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Planning your finances as a parent is the most crucial yet underrated aspect of raising children. Amidst all your parental responsibilities, becoming a parent is emotionally and financially life-changing. One fine day, you suddenly are responsible not only for yourself but also for another person. Embarking on this new adventure requires certain preparations. So, let’s figure out how to plan your finance as a young parent!  Financial hacks to learn on your new parenthood journey  Here are some hacks that will allow you to spend quality time with your newborn while managing your finances effectively.  #1 Get a health insurance plan for your newborn  The most important step after your child is born is to update your health insurance plan or get a new one to cover your newest member. Many health plans allow young parents to add their child within 30-60 days after the delivery to the family health plan. The insurance covers medical expenses, and hospitalization of the newborn baby and reduces the financial stress of medical bills!    #2 Create a Budget  With an infant entering your life, you will have new expenses. Diapers, baby clothes, baby food, and other childcare costs might add up quickly. Besides, you would also have post-natal and prenatal medical expenses. Some expenses, such as new toys and diapers, might be recurring, while others, like a car seat and a stroller, are a one-time investment.  One quick note: It’s best to understand the “upfront costs” that might be a temporary hit to the wallet. Differentiate it from the recurring costs because they will influence your overall budget. You may also use online budgeting apps to alleviate further stress and anxiety.  #3 Create an emergency fund  Sudden unemployment or hospitalization can be financially-stressful when your family is growing. That is why having an emergency fund covering between 6 and 12 months of living costs is valuable. The emergency fund offers a comfortable cushion for new parents. Such a fund is crucial when your family relies on a single source of income.   #4 Save for your kid’s education  Surveys suggest that the average tuition & fees for private institutions were more than $30,000 during 2017-2018. According to research, only 13% of parents place college savings as the top child-related financial priority. Even if your kid’s education does not sound like your immediate priority, the sooner you prepare for it, the better it is. You can start saving your money as per your salary to keep some amount for your child’s education.  source: pixabay #5 Financial plan for your retirement   With so many things to do for your infant, you might at times forget to prioritize your own life goals. But you must not undermine your priority. Just as your child is important, your future life is nowhere less significant. You must consider setting up automatic withdrawal of retirement contributions.  Prioritizing your retirement will prepare you for the future.   #6 Invest in a term life insurance plan  Like other insurance forms, life insurance also can financially protect you & your family against any worst situation. You might not realize it, but term life insurance policies are extremely affordable. For healthy adults, these policies can cost less than monthly video or music streaming services.  The best part of investing in such an insurance policy is that it provides the financial protection that your family requires in case of any unexpected tragedy. Due to the amount of coverage that varies by different aspects, life insurance calculators help determine the appropriate coverage for your family.  #7 Make a will & mention beneficiaries on your accounts  In the event of your unfortunate demise, financial arrangements for your child are crucial. A will, thus, offers a plan for the division of your assets. In addition, it also designates a legal guardian for your child. Most individuals mention their surviving spouse or children as their account’s beneficiaries. You may select a separate guardian who can manage your accounts & assets until your kid reaches legal age.   An authenticated will helps avoid long legal battles about who owns your accounts & assets. It also helps define how your kid will be cared for. You may change the will & beneficiaries at any point in time.   One quick note: When you file out the essential forms, always take legal consultation from an attorney.  Ensuring these steps can safeguard your and your child’s future. Comprehensive financial planning as a parent can help you manage different expenses and maintain a healthy lifestyle for your family. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

In the previous article, we discussed AUM in mutual funds in this article, we will discuss what is foreign investment? Financial institutions and individuals wishing to diversify their investment portfolios seek multiple ways to earn outside income. The increasing inclination toward stocks, IPOs, and bonds investments sparked the individual’s interest. They keep up with the latest investment updates.   Apart from this, Foreign Investment is considered a growth catalyst for India. Companies exploring opportunities for business expansion internationally benefit from it the most. Goldman Sachs, J.P Morgan, and Morgan Stanley are some leading international investors.   Some businesses seek opportunities to capitalize on relatively economic labor and production costs. Likewise, Indian companies seek relaxation from a tax perspective internationally.   There is a lot to know & understand about investments. The blog discusses nearly every nut and bolt of foreign investments.   If you are an active or ambitious investor seeking opportunities to invest in foreign stocks, this blog is worth a read. Let’s begin with the first things first.  What does foreign investment imply?   Foreign investment implies an investment of a native business or a company in the assets of an international company. It generally includes long-term physical investments made by an Indian company in a foreign company, listed on the stock exchange.   Foreign investment is of two types: Direct and Indirect. It involves cash flow transactions between countries. If the investor's stake is higher in a company, he shares the right to regulate the company’s decisions. These are long-term physical investments like - bridges, damn, and infrastructure in foreign countries.    For example, if a person or a business holds (a 75%) share in the company, they share the larger portion of the company’s equities available in the market. They can regulate and dominate the company’s decisions.   So, are you now clear about – What is the foreign investment?   Let’s move on to the most asked query under this.  What are the most popular types of overseas investment opportunities?  Foreign investments have two main categories- direct and indirect investments.  Direct Investments   Foreign direct investments are the equipment, plant, or factory an investor purchases in a foreign country.  Indirect Investments   Indirect investments imply purchasing stocks and equities of foreign companies listed in their respective countries.   Direct investments are much in demand than indirect investments owing to the long-term benefit prospect. The value of these tangible assets multiplies more than liquid assets. These boost the country’s economic status over time.  In contrast, indirect investments are short-lived. These are time-sensitive investments that do not share any future scope or value.    