Performance: Trailing Returns %FundCategory3 Months0.920.526 Months0.20-1.771 Year7.604.373 Years Annualized12.539.185 Years Annualized--Note: Report as of 3rd June 2022.Source: Morningstar Riskometer: Fund review: Asset AllocationFund %Equity42.50 %Debt25.51 %Cash31.99 %Note: Report as of 30th April 2022.  Source: Morningstar Top 10 HoldingsNameWeightage %Reliance Industries Ltd4.21Tata Ultra Short-Term Dr Gr3.465.63% Govt Stock 20262.89ICICI Bank Ltd2.70HDFC Ltd2.49Tata Consultancy Services Ltd2.39Hindustan Unilever Ltd2.15Larsen & Toubro Lt1.93Axis Bank Ltd1.85Grasim Industries Lt1.83Note: Report as of 30th April 2022.   Source: Morningstar Sector AllocationWeightage %Basic Materials17.20Consumer Cyclical6.13Financial Services19.72Real Estate2.40Communication Services2.81Energy7.80Industrials8.89Technology10.68Consumer Defensive9.35Healthcare8.71Utilities6.31Note: Report as of 30th April 2022.    Source: Morningstar Fund profile: The categorization of the stocks in this fund is based on three parameters i.e., Cyclical, Sensitive and Defensive. The fund largely follows a growth-oriented style of investing and invests across market capitalizations of around 53.82% in large-cap, 7.9% in mid-cap and 1.99% in small-cap companies. Basis stock selection makes the fund less volatile as compared to the category. The fund has around 27.94% investment in debt – 8.69% in G-Sec and 19.25% invested in very low-risk securities. ProsConsGood equity and debt diversification as per market conditions. Exceptionally outperformed the category averageExit Load of 1.0% before 365 Days. How much would you have made with SIP? Monthly SIP AmountTotal InvestmentCurrent ValuationNet ProfitCumulative Returns₨ 5000/-₨ 2,00,000/-₨ 2,56,049/-₨ 56,049/-60.81%Note: SIP Start Date – 28/01/2019, SIP End Date – 30/04/2022. Past performance does not guarantee future returns.Source: Morningstar About the fund manager: Akhil Mittal since Jan-2019. He is a B.Com (H) and MBA from University Business School. Prior to joining Tata AMC, he has worked with Canara Robeco AMC, Principal Asset Management Company, Edelweiss Securities Ltd. and Rallis India Ltd. Sailesh Jain since Jan-2019. He carries a rich experience of more than 16 years in both fund management and broking, He joined Tata Asset Management in November 2018 as the Fund Manager (Equities). He holds an MBA degree in Finance from the Queensland University of Technology in Australia. Disclaimer: The data in this presentation are meant for general reading purposes only and are not meant to serve as a professional guide/investment advice for the readers. This presentation has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been suggested or offered based upon the information provided herein, due care has been taken to endeavour that the facts are accurate and reasonable as of date. The information placed on the presentation is for informational purposes only and does not constitute an offer to sell or buy a security. The Company reserves the right to make modifications and alterations to the content available on the presentation. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investment. Investment in the securities market is subject to market risks, read all the related documents carefully before investing. The valuation of securities may increase or decrease depending on the factors affecting the securities market. EduFund and the EduFund App are the brand and product of Helena Edtech Private Limited “An affiliate of the Company, i.e., Samyama Advisors Private Limited, is registered with the Securities and Exchange Board of India (SEBI) as an investment adviser under the SEBI (Investment Advisers) Regulations, 2013 bearing the registration number [INA000015321]. Samyama Advisors Private Limited may provide investment advice to the clients through the Company's platform.” Registered Address: 30, Omkar House, Near Swastik Char Rasta, Navrangpura, Ahmedabad Gujarat, India – 380009. Transaction Platform Partner: BSE Star MF (with Member code-51573). CIN No: U67100GJ2020PTC112589. RIA Number: INA000015321 GST No: 24AAFCH2122L1ZU© EduFund | All rights reserved | 2022 Last Updated – May 19, 2022

