Tag Archives: finance

IDCW in mutual fund means Income Distribution cum Capital Withdrawal. It is a dividend option in the market of mutual funds, and one can term it IDCW Mutual Fund.  The change in the name introduced by (the Securities and Exchange Board of India) SEBI became operational in April 2021. Irrespective of the name change, the role of the dividends is the same. As per SEBI regulations, the investors must know that they can use and distribute the income capital as dividends.  Why did SEBI change the dividend name to IDCW?  The term means the distribution of income of a mutual fund scheme. It includes dividends paid by stocks and capital gains made by selling stocks from the scheme portfolio. The name change happened to highlight that the income is coming out of the depositor’s income value, which means the withdrawal of capital.  The term IDCW accurately represents mutual fund dividends and will remove any misunderstanding about mutual fund dividends for the investors as per SEBI.   The highlights of IDCW in mutual funds   The IDCW is mainly selected by investors who want to access a periodic inflow of funds. Note that the IDCW happens at the discretion of the fund manager. There is no specific assurance that it will be declared at periodic intervals.  Investing in an IDCW mutual fund is a great alternative to conventional investment instruments like fixed deposits or savings schemes. Senior citizens and investors who want to access low-risk returns can always consider IDCW mutual funds to brighten their investment portfolios.   Things to consider about IDCW in mutual fund There are many misconceptions floating around this field. Here are some facts that would help you break out of those misconceptions and plan better.   Mutual fund scheme dividends may include the ones received from underlying stocks in the portfolio and profits books by selling those stocks.  The dividends are not an extra income over the redemption profits you’ve made. The dividends, instead, are capital appreciation, which is ultimately paid from your capital. Therefore, the dividend scheme’s Net Asset Value (NAV) falls to the extent of dividends paid to you.  In the case of the growth option, the profits are reflected in the NAV and reinvested in the scheme.  At the discretion of the AMC or fund manager, a portion of the profit gets distributed to the investors in IDCW. However, it must be noted that this is not mandatory for an AMC under the dividend option. Tax benefits associated with IDCW in mutual funds   If you are a short-term investor, opting for IDCW in mutual funds is a viable option. That’s why an IDCW in a mutual fund is more appealing to conservative investors. However one cannot deny the importance of the tax benefits of IDCW in mutual funds.   Since the payout of IDCW in mutual funds is regular, whatever payout you receive is included in the income of the investor. And as IDCW offers an investor the promise of regular cash flow, you can always opt for such a mutual funds scheme. Note that the payout frequency of the IDCW is solely dependent on the fund manager.   IDCW pays out from the surplus investment accumulated. Income received by the investor as IDCW is added to the gross taxable income. Moreover, it is taxed based on the income tax slab rate of the investor.  Being a dividend distribution plan, dividends in IDCW exude practicality to the investors. Usually, retired investors want regular income from their portfolios. In that case, opting for IDCW in mutual funds is an excellent idea. Here are some noteworthy points of IDCW funds you should be aware of.   Based on SEBI, the dividends can only be paid from the profits earned by the respective mutual fund.   The payout rates of dividends may vary based on the payout cycle   Dividends paid on both debt and equity mutual funds can be taxed as per the investor’s tax slab.   Investment experts recommend the IDCW option when the market trajectory is moving upwards. During this time, the net asset values of funds rose consistently. Moreover, there is a greater likelihood of a fund declaring great dividends.   Where should investors invest? IDCW or Growth  Considering the in-growth option, the profits made by the scheme remain in the scheme investment. For long-term investment, the investor will profit for a long time. It is also known as compounding and will have a prominent role in wealth creation for investors.   IDCW in a mutual fund is something where the profits will improve the scheme, and the investor will get the best distribution with full or partial discretion of the fund manager with AMC. In this option, you will lose the compounding advantages the investors receive periodically. If the investor wishes to have a daily cash flow of the investment, then IDCW will be your best option.   Who should opt for the IDCW in mutual funds? IDCW in mutual funds is best suited for -  Investors looking for a regular income through their investments. Investors with low-risk tolerance levels.  Those looking for dividends during the bare market phase. Conclusion  Your choice of investment depends entirely on your financial goals. Moreover, you should also consider your investment horizon and tax situation to choose the best mutual fund. To be precise, IDCW mutual funds are suitable for those who want to have access to periodic payouts. Investing in mutual funds is a viable way to accumulate money for bigger purposes in life. If you want an investment portfolio with minimum risks, opting for IDCW is a better alternative.  FAQs Is IDCW income subject to tax? Yes, the IDCW income is added to your taxable income. It is subject to normal tax-slab rates. And if the dividend exceeds INR 5,000, there's also TDS on IDCW. What does IDCW stand for? IDCW stands for 'Income Distribution Cum Capital Withdrawal’. Can we change from IDCW to growth? Yes, you can. But it must be noted that depending on how long you had invested, the switch will attract capital gains and exit load.