Given this, who can legally invest in these assets? Let’s find out.  source: pixabay Who is eligible for foreign investment?   Most individuals are anxiously googling-   “What is foreign investment?”  “How does the foreign investment work?”  There is so much to explore on the topic. But before that, one should be knowledgeable about the eligibility criteria to invest internationally.   If you are considering an overseas investment, check whether you meet the below criteria set by RBI (Reserve Bank of India):  Residents, corporate entities, and partnership companies registered under the Indian Partnership Act of 1932 are eligible for foreign investments.   These individuals can invest in foreign ventures or wholly owned subsidies.   Residents may invest according to Q3 of the law.  How can residents invest in foreign companies or ventures?   Residents can invest in foreign investments without any restrictions or limits. The companies they tend to invest in must have a 10% share in an Indian company listed on a stock exchange in India. It should be listed as of 1st January as the investment year.   How are foreign investments beneficial for the Indian economy?   FDI occurs when an individual or a company holds 10% dominance in a foreign asset or company. If an individual or business owns less than that, IMF deems it as a part of the stock portfolio. It might not grant complete control over the company’s politics but a percentage to investors.   Foreign direct investment grants power and dominance to influence the foreign firm’s operations. Foreign investment can prove beneficial for the existing economy.   1. Funding and expertise   Developing nations require the apt tangent and growth momentum to utilize their potential. Corporates operating in these countries need the expertise, guidance, and funding to expand business operations. Here Foreign investment proves profitable in upscaling a brand and nurturing its prospects.   As per research, “Global FDI collapsed in 2020 and plummeted from $1.5 trillion in 2019 to $859 billion”. It is the lowest ever recorded since 2008.  However, as per recent stats by Hindustan Times, “ The FDI inflow has increased by 23% after COVID blues. March 2020-2022 recorded an inflow of $171.84 billion inflow.”  It stands in steep contrast to $141.10 billion between February 2018-2020.  Thus, investments in the country can prove a breakthrough in economic terms.   2. Increases employment opportunities    What follows with growth is personal development.   India is facing the harshest blow post-COVID-19, she needs a comeback. With businesses shutting down, the country is losing momentum. FDI can breathe in the needed inspiration.   However, India can prosper independently, but a mere international push can open up a wide growth arena for the country and its people. FDI help create employment opportunities, especially in the manufacturing industry. It not only boosts the economy but makes its people independent.  3. Access to leading-edge tools and technology  To compete in the international market and gain an edge, India must optimize its economic structure. Foreign investment is one of the panaceas that share the potential to rationalize it.    It can promote access to advanced tools and technology that help streamline a business process and economic growth.  These are some popular growth opportunities that foreign investment can provide.  Which country topped the FDI index of India in 2022?   Singapore topped the FDI index with a share of 27%. It is followed by big giants US (18%) and Mauritius (16%) respectively.   What does FDI cover for India in the future?   As per Business Standard, “India recorded the highest ever annual FDI of $83.57 billion in the year 2021-22.” It reveals a progressive India in the coming years.   Furthermore, the “FDI to GDP ratio may rise by 2025.” The recent shift in FDI structure and the “Atmanirbhar Bharat” policy provoked the estimation.   Conclusion  It is evident from the listed facts and figures that foreign investment can ensure a profitable shift in the Indian economy.   If you are still confused regarding “What is the foreign investment?”, detailed research and analysis will help you gauge the importance of FDI from the Indian perspective. Consult an expert advisor to get the right plan for you   TALK TO AN EXPERT

Exchange-traded funds (ETFs) have altered the global financial industry by providing investors convenient access to foreign markets and a wide range of sectors. However, the increased churn in the ETF market is a natural consequence of such rapid expansion. Some ETFs prosper, while others fail and have to be liquidated or delisted. Although the process of formation and closure represents the constant change of a healthy market, investors are best off avoiding the scary stuff at all costs. The year 2020 saw more than 7500 different ETFs offered in all. Of these 7500, nearly 300 ETFs closed from 2020 until February 2022, almost 4%! Thus, it becomes very imperative for us to study the effects of ETF liquidation and closure. What happens when an ETF closes? An ETF can be closed in two different ways; one is liquidation and the other by delisting. We will see this in detail below. A prospectus supplement will indicate the ETF's last trading date and liquidation date once the decision to disband the ETF has been finalized. "Business as usual" ends at this time or soon after, and the fund stops making new investments as it proceeds to liquidate. As a result, the performance of an ETF diverges from that of its benchmark index. During this time, the ETF issuer will continue to publish an indicative net asset value (iNAV) during the day, which is used when purchasing or selling the ETF. It's generally a good idea to sell any shareholdings before the end of the trading day. What is liquidation? Investors receive cash payments equal to the NAV whenever an asset is liquidated. Most of the time, this has the advantage of offering you fair value for your shares. Liquidation is vital to investors since they only have two weeks to liquidate their shares once the process starts. Once investors learn that their ETF is in the process of liquidation, they have two choices: selling before the closing date or waiting until the final liquidation. To determine the best course of action, one must read the final prospectus supplement. Liquidation is generally less expensive and time-consuming than delisting the ETF if the issuer decides to do so. What is delisting? Delisting is significantly more time-consuming for investors who fail to liquidate holdings before the last trading day. When this happens, they must trade OCT, i.e., over the counter, which is time-consuming and often costly compared to buying and selling on an exchange. That is why delisting is vital to investors; failing to keep track of the closing date might negatively affect your investment portfolio. source: freepik Some examples of ETF closures are DateFundTicker3/7/2022Xtrackers Eurozone Equity ETFEURZ1/14/2022Direxion Dynamic Hedge ETFDYHG12/23/2021Credit Suisse FI Large Cap Growth Enhanced ETNFLGE12/15/2021iShares iBonds Dec 2021 Term Corporate ETF        IBDM12/15/2021Invesco BulletShares 2021 USD Emerging Markets Debt ETFBSAE Negative impacts of ETF closures Impact on investors: Investors face at least four chief risks when an ETF is closed, i.e., liquidated or delisted. Reinvestment Risk: The investor must now find a new investment avenue after cashing out of the delisted or liquidated