Trading on the exchange can be a challenging experience. If you buy too soon, you risk being disappointed if the price declines. However, if you postpone and the price rises, you will feel you have lost out on a good offer.  Dollar-cost averaging is a risk-minimization tactic that involves progressively increasing your holding. When you employ a dollar-cost average strategy, you engage in an asset in equal amounts of dollars at regular intervals your purchase is at a range of prices rather than aiming to time the market.  Like most investment techniques, dollar-cost averaging isn't for all, and there are periods when it makes more sense than others. However, it can be an efficient strategy for overwhelming some mental hurdles to investing.   Let's understand the nitty-gritty of dollar-cost averaging.  What is Dollar cost averaging?  When buying equities, exchange-traded funds (ETFs), or mutual funds, dollar-cost averaging is a tactic for reducing price risk.   Instead of investing in a single asset at a single purchase price, you divide the investible money to buy tiny amounts over a period at regular intervals with dollar-cost averaging - it reduces the risk of paying a high price before market prices come down.  Of course, prices do not always move in a single direction. However, splitting your purchase into many increases your odds of paying a lower aggregate price over time.   Furthermore, dollar cost averaging allows you to regularly put your capital to work, essential for long-term success.  Let's understand with an example, using DCA, a $200,000 investment in shares can be undertaken over eight weeks by investing $25,000 each week in the same manner.   The trades for lumpsum investing and the DCA approach are in the table below:   The amount invested is $200,000, with 2,353 shares purchased as a lumpsum transaction. On the other hand, the DCA strategy purchases 2,437 shares, a differential of 84 shares worth $6,888 at the $82 average share price.   As a result, DCA can raise the number of shares purchased when the market is down and decrease the number of shares purchased when the market is up.   DCA @ $25000 per weekLumpsumWeekShare priceNo shares purchasedShare priceNo shares purchased185294852353286291  383301  481309  582305  678321  780313  882305  Total shares purchased 2437 2353Average share price82 85  What is the best time to employ dollar cost averaging?   When it comes to dollar-cost averaging, it's crucial. You must, in particular, create and keep to a consistent plan. The strategy's main advantage is that it allows you to avoid worrying about when to buy in and stop trying to beat the market by splitting the investment into parts.  As a result, you must adhere to it once you've set a date, no matter what.  The day you select is the perfect day.  Scenarios of the DCA in market phases  When you employ DCA in a falling market, you can own more significant shares as the market prices fall each day, thus helping you get more shares than the lumpsum buy.  In a rising market, Dollar-cost averaging prevents you from maximizing your returns compared to a lump sum buy because the stock rises and then rises again. However, unless you're looking to make a quick buck, this circumstance rarely occurs in real life. Stocks are pretty volatile.  In a flattish market, the scenario appears to be the same as the lump sum buy in a flattish market, but it isn't because you've eliminated the danger of market mistiming at a low cost. For long periods, markets and stocks might move sideways – up and down but ending where they started.  Benefits and disadvantages of the DCA.  Who should use DCA?  You may consider dollar-cost averaging if you are  When you first start investing, you only have a small quantity of money to invest.   I'm not interested in the extensive research that goes into market timing.   Putting money down for retirement every month.   In a falling market, it's unlikely to maintain investing.  You may employ another investment approach if  You have a lot of money to invest.  You invest in mutual funds through a taxable brokerage account with greater initial investment minimums.   You love attempting to time the market and are unconcerned about the extra time and research required.   You're making a short-term investment  Aside from other aggressive techniques like target asset allocation, diversity, and frequent portfolio rebalancing, an investor should seek to use DCA as an optional strategy.  Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