In the previous article, we discussed 5 degrees for your child that can cost up to 1 crore. In this article, we will discuss the best way to save for any kind of education expense Saving and investing money is simpler when there is a goal in mind. For parents, their child’s education is the ultimate goal. Given the skyrocketing cost of education in India, it is one of the biggest financial outlays that families take into account.   This is because education is not just about tuition fees; it includes a host of expenses like a laptop, phone, course fees, etc. To make sure you can provide for all your child’s needs, let’s find out which is the best way to save for any kind of education expense.   Why is education becoming expensive?  The education inflation rate measures how rapidly educational expenditures have increased over time. Education inflation in India is presently between 10 and 12 percent, which is more than twice as high as inflation in the economy.  Most parents frequently find themselves going to banks to take out school loans, despite the rising inflation and education costs. Given that you have an added duty to make interest payments, this may not always seem sound advice. So, how should a parent save money for their child's education? Let's examine that in the part that follows.  Top ways to save for your child's education expense  Plan ahead and take the necessary actions to save money for your child's future. This will prevent financial constraints from impeding their ability to pursue higher education. So, these are the best ways to save for education expenses:  1. Set a goal amount for higher education  Parents generally don't know how much money to set aside for courses like medicine, engineering, the arts, science, and business. The annual costs for these courses range from Rs. 2.5 lakhs to Rs. 15 lakhs. When you have time on your side, you can save for this desired amount with a regular SIP and the power of compounding.  Once you've chosen the SIP amount, use the step-up function to raise it as needed with your bonus or extra cash flow. As your salary rises, you should ideally increase the SIP contribution each year.  2. Time is a big factor  For young parents, the ideal time to start saving is - before your child's birth. This allows you to financially prepare for their future and minimize the risk that comes with investing. By starting early, you would have sufficient money if you were saving consistently for 18 years. If you begin saving later than you intended, you may still be able to catch up by raising the amount you want to set aside each month.   3. Investment plans  The best way to save for any kind of education expense is through investing. Your saved money can be invested in PPF, ULIPS, and SIPs for kids every month. These alternatives allow you to set aside a sum of money every month based on your budget as well as goals.   Systematic Investment Plans (SIP)  Making money work for you is always an excellent idea rather than working for your money. Everyone makes an effort to save money, but you may be savvy and invest your funds to see your money increase. You can invest modest amounts on a regular basis using a Systematic Investment Plan (SIP), which will enable you to realize your goals.    Unit Linked Insurance Plan (ULIP)  Insurance providers provide unit-linked insurance plans that combine insurance protection with an investment strategy for investors. In this situation, a ULIP will be beneficial to you because it combines an investment and insurance plan.  Public Provident Fund (PPF)  There is no minimum age requirement to create an account with Public Provident Fund schemes, which are well-liked long-term investment plans. As a result, you can invest in a PPF for your child as it provides security, an alluring interest rate, and tax-free profits.  4. Look for Scholarships  Scholarship hunting in India is much simpler than you may imagine. With technology, finding scholarships and applying for them is easier. It may be simpler for you to obtain scholarships in India if you are a member of a specific caste or religion or come from a low-income household.  Always inquire about any available scholarships before accepting admission to any institution. These bursaries may be merit-based or available to low-income students. You can apply for merit-based scholarships by taking the exam that evaluates your knowledge and abilities. All they ask for from poor or category students is an income certificate and a category certificate.  5. Withdrawal plan  Even when investing long-term, the investment process is never static. Experts have recommended equity funds for individuals with an investment horizon of more than 12 to 15 years. However, it would help if you started moving money out of stocks and into debt five years before your target. Begin a planned transfer of funds from your equity fund to your short-term debt fund. It highlights the necessity to exercise caution while saving for an urgent need that cannot wait. Remember that your child's admittance to college has a set date.  When it comes to your child's education, having a clear strategy in mind is crucial. This is due to the significant disparity between present and future schooling expenditures. For your child's financial stability, it is crucial to establish a well-defined savings and investment strategy and implement it over the years! TALK TO AN EXPERT