ETF. It is an intrinsically risky undertaking, especially considering the opportunity cost of exploring new investment alternatives and their benefits and drawbacks. Added Expenses: A delisted ETF incurs additional OTC costs for investors. Additional charges are charged when starting a new investment, which may have a fee structure that differs from the earlier one. Loss of ETF Value: While the investor didn't walk away with anything, it's doubtful that he achieved the investment goals in the case of closure. Investors don't choose ETFs they think will fail in the future. Investors face value loss that they must up elsewhere. Tax Burden: One of the most significant downsides of ETF closures is an increase in the tax burden due to unanticipated capital gains. Impact on Issuer: The major disadvantage of closure for an issuer is the danger of losing its reputation. Reputation Risk: An issuer whose fund is liquidated or delisted may have a difficult time attracting new investors in the future. Advisors are less inclined to endorse ETFs from issuers with a history of closing funds for various reasons. Ways to predict which ETF may be vulnerable to closure 1. Low AUM: One of the best predictors of closure risk is a low AUM. After all, funds that manage millions of dollars in assets are far too profitable to shut down. 2. Issuer strength: Look for ETFs sponsored by prominent, well-known companies such as iShares, State Street, Vanguard, Invesco, and First Trust. A minor sponsor may find it more difficult to continue operating an ETF if it does not initially attract assets. 3. Fund ranking: Less popular ETFs are more prone to closure; avoid them! 4. Trading volume: ETFs actively traded are more likely to change at the underlying assets' value. 5. Appeal: Look for ETFs with a broad investment approach, such as S&P 500 index funds, unless one is an experienced player. Over time, exact methods may not be able to attract adequate assets. Investors can lessen their chances of going through an ETF liquidation by conducting thorough research on the ETF and avoiding a probable closeout. There's no need to panic if the ETF liquidates; simply investigate the next fund and make sure to understand what one is getting into. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

The tracking differences and tracking errors are metrics that can aid in evaluating ETFs for a portfolio. However, to properly use the metrics, one must first grasp what each one represents and how much weight each holds in decision-making.  When considering investment products, annualized fund returns are frequently one of the first things investors look at. However, the performance of ETFs compared to their benchmarks and competing products is essential.  The tracking difference, which can be either positive or negative, indicates how well a fund has outperformed or underperformed its benchmark index.   It's derived by subtracting the fund's total return from the benchmark's total. Because a fund's NAV total return includes fund expenditures, the tracking difference for index funds is often negative.  The simple, hypothetical example below shows how two ETFs with the same benchmark's average performance and negative tracking discrepancies compare to a baseline of their benchmark's average performance.  Tracking differences relative to a benchmark Fund A was the better-performing vehicle, with a more significant average tracking difference. Fund B had a lower average tracking difference, giving investors a poorer return.  The annualized standard deviation of tracking different data points is used to compute tracking errors. Tracking error reflects how much variability occurs among the individual data points that make up the fund's average tracking difference. Tracking difference evaluates how much an index product's return differs from its benchmark index.  In our hypothetical example, the graph below depicts the data points that make up the averages. Tracking error is a metric that compares the distribution of individual data points to the average tracking difference of the fund.  tracking differences relative to a benchmark The tracking error for Fund A was more significant. It did, however, produce a better average return. The tracking inaccuracy for Fund B was more minor. The average return to investors, on the other hand, was lower.  Using the tracking error and difference  Maintaining tracking differences and tracking errors in context is critical when choosing the finest indexing ETF for a portfolio. If the total return is a significant criterion, tracking differences in evaluations will likely be more important than tracking error.   If the consistency of performance is a priority, then tracking error may be a better option.  What are some factors affecting a fund's tracking of an index?  Total Expense Ratio: The total cost ratio (TER) of an ETF is the single most accurate predictor of future tracking differences. If an ETF charges 0.5 percent to match an index, then ETF returns should trail index returns by precisely 0.5 percent, ceteris paribus.  Transaction And Rebalancing Costs: Whenever an index's components are rebalanced; a new company is added or removed. Thus, the ETFs that track the index must alter their holdings to reflect the current condition of the index.   As a result, the ETF must rebalance its underlying shares, incurring trading costs in the process. These expenses are included and covered by the fund's assets, which increases the tracking disparity.  ETFs that monitor indexes with many stocks, illiquid securities, or frequently rebalance by design will have higher transaction and rebalancing costs, resulting in a more significant tracking gap.  Sampling: Some ETFs choose to keep a representative sample of their holdings. The smallest securities have small weights and have no impact on performance in indexes with thousands of securities.   ETF managers may choose to neglect some of those trivial securities to save money. This can lead to tracking differences.  Cash drag: During the time between when the ETF gets a dividend and when it pays those dividends to owners, the ETF will experience cash drag. i.e., the lag between remittance or reinvestment will have an opportunity cost for the fund.   Investors who want more significant long-term returns could prefer Fund A in the hypothetical case above. Despite its lower average tracking difference, short-term traders seeking higher performance consistency are drawn to Fund B.   In other cases, the trade-off between tracking differences and tracking errors may not be as evident. A superior product would have a minor tracking error and a more significant tracking difference. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

What is Geographical diversification, and why is it important?  Diversification is assigning money to a diverse range of investments to minimize risk. It's akin to not placing eggs in one basket in terms of money.   Purchasing securities from numerous locations is called geographical diversification. Like many advisors may have advised you against keeping all your money in one stock, similarly, you don’t want all your money in one single country or region. Relying on one single means that the stock's failure would be devastating to your portfolio.  Geographic diversification, like general diversification, is based on the idea that stock markets in different regions aren't always highly associated.   For example, suppose the stock markets in advanced economies are decreasing due to a recession. In that case, an investor may transfer a portion of his or her holdings to emerging economies with greater growth rates, like China, Brazil, India, Russia, and others. This strategy restores balance to your portfolio.  source: pixabay The pros and cons of global diversification  Expanding a portfolio across several geographic locations can help investors adjust for the fluctuations of a particular financial region, lowering risk over time compared to less diversified portfolios.   Investing in international markets has never been easier, thanks to exchanging traded funds and mutual funds.  Diversifying away from advanced economies has its compensations. Many enterprises in sophisticated markets offer comparable products and services, resulting in fierce competition. On the other hand, developing markets may be less competitive and hence have more room for expansion.  The refute is that the whole world's marketplace is already interconnected, so dispersing your money across different areas no longer provides the same level of diversification.   Compared to industrialized countries, faster-growing economies may face higher political risk, currency fluctuations, and general market risk.  Exchange rates, for instance, are always changing and can work against you. If the rupee declines, an investment in India, for example, could lose value in dollar terms (This means it takes more rupee to buy a dollar).   On the other hand, investing in different currencies is another strategy to diversify and reduce risk.  Over the previous ten years, India's share market has generated remarkable gains. It is one of the world's fastest-growing stock markets, outpacing even the S&P 500. For instance, from August 08’ to August 18, S&P 500 Index increased by 142%, whereas the BSE SENSEX climbed by 188%.  Despite greater return, the SENSEX shows high volatility. Volatility means how risky a particular investment is for the average investor. The risky the investment is, the greater the volatility and the more price movements there are.   The standard deviation of the return is one measure of volatility. Compared to the S&P 500, the SENSEX has more spells of higher volatility.  Minimizing volatility when designing a portfolio can result in a more profitable portfolio. This is the basic argument of the Modern Portfolio Theory, which states that an investor should opt to maximize return for a given level of risk rather than taking a greater risk than would not provide additional gains.  In general, geographical diversification promotes more stable investment returns while lowering the depth and duration of your portfolio's drawdowns compared to other regional markets.   Given the current state of world geopolitics, which could lead to more diverse outcomes in country investment returns and relatively close to nil interest rates globally, resulting in lower asset yields in the future, geographical diversification is important.   In fact, geographical diversification of your investment portfolio may be the best chance of successfully conserving and growing your wealth for the future. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

“ETF trading at a premium?” or "What's the deal with ETF B selling at a loss?" Y. These are some questions you are likely to hear whenever advisors talk about ETFs. You can understand this better if you understand the different costs of ETF transactions.  ETFs have multiple "prices," as perplexing as they may appear. There's the actual value, determined by the net asset value (NAV) after each day and the intraday NAV (iNAV) in the midst.   The NAV of bond ETFs is set by the bid prices of the portfolio's underlying bonds. The NAV of an equity ETF is given by the most recent trading prices of the underlying stocks. The NAV is calculated based on the previous trading day's closing.  However, since ETFs are actively traded on a stock exchange, they have a current market price which may differ from their actual value. This market price will determine the premiums and discounts.   The ETF's latest traded price determines the market price of both equities and bond ETFs. For a stock ETF, that price will often fall within the bid-ask spread of the underlying basket of securities, but bond ETFs would more likely trade at a premium because the NAV is set at the lesser bid price.  If the price of an ETF is higher than its determined NAV, it trades at a "premium." In contrast, if the ETF's price is below its NAV, it trades at a "discount."  ETF prices and NAV are often closed in relatively calm markets. When stock markets become choppy, however, ETFs respond swiftly to shifts in market sentiment, whereas NAV may take longer to adjust, leading to premiums and discounts.  Let's look at it illustratively,   The market price of an equity ETF will often fluctuate within the basket's bid-ask spread. When the ETF's supply and demand are roughly balanced, trading takes place on the secondary market.   The ETF's market price may be momentarily pushed outside the limitations of the fundamental basket when there are more buyers and sellers in the market. Traders might profit from the gap between the ETF's market rate and the prices of the underlying securities if the ETF trades at a significant premium or discount.  When this occurs, the market maker can go to the primary market to deal with the ETF sponsor, issuing new ETF units when prices increase and redeeming ETF units when supply is low.   The primary market aids in re-aligning the ETF market price with the NAV. However, because the expenses are determined by the creation/redemption process, the ETF would often trade at a higher premium or discount to mirror those costs until the two-way order flow in the ETF recovers.  Since the ETF and its fundamental securities are two separate liquidity pools that are only loosely connected, this can happen at any time during the trading day.   Suppose bullish investors start bidding up an ETF more aggressively than its underlying securities. In that case, the ETF's price may climb faster than the underlying securities' price and, as a result, trade at a premium.   Similarly, if bearish investors sell an ETF aggressively, it may trade at a discount to its underlying stocks. Alternatively, premiums or discounts may develop if the ETF and its constituent stocks trade on exchanges in separate time zones.  Pricing transparency is offered through ETFs, which allow you to acquire the intraday price of any asset type. The problem is that the trade costs are explicit unlike mutual funds, they are not reduced to a single number by the end of the trading day.  It's critical to keep trading expenses in mind, especially in less liquid markets, and to resist following the herd, which can lead to acquiring at a markup and selling at a discount.   Despite their "designed for speed" nature, ETFs are still the best choice for long-term exposure to specific asset classes. Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT

People do not accept a salesperson's first price as the actual value of veggies purchased from a roadside cart. Instead, most people try to come up with a more objective appraisal of the vegetables' true worth.  It can be challenging to haggle with some merchants. Fortunately, ETFs make it simple by calculating and disseminating information to the public daily. Net asset value (NAV) is the word for this "value," and it's one of the essential data elements for ETFs and mutual funds.  The value of a fund's assets subtracted the value of its liabilities is known as net asset value (NAV). The term "net asset value" is frequently used in the context of mutual funds and ETFs, and it refers to the value of the assets owned in the fund.   The Securities and Exchange Commission (SEC) requires mutual funds and ETFs to compute their NAV at least once every business day.  net asset value = value of assets - value of liabilities  The NAV is the value of a fund's holdings in cash, shares, bonds, financial derivatives, and other securities, less any liabilities, fund expenses, and fees.  Generally, the NAV of an ETF or a mutual fund, the NAV is calculated per share or unit.  net asset value = value of assets - value of liabilities / Total shares outstanding  Let's take an example,  An investment firm that runs an ETF wants to determine how much a single share's net asset value is worth. The following information is given to the investment firm on its ETF:  Value of securities in the portfolio: $90 million (based on end-of-day closing prices)  Cash and cash equivalents of $25 million  Accrued income for the day of $30 million  Short-term liabilities of $0.5 million  Long-term liabilities of $15 million  The accrued expense for the day of $7 million  30 million shares outstanding  net asset value = 90000000 + 25000000 + 30000000 - 500000 - 15000000 - 7000000 / 30000000 = $1.3983 Thus, the NAV of the fund is $ 1.3983.   To calculate a daily NAV, the fund selects a time to value its assets each day. The NAV of a standard equities ETF is determined (or "struck") after all of the markets that the ETF's index tracks have closed.  For example, the NAV of an ETF following US equities is taken shortly after the US market closes at 4:00 p.m. ET. The closing stock price of each fund's assets must be recorded as a representation of its current value.   The worth of the fund's whole portfolio is calculated by adding these prices. When the value of the fund's securities rises, the fund's NAV also rises. The NAV of the fund decreases as the value of the securities in the fund decreases.  The NAV of a fund is essentially a representation of the fair market value of a single fund share. It gives investors a benchmark against judging any bids to buy or sell shares in the fund.  What is iNAV?  The intraday or indicative NAV (or "iNAV") differs from an ETF's official, once-a-day NAV. It is a gauge of an ETF's intraday worth, with the pricing used for the NAV calculation revised many times per minute to reflect real-time market fluctuations.  Third-party corporations frequently calculate iNAVs for their clients. When trying to trade an ETF, iNAVs can be a helpful indicator of worth, albeit they're not fail-safe and, like NAVs, may not reflect genuine value if prices grow old.  What isn't Net asset value able to tell?  While a mutual fund's net asset value (NAV) is an essential indicator of its value, it doesn't tell you everything you need to know about a fund's performance, value, or possible place in your portfolio.  The anticipated capital gains exposure that has occasionally accumulated within an older ETF or index fund is not calculated by net asset value. It also cannot know whether the underlying holdings' intrinsic worth is reasonable.  During the dot-com boom, for example, one could have purchased a fund at its net asset value while still paying high P/E ratios for businesses that were doomed to fail.  While NAV is a crucial part of understanding ETF trading for investors, it is not a substitute for other information regarding the mutual fund. Before investing, you should research an ETF's brand, profitability, aims, and long-term value to see if it is a better fit for your portfolio. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Previously we discussed 5 things to consider before sending your child abroad for education. In this article, we will discuss how to plan your child's bachelors in Australia. Are you planning your child's bachelor's in Australia? Why wouldn’t you? Australia's excellent educational system, laid-back nature, with high living standards make it a perfect choice for parents and students alike. How prospective is Australia in pursuing a bachelor's education?  The unique opportunities of studying bachelor's in Australia extend beyond the classroom program. It is about getting an excellent culture for study and work. There are great placement opportunities with average to good salary packages. There is also the flexibility of part or full-time study programs.   Given the job opportunities and thriving conditions in sectors like finance, tourism, education, agriculture, and construction in Australia, students have ample options to choose from for jobs.    The post-pandemic reforms introduced by the Australian government like extending student work hours, offering students to return to Australia to find work on their work permits as well as increasing the tenure of post-work visa has made Australia can an excellent place to not only study but to build a career.   Let's look at some prominent reasons to choose Australia for undergraduate studies. University offers academic excellence   Australia has some of the best universities, offering top education systems for international students. The quality of education and commitment of faculty is evident in the international ranking that the universities get.     Internships and placements are advantageous   Most study programs in Australia offer internships or placement opportunities. With unique options, students get a chance to have better experiences and discover advanced jobs or career opportunities. It gives way for better understanding skills and improves communication in aspirants.   The study program with scop for an internship is beneficial as it gives students a work experience with practical experience. From this, students get an understanding of work-life culture. They can learn how to implement their study of course program into the practical field. Therefore, the internships are golden scopes for students to acquire knowledge, apply it in-field, and eventually hone their skills.   That being said, choosing a bachelor's program that offers either internship or good placement opportunities for students is better. Discover a welcoming university life   Australia is the right place to provide adequate support to international students. Be it about getting a job, finding accommodation, networking, and others, it has plenty of options.   Therefore, Australia has a welcoming environment for international students, helping them adjust to the new education system. In addition, it helps students organize and get accommodation easily.   The universities focus on a problem-based learning approach, help students become independent learners. The class patterns are flexible, and the study approach makes it easy for the students to cope with the educational system.   source: pixabay What is the cost of living in Australia?  Before packing your child’s bags, make sure you are aware of the study program packages in Australia and the cost of living. Top-class education isn’t cheap and so check its scholarship options available for international students. There are eligibility criteria to avail of scholarships, and one should check them before applying.   Tuition fees   The Australian universities’ tuition fees are among the highest in the world. For a bachelor’s degree, it is 20000 and 45000 AUD yearly. The private ones are more costly and may not offer scholarship benefits.   Accommodation fees   The on-campus accommodation is affordable, which starts at around 440 AUD monthly than any other accommodation in Australia. Rent of a place may take around 1300 AUD to 1750 AUD. Even the monthly grocery costs are around 300 to 600 AUD. So, the overall living costs are approximately 1200 AUD monthly in some cities, which can rise to 1500 AUD in other cities.   Plan your expenses, and make sure you have some money left for monthly savings. When planning to send your child for a bachelor’s in Australia, it is important to have this in mind.   How do financially plan for your child’s bachelor's?  Whether you pick Australia or any other country for your child’s bachelor's, you need to start saving. The average cost of education is rising at an unprecedented rate and the only way to meet this cost is to start saving aggressively!   Today, the yearly expense to support your child in Australia can be anywhere between Rs. 10-20 lakhs. This cost greatly varies based on your child’s needs and lifestyle, however, it’s important to remember that your child may have to pay double this amount when it’s their time to study in the country due to education inflation.   So, calculate in advance how much you need to send your child to Australia, create a financial plan with the help of an expert and start saving via SIPs to ensure you have the funds you need when it’s time to send your child to the land of opportunity!  Consult an expert advisor to get the right plan TALK TO AN EXPERT

Individuals' interest in index funds is increasing due to an overarching desire to compound and capitalize on wealth.   Amid constant volatility in markets, it has become imperative to explore investment ways that dilute any potential risks of losing on high-return investments.  This is why people are incredibly inclined toward building different buckets instead of leaving all eggs in a single basket. In investment terms, diversifying the portfolio by investing in different equities and sectors is one of the best techniques to evade market risks.  It is where investment in index funds emerges as a market dominator in the current Indian scenario.   What are Index funds?  Index funds work differently from active funds. These funds are appropriate for those wishing to evade risk and diversify investment. One can only manage the investments passively.   It implies that a person cannot invest directly in an index but through mutual funds called “Index Funds.” A manager or investor invests in the same equities as present in the index.  The market index leverages a company’s market capitalization to determine the total weightage of securities in the index. The total value of the company shares is equivalent to the number of outstanding shares.  As per Economic Times, “since February 2020, the number of index funds has surged 144% and the assets managed by these investors grew by 590%”.   As a part of the ongoing research by Economic Times, “The number of index funds grew from 32 in February to 78 in July 2020”. ETF draws the investor’s interest during the phase.  https://www.youtube.com/shorts/FlrxZAJjemE Who should invest in index funds?   Investments in index funds are profitable only for a selective bunch. If you meet the below investment behavior, index funds are just right for you:  You wish to evade any risks associated with investment/slash investment risks  You want to diversify your portfolio by starting and investing a low amount  You prefer to invest only a fixed amount in a particular index fund  You would like to invest in multiple investment forms – like real estate, gold, equities  How to invest in index funds?   Index Funds are a type of investment vehicles like mutual funds and exchange-traded funds that help achieve results on specific indexes. Here is how you can invest in index funds:   1. Figure out your investment goals  Before investing, it is important to ensure clarity over the present and future financial goals.   When do you want to retire?   How long till you achieve your financial goals?   What do your risk appetite and budget look like?   2. Pick one index to invest in  Index Funds, apart from helping diversify the investment, track broad sectors like large capitals and emerging markets. Different index types serve different purposes.   While deciding on the index to invest in, analyze the below parameter:   Which industry do you share knowledge in and is growing lately?   How much is your risk tolerance?   What are the company size and market capitalization?  What index fund would you find comfortable investing in (stocks, bonds, or commodities)?   Highlighting and improvising on these parameters will help you choose the right index fund. It will help build a growth foundation.   3. Decide the index funds to invest in  Each fund and company has different marketing capital, growth potential, and shares available to invest in. The best research method is by researching Asset Under Management (AUM). It is the total investment value that an expert manages on the client's behalf. Analyze the AUM index of a given fund and the ease of trading.  Here are some best index funds for 2022:  IDBI Nifty Junior Index Fund Growth  ICICI Prudential Nifty 50 Index Plan Direct-Growth  UTI Nifty Next 50 index Fund Direct-Growth  As per ClearTax - “ IDBI Nifty Junior Index Fund Direct Plan-Growth, is one of the most profitable index funds in India."  Index funds companies can vary in their short and long-term costs.  4. Sign up for a brokerage account   After signing up for a brokerage account, utilize the above points to figure out the best index funds to invest in. Here, an investment expert may help you meet the purpose according to your financial goals.   In the initial stage, having an expert backing works well. An expert can help you develop an investment strategy that aligns with personalized financial goals. It makes investment in index funds a smooth journey.   5. Manage investments cautiously   It is important to manage and check potential opportunities for growth. Start with small investments and set up automatic monthly deductions. Monitor the fluctuations and returns throughout the year. Modify the strategy if the market demands.  While Index funds are a great way to start investing, it's good to remember no market is without risks. Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT

Diversification is the foundation of any good portfolio. Diversification provides a cushion to unforeseen volatilities from the future.   In today's integrated world, getting hold of foreign stocks, bonds, and mutual funds has become much easier. New-age investors can now have a balance of domestic and international securities in a portfolio.   An international portfolio is a collection of stocks and other assets focused on global markets rather than home markets. An international portfolio, if well-designed, provides exposure to emerging and developed economies and diversification.   Buying an exchange-traded fund (ETF) that focuses on foreign equities is the most cost-effective approach for investors to own an international portfolio.  Let's now look at some of the advantages and disadvantages of having international exposure in the portfolio.   Advantages  Reduced risk It is possible to lessen investment risk by having an international portfolio. Gains in the investor's global holdings help increase profits if domestic stocks underperform.   Risk can be further lowered by diversifying the international portfolio with stocks from developed and emerging markets.  