When you are looking to invest in mutual funds, there is another detail that you need to consider. There are two options that are given to you by the mutual fund – The growth option and the dividend option. Consider an ABC fund that invests in Large-cap funds. When the fund earns profits (when funds’ holdings i.e., the stocks or bonds it has invested into have price appreciation, when those stocks distribute dividends, or when the selling of stocks or bonds provides returns) in the process, it can either distribute it to its investors or it can invest back these gains into the fund.  The growth option In this option, the profits are added back to the investment corpus of the fund (the number of units held remains constant). NAV = Funds Assets - Funds Liabilities / Total Number of Shares The NAV of the fund increases, as the fund's assets, increase with accumulated profits. For example: Consider the ABC fund with a NAV of Rs 100. After a year, if the fund has achieved a profit of 20 per share and if it has not distributed it to its investors, the NAV would be Rs 120. If you had 10 shares of this fund, on selling it after one year you would receive 120*10= Rs 1200. Your cost price was 100*10= Rs 1000. Hence, your gains would be 1200 – 1000 = Rs 200. The dividend option (Dividend payout option) In this option, the fund’s profits are not accumulated or reinvested into the fund. They are distributed to the investors. The gains are distributed either annually or quarterly, and only when the fund makes profits. The fund manager decides the frequency and the number of dividends. Once the dividend is paid out, the NAV of the fund decreases (it always does not decrease by the exact dividend amount as there are other factors that impact the NAV). The number of units held remains constant. For example: If the ABC fund has a NAV of Rs 30. If as an investor, you own 1000 shares of the same - if the fund declares a dividend of Rs 3, you would receive 3*1000 = Rs 3000 as a payout. The NAV of the fund would also decrease to NAV - Dividend. Rs 30 – 3 = Rs 27. Dividend reinvestment In this option, the dividends are declared, but the investors do not receive a cash payout. They are paid in “kind” or with the shares of the fund itself. Hence, as an investor, you would have more shares of the fund. For Example Dividend ReinvestmentRemarksNAV of fund20Initial StageNumber of units held100Dividend Declared2As declared by the Fund managerNAV after dividend Declaration18For the fundDividend Receivable (not paid out)200Investor's EntitlementAdditional Units of Funds that can be purchased with the Dividend                  11.11 Dividend Receivable/New NAVThe final number of units                111.11 Initial + Additional Which fund should you be investing in? There is no one-size-fits-all rule that we can follow. It depends on the investor and his or her requirements. If you would like to receive payments from the fund to fund your expenses, opting for a dividend payout plan would be ideal for you. However, if you are a long-term investor who wants to lock in the funds, and wait to reap the returns, you can opt for the Growth option where the profits are accumulated. In the long run, the Growth option provides a higher return than the dividend option and could be a faster way for wealth accumulation. You can find all the mutual fund options mentioned above on EduFund, a secure platform to invest in the biggest mutual funds in the country.  Things to Look forGrowth OptionDividend PayoutDividend ReinvestmentDividend DeclarationNoYesYesImpact on NAVIncreasesDecreasesDecreasesDividend in your hands (Bank account)NoYesNoUnits heldNo changeNo changeIncreases FAQs Which is better dividend or growth fund? Dividend option for mutual fund is good for investors looking for liquidity. While growth fund is for those who are focused primarily on growth and wish to stay invested for a while. Which option is good growth or IDCW in mutual fund? IDCW is a good option for investors looking for liquidity and growth is a good option for investors looking for wealth generation. How much MF dividend is tax free? If the dividend amount generated from mutual funds is less than Rs. 10 lakh, then investors do not have to pay taxes. If the amount exceeds this limit, the investor has to pay 10% of the total earnings as tax during a particular year. What is disadvantage of growth fund? The biggest disadvantage of growth fund is that they are highly volatile and may fall dramatically. Consult an expert advisor to get the right plan TALK TO AN EXPERT DisclaimerNAVs in the article are only indicative and not exact measures. They are only for representation of the direction of adjustments.

The Indian stock market offers plenty but if you’re looking for geographical diversification in your portfolio, you might want to look beyond it. The United States is the biggest market in the world, and a great attraction for investors the world over. Investing in the US market means an opportunity to invest in the biggest companies in the world, and that includes the likes of Google, Facebook, Amazon, Apple, and more.  Now when something has so many great things to offer, why doesn’t everyone invest in the US? The truth is that investing in the US is much easier now than it ever was, but there are some hindering misconceptions among Indians that hinder this route. The biggest of them are the worries of taxation upon the returns.  Let’s dive deeper into how taxation works when Indian citizens invest in the US stock market, either through stocks or exchange-traded funds.  Photo by Karolina Grabowska from Pexels Tax implications for investors  There are just two types of taxes levied on investors in this arena - capital gains tax and tax on dividends. Let’s understand both these taxes.  1. Capital Gains Tax  This is the tax paid on the appreciation of your asset over a period of time. Let’s say you bought a stock for 100$ and sold it after some time for 150$, capital gains tax is levied on the appreciation of 50$ on the stock.An Indian Investor does not have to pay any capital appreciation tax in the US. The taxes on this are levied in India, depending on whether it is long-term capital gains or short-term capital gains. a) Long Term Capital Gains (LTCG) If you have held an asset such as a stock or ETF for 24 months or more before selling it, you have to pay 20% as long-term capital gains tax, along with other applicable surcharges and fees.  b) Short Term Capital Gains (STCG) If you have sold a financial asset in less than 24 months for a profit, you add these gains to your income and pay taxes based on your income tax slabs. The important thing to remember is 24 months is the duration that separates long-term and short-term capital gains.  2. Tax on dividends  Dividends are another way that investors make money. The taxation on dividends when you invest in the US is fairly simple. The tax on dividends for Indian investors in the US is 25%, which is lower than the tax rate for US citizens. This is due to a treaty signed by India and the US to encourage investments from India to the US and vice versa.Let’s understand this with an example. If you have received $ 1000 as dividends from an investment in the US, the amount you receive after the tax deduction is $ 750. Now what gets most investors worried is if they have to pay taxes again in India on the 750$. The good news is that you don’t.India and the US have signed a DTAA (Double Tax Avoidance Agreement) which ensures that you are not paying double taxes. So, the tax you’d have to pay in India is not on the $ 750 you received after deductions but the $ 1000 you received as dividends, and the $ 250 that you’ve already paid as tax is accounted as tax paid on the amount. You only have to pay more if your tax slab exceeds 25%.  Invest in the US stock market with EduFund  You can now just download the EduFund app and create an account to start investing in the US. The account opening process is simple and the charges are zero you can get started with FAANG in your portfolio and have it geographically diversified!

Investing is the best way to secure your future goals and achieve your dreams. Be it for child education plans, retirement goals, or other goals, investing can help you generate wealth and avoid accruing debt while chasing them.  Traditionally, middle-class Indians have tended to play safe when it comes to their wealth. Investment seems like a needlessly risky game for many. However, it is time to bust some myths and mitigate your worries.  Once these common myths are busted, the investment will not seem as foreign and dangerous anymore. Read on as we separate fake news from fact! 1. Investing is the same as trading Trading is when you buy assets in the stock market and sell them after a short term to generate a quick profit. Traders are looking to make short-term gains by predicting the future behavior of certain stocks. Their profits depend on market unpredictability. Investors are not banking on unpredictability. Investors look for relatively stable stocks and bonds or basket securities in which to invest for the long term. When you invest money you do so with the expectation that the price of the asset will rise, slowly but reliably, over the course of a long time - usually years.  Thus, investment is nowhere as risky as stock trading. In fact, it is a fairly secure and reliable way of passive wealth generation. Investors favor diversified, well-managed portfolios and often look to mutual funds and ETFs because they are structured, balanced, and professionally managed. Short-term market fluctuations do not generally affect your long-term investments. Minor setbacks tend to average out over time.  Investment is a good and responsible method of financial planning for your children’s education plans, homeownership goals, etc. With a strategic investment scheme in place, you can send your child to study abroad and give them the best global opportunities. 2. You need a lot of money to start investing This is another completely unfounded myth that discourages a lot of middle-class Indians from investing in stock market assets. Investment is certainly not just a rich man’s game. It can be an incredible way of compounding wealth for all kinds of people.  There is a misunderstanding that you have to invest a huge amount of money all at once to get good returns. This is not true. You can invest slowly and at your own pace. Many mutual funds in fact offer SIP (Systematic Investment Plans). These plans enable you to make small monthly investments starting as low as Rs. 500 or even Rs. 100.  Ultimately the amount of money you invest and how you invest it will depend on your financial goals and capacity. For example, if you are investing for the sake of your child’s education plans and your child is still young, you can start with a relatively modest SIP. Because of the long-term nature of the investment, your money will still grow splendidly. This is an especially harmful myth because it discourages the exact people who can benefit the most from strategic, long-term investments. 3. Past performance of a stock is a guarantee of future returns Stock markets are volatile and the performance of any particular stock is dependent on a lot of different factors. If a stock is performing well today and has performed well for even the last 10-15 years, it is no guarantee that it will still be good 10 years from now. Times change and so does the market. A company may be doing well today but future events can cause it to unexpectedly shut down.  This is why you should avoid investing based on past trends alone. Most casual investors actually do not have a lot of expertise in choosing or selecting stocks. This is why it is advisable to invest in basket securities like mutual funds and ETFs when you are just starting out. These funds are professionally managed and have a team of experts who select appropriate stocks and figure out the right opportunities to buy and sell.  If you have more specific goals you can consult with financial advisory services that specialize in goal-based financial planning. A service like EduFund can be extremely useful for you for education planning and child investment schemes. 4. I am too young to start investing There is no such thing as being too young to start investing. Investment is planning for the future and you can never be too young for that.  You may think that investment is not an ideal option for you when it's still early in your career and your salary is fairly low. However, as we have noted already, you can start a SIP for as low as Rs.500 or even Rs.100 a month. Even for a fresh graduate, this is not a huge amount. In addition, it can help you cultivate the good financial habit of regular investment.  You may also think that you still have a lot of time and don’t need to think of long-term financial goals just yet. However, that is a short-sighted attitude to have. The earlier you start investing the better your returns will be. If you have a young child and you want them to study abroad, it is better to start investing now rather than later. 5. FDs are the best investment for middle-class families FDs or Fixed Deposits have been the traditional investment instrument of choice for the Indian middle class. The reason for this popularity is that FDs are extremely low-risk. You deposit your money with a bank for a fixed amount of time and on maturity, you receive your original principal, plus interest. There is little to no risk of losing your deposits. FDs typically have higher rates of interest as compared to regular savings accounts. Even with interest rates that are higher than typical savings accounts, the returns on FDs pale in comparison to investment options in stocks, bonds, funds, etc. This does not mean FDs are completely useless. They can be a good, low-risk investment for less expensive financial goals. However, for something like study abroad education plans, you should strongly consider investing in mutual funds or ETFs. FAQs What is the 5% rule in investing? The 5% rule in investing states that any broker is not allowed to charge more than 5% as commission. What are 4 common investment mistakes? Not conducting your own researching before investingFollowing hearsay or influencer finance adviceNot knowing the taxes and expenses involved like expense ratio or exit loadFailing to diversify your investments What are some common investment myths? Here are some common investment myths: You need a lot of money to start investingInvesting is only for financial advisors or the richFDs are the best investment for middle-class familiesPast performance of a stock is a guarantee of future returns What are the rules of investing? Here are the rules of investing to keep in mind: Start saving todayDiversify your portfolioMinimize feesProtect against lossRebalance regularly Conclusion In this time of increasing costs, you cannot always depend on savings and FDs. Good investment decisions and a reliable and balanced portfolio are key to achieving your goals. Investment generates wealth and prevents your money from losing value due to inflation. Thus investment is also a way to protect yourself and your assets from inflation.  Don’t let myths and fake news hold you back. Do your research, educate yourself and invest to fulfill your dreams. Consult an expert advisor to get the right plan TALK TO AN EXPERT