There are various methods to choose from when it comes to developing a financial plan, but the proper plan needs a few components, regardless of the process utilized for creating it. Components for financial planning   1. Your net worth statement  Every financial plan demands a baseline. So, it is worthwhile to determine the net worth before finding a financial plan. Make sure to note down all the assets and debts. This will include investment accounts, bank accounts, valuable personal property, real estate, mortgages, student loans, and credit cards.   Make sure to deduct your liabilities from your assets to find your net worth. If you find that your liabilities are outweighing the assets, make sure to not be discouraged because when people are starting to establish a solid financial plan, it is something that happens. So, it needs to be considered when looking for the components of financial planning. 2. Financial goals  You cannot consider making a financial plan until you understand what you are going to do with your money. Your plan needs to begin with a complete list of goals, both small and big.   A proper list can help you organize all the goals. Be aware that your short-term goals will be those that you are hoping to achieve in the next 2-5 years. When it comes to medium-term goals, those are the ones that you want to achieve in the next 7-8 years. Finally, your long-term goals will be those that you want to achieve in the next 10 to 50 years. Listing down financial goals is one of the primary components of financial planning.   7 Types of Financial Planning Read More 3. Debt management  Having a debt management strategy is something that can help you reach your financial goals. If there is high-interest debt, ensure creating a strategy that can assist you to pay them quickly. You can also hire a financial professional advisor if you are not certain about where to begin. They will help you determine the amount from your budget that should be spent on the debts every month.   4. Cash flow and budget planning  Your budget assists you to find out where all your money is going and it helps you cut back to meet your goals. You can make use of a proper budget calculator to be sure that you do not ignore the important expenses. While jotting down your list, make sure to separate the expenses into two categories when considering the components of financial planning.   One category will have must-have items and the other will have luxury items. When you are considering how the financial goals will fit within the budget, make sure to consider all your expenses. You can also take the help of any advisor that offers procedures and tips that enable you to adjust particular assumptions to check how they would affect the savings plan.   Financial Planning Contingencies Read More 5. Retirement plan  You are going to need 80% of the income you're earning today in your retirement. But, you can also assume that retirement can free you from taxes and other work-related expenses. You must consider that medical insurance does not cover everything. You need to keep those expenses under long-term health care expenses. Make use of a savings calculator for your retirement to help you understand what you might require during your retirement period.   6. Insurance coverage  Insurance refers to an integral part of safeguarding your financial downside. Disability insurance, health insurance, life insurance, and home insurance are some of them. When it comes to life insurance, it is a good concept for people having dependents. Make sure to talk to an insurance professional to acknowledge what kind of coverage works best for you.   When it comes to disability insurance, just like the components of financial planning, it safeguards you and your family when you are not able to work. It replaces approximately 60% of your monthly salary. If you have a home or a car and you cannot afford to pay the entire bill from your pocket, ensure that you have adequate protection. The same is true with health insurance which can get you back thousands of money during a severe injury.   Wrapping Up  These components of financial planning are growing effectively to confirm that the present plans in your life are in a positive direction.   In a nutshell, you need to -  Keep a regular check on your enrolled plans, mutual fund, and assets;   Analyze your essential expense;  Cut down excess expenses for your future investment to be more structured;  Optimize your goals.   So, follow the above-mentioned components of financial planning to make your financial goals realistic as well as achievable. It is one of the best and workable ways to help take a step toward your financial goals. FAQs How do I determine my net worth? List all assets and debts (e.g., investments, bank accounts, loans), subtract liabilities from assets to find net worth. Why is goal setting essential in financial planning? Goals provide direction. Categorize them into short-term (2-5 years), medium-term (7-8 years), and long-term (10-50 years) goals. How do I manage debt effectively? Create a strategy to pay off high-interest debt. Seek advice from a financial advisor if unsure where to start. Why is insurance coverage crucial for financial security? Insurance safeguards against financial downsides. Types include disability, health, life, and home insurance, offering protection in various situations. TALK TO AN EXPERT