Varied currency exposure When investors purchase stocks for a global portfolio, they also buy currencies in which stocks are denominated.  As a result, currency fluctuations might help the investor offset losses or raise gains depending on the currency movements. It does, however, come with its own set of dangers.  Market cycle An investor with a global portfolio can take advantage of several countries' market cycles.  Accessing the entire supply chain International investing provides opportunities across industries as well as up and down the value chain often missed in domestic portfolios.   Manufacturing, services, and technology are all tiers in the supply chain. These companies benefit the most from the multiple stages of the global supply chain.  Innovation Beyond the home market, there is world-class innovation in industrial automation, payments, and renewable energy.  Source: freepik Disadvantages   Political and economic risk Many emerging countries lack the same political and economic stability as industrialized economies. Instability can drive already invested or budding investors away from the market.   Enlarged transaction costs When buying and selling international equities, investors often pay higher commissions and brokerage fees, lowering their overall returns.   Taxes, stamp charges, levies, and exchange fees may be required, further diluting gains. Many of these fees can be eliminated or reduced using ETFs or index funds to get exposure to a foreign portfolio.  Regarding assets, two ETFs stand out above the rest for individuals seeking broad exposure to international markets. With $110.3 billion in assets under management, the Vanguard FTSE Developed Markets ETF (VEA) is the largest.   The iShares Core MSCI EAFE ETF (IEFA), benchmarked to an MSCI index rather than an FTSE Russell-managed index, has amassed $104.34 billion in assets. These ETFs are best placed only to get the investor an upper edge over the developed markets.   The most significant distinction between the two funds is the nations they provide exposure to. South Korea is a developed market in the FTSE index tracked by VEA, accounting for approximately 5% of the fund.   South Korea is not included in the IEFA's MSCI index because it is listed as an emerging market by MSCI. Canada is also not included in IEFA because the fund ignores North America, even though it is VEA's third most significant country exposure.  ETFs like the iShares Core MSCI Total International Stock ETF (IXUS) and the Vanguard FTSE All-World ex-US ETF (VEU) contain both developed and exposure for those who want their international exposure to include emerging markets.   IXUS currently has around 12.5 percent of its portfolio invested in developing market companies, while VEU has 13.1 percent. It is a bit riskier than the developed markets due to the very structure of the emerging economies, which inculcates volatilities in the business environment.  Over the last decade, investors have done well while investing in the United States. This is particularly true when comparing U.S. equities returns against international equity returns.   However, trends change, and given the challenges in the United States and the opportunities that may exist elsewhere, investors may be more open to channeling funds outside of the United States to more countries for international exposure.   However, international exposure may win or lose, and investors should do their due diligence before investing. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

If you are planning to send your child overseas for higher studies, here are 5 ways early saving will help your child’s future career. Depending on the career your child decides to pursue and the country where your child wishes to travel, you will require a corpus of anywhere from Rs. 25 lakhs to up to Rs. 1 crore. And as you can imagine, these funds need to be planned for and accumulated over time.   Here is why early saving will help your child’s future career  Start saving early to build a larger corpus It is difficult to assess the career your child will ultimately pursue almost 15 years from now, it is best for you to go big and work with a higher target. This way your child will have the freedom to choose whichever career appeals to him/her, without you stressing out about how you are going to fund it.   You will not need an education loan While education loans are quite commonplace these days, if you plan well in advance, your child will not need to apply for education loans. No matter how easy they are to get, you must remember that most students end up having to commit a substantial portion of their 7-9 years’ earnings in the initial years towards settling these loans. If you plan well and start saving early, you can spare your child the stress of this loan.   Zero hassle of getting education loans While education loans are many today, the competition for these loans is going up as more and more students aspire to go overseas. This means by the time your child is ready to travel for higher studies, these loans will be harder to get and will definitely be more expensive than they are today. Also, loans that are easily available are provided against high-value collateral. If you do not have the necessary collateral with all the required documentation, the loan will not be sanctioned. Further, if your loan application is rejected for any reason by even one loan provider, it will create a lot of hurdles for you when you apply to other lenders. All of this stress can be avoided if you have your own funds to put your child through college with your funds.   Source: pixabay No fear of repayment Different lenders have different repayment terms. Some need the student to start repayment even during the study period. Others, once the course of over and the student starts working. In both cases, this becomes an additional area of concern for the student. Managing a job while studying overseas is not an easy task. Even if the repayment schedule starts to post the course completion, it implies the student will be forced to take up a job even if he/she prefers to study further. As you can see, there is no need to put your child through all these challenges. All you have to do is create and follow an effective savings plan that will help you save your funds and grow them through compounding over an extended period of time.   Builds healthy financial habits We all know that our children usually follow what we do when it comes to financial behavior. By saving early on, your child will be able to pursue the career of his / her choice and will be free to start work when he/she feels ready. Most children, having experienced the ease of access to their own funds, realize early on that saving for a bigger goal in the future is important. Your decisions today will encourage your child to put away their own funds for their future career and personal goals.   It may seem like an obvious adage to start saving for your child’s higher education. But most parents make the big mistake of waiting for their child to go off to college. By saving diligently, it can be the game-changer that your family needs to shift to a whole new level of success in just one generation. So, ensure you start your savings today! Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Recent events like the pandemic, Russian - Ukraine war, consistently falling rupee and high inflation have proved why investing at an early age and systematically is vital and a significant requirement today! Since it’s the only way to beat inflation and work towards wealth generation, here are 8 ways to invest in 2022 for beginners!  1. Know your financial goals  Every person has financial goals to achieve; whether it’s to cruise around the world or pay for your child’s foreign education. Everyone has them and everyone needs to work for them. The first rule of investing is to determine your short-term goals like buying a car and long-term goals like buying a house to figure out how to work towards it based on your finances and spending.  When it comes to financial planning, it's best to be realistic. Understand your goals and determine the best way to attain them without compromising your present needs!  2. Study your finances  Before investing a huge sum, it's good to budget your finances and understand where your money is going. For instance, if you have an income of Rs. 45,000 a month and if you spend Rs. 25,000 on rent then it’s not feasible for you to invest Rs.20,000. You have to take care of your utility bills, food, and other miscellaneous expenses. It's best to pick a realistic amount for investing every month that you can pay consistently before starting a SIP.  3. Time your financial goals  Knowing how much time you have and need to achieve your goal is a crucial aspect of investing. Some investments have a lock-in period; suppose you choose an investment that has a lock-in period of 5 years but you need your money in 3 years, this can throw your financial planning off the charts. So, it’s important to align your deadlines with your investments so that you can take care of all your needs on time.  4. Know your risk appetite  Some investments are riskier than others, some offer low to medium risks. Depending on your risk appetite you can choose the option that suits your financial goals and current needs. Risk appetite depends on a number of factors like your running income, sources of income, financial obligations, number of dependents, age, etc.  5. Put your eggs in different baskets  You have probably heard this line more than enough to know relying on one financial tool like an FD or Mutual Fund or ETF alone can be a huge mistake. It is always beneficial to diversify your investments so that you can achieve your financial goals faster and more efficiently. Speak to an expert if you have trouble assessing the different investments for your unique goals!   6. Avoid impulse decisions  Many first-time investors make the mistake of investing everywhere without any specific goal in mind rather than the lure of lucrative returns. While these avenues may be a great investment opportunity, they could prove to be a loss. So do your research well, understand your needs and then invest your hard-earned money into schemes you can vouch for!  7. Ensure you have enough liquidity   Some investments have lock-in periods and levy extra charges for redemption before the set date. This can be a huge loss on your investment! While you cannot foresee future emergencies, you can prepare for them with emergency funds and some liquidity, that is, cash in hand!    8. Market research is key  While the pandemic introduced various changes and led to the emergence of pharma companies like high-return investments, the winds are changing again. Companies like manufacturing and logistics are making a grand comeback, especially in India with the start-up culture in full swing. So, know your market before making any big investments. If you have no prior expertise in share market research then contact an expert!   How you invest in 2022 should be determined by your financial goals and needs while keeping research at the centerfold! The gamut of financial advice and instruments has increased in past few years, it is easy to get overwhelmed so seek help wherever you can to make the right choices!  Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Exchange-traded funds (ETFs) are well-known for their low costs and liquidity, but many investors ignore an additional, undervalued benefit of ETFs: tax efficiency. In this crucial aspect, ETFs outperform Mutual Funds by a long shot.   ETFs may owe this tax efficiency to their very structure and their trading, creation, and redemption. Structural components contribute to tax efficiency; lower turnover in passive strategies than active strategies, secondary market trading possibilities, and the structural tax advantages of in-kind redemptions.  As a result, ETF investors have more control over when they pay taxes, i.e., when they sell their shares, rather than when other shareholders buy and sell.   In the USA in 2018, only 10% of ETFs paid out capital gains to investors, but 61% of mutual funds did. Mutual funds paid an average of 4.5 percent capital gains as a percentage of NAV, while ETFs paid only 0.2 percent.   Source: pixabay How are ETFs are so tax efficient Passive turnover   According to Morningstar, only 4% of mutual funds are passive, compared to 89 percent of ETFs. Passive strategies, on average, have lower portfolio turnover than active methods.   As a result of the decreased turnover, there are fewer instances of securities selling at a profit, and hence fewer opportunities for shareholders to receive capital gains.   Thus, the very basis of management of a fund leads to lower or higher tax efficiency. A passive ETF is more tax-efficient than the actively managed ones, as passive strategies eliminate the need for continuous rebalancing.   Secondary market trading  Unlike mutual funds, exchange-traded funds (ETFs) get traded on stock exchanges. Only 10% of ETF trades affect the underlying portfolio through the primary market, with the rest occurring between investors in the secondary market.   On the other hand, all activity of mutual funds has to occur in the primary market, affecting the underlying portfolio.  When a mutual fund investor requests a redemption, the fund has to sell the securities to cover the obligation. On the other hand, when an individual investor wishes to sell an ETF, he simply sells it in the secondary market. For the ETF, there is no bother and so no capital gains transaction.  This structural difference limits the fund-level transactions. As a result, compared to mutual funds that invest in similar assets, this has a lower cost of ownership and higher returns.  Structure  Instead of selling securities for cash, the ETF issuer can satisfy redemptions and portfolio rebalance in-kind (exchanging securities for ETF shares) in the ETF primary market.   This in-kind transaction does not result in a taxable event for the fund. It can protect fund shareholders from capital gains from other shareholders' buying and selling decisions.  When an AP redeems ETF shares, the issuer does not immediately rush to sell ETF shares to pay the AP in cash. Instead, he's paid "in-kind" by delivering the ETF's underlying assets.   No capital gains, therefore. Additionally, the ETF provider selects the stocks to be given to the AP, making sure that the shares with the lowest tax liability are given to the AP.  This leaves the ETF issuer with only shares acquired at or even above the market rate, lowering the fund's tax burden and, as a result, providing investors with better after-tax returns.  For some ETFs, the mechanism does not augur well. Fixed-income ETFs are less tax-efficient than other ETFs due to higher turnover and recurrent cash-based creations and redemptions.   That said, ETFs win hands down, with two decades of evidence pointing out their high tax savings compared to any other investment avenue.  Consult an expert advisor to get the right plan for you TALK TO AN EXPERT