In the previous article, we discussed how parents can find the best education loan. In this article, we will discuss the responsibilities of a parent in an education loan Education inflation is making things worse for parents. Let’s cite some figures to help you realize the state of education inflation in India. The education inflation rate in India was 0.63% in April 2021. But it has increased to 4.12 in the corresponding month of 2022. https://www.youtube.com/watch?v=awKjIuVlRAQ On the other hand, with the economy taking a hit due to COVID-19, many parents might find it tough to fund their child’s education. That’s when an education loan is one of the best solutions to make your child realize their dreams.   You can apply for an education loan in the public sector or a private bank. Even non-banking financial institutes nowadays offer education loans to eligible candidates. But with increasing costs, savings won’t be enough to fund your child’s education. No doubt, the best way to support your child’s higher studies is with the help of an education loan. So, what are the exact responsibilities of a parent for an education loan?   1. Always maintain a high credit score   If you are applying for a student loan for your child, the lender would ask you to act as a guarantor for the loan. It is crucial for parents to maintain a good credit score to showcase their creditworthiness to lenders.   A minimum requirement for credit score varies from lender to lender. A credit score of more than 700 is pretty good. Maintaining a good and higher credit score can help you negotiate with the lender to provide the loan at a better interest rate  https://www.youtube.com/watch?v=fufyFB9aMQI 2. You shouldn’t worry much about the collateral   Parents often hesitate to apply for education loans due to the fear of mortgaging their assets or property. However, you shouldn’t stress much about mortgages and collateral. An education loan can be collateral free. It also decreases loan sanction time and makes the overall process hassle-free.   Best way to explain child education loans Read More 3. Tax benefits on education loan  Note that tax deduction under Section 80E is one of the main advantages of an education loan. This deduction is available both to the parent and child, based on who repays the loan. Education loans offer a good tax planning opportunity. Since the complete interest can be deducted under Section 80E, the actual repayment cost becomes much lower.   https://www.youtube.com/watch?v=4gTQkdePOWM 4. Try to in still healthy financial habits with your children    As a responsible parent, your primary objective should be to instill good financial habits in your children. Good financial habits will help your child to repay the loan on time. And when your child bears the loan repayment responsibility, it is an excellent way to inculcate financial discipline. In this manner, they can build their own credit history. Building their own credit history in the early stages opens up a world of financing opportunities for them in the future.  5. Go for competitive interest rates   Interest rate is one major factor that influences the loan amount and EMIs. For instance, if the interest rate is high, the repayment amount will increase drastically. As a parent, your primary responsibility should always be to opt for education loans that come with lower interest rates.   Education loans in India don’t come affordable. Moreover, the overall NPA of educational loans is pretty high. That’s why banks charge exorbitant interest rates. As a responsible parent, you should remember that banks decrease interest rates by 1% when it is paid while the child pursues their education. Furthermore, you should repay the loan without defaulting.          6. Make use of the moratorium period  Parents typically make use of the moratorium period. Note that you cannot get a moratorium period on every education loan. Certain lenders and government-based financial companies don’t begin the loan repayment process unless the student finishes the course and completes at least six months in the professional workplace.   7. Know the significance of margin money  You should closely analyze how much the financial institution will finance and how much you need to put in. The contribution from your end is known as the margin money. The requirement of margin money usually varies from one lender to another.   For instance, the PSU banks typically charge a 5% margin money for education loans above INR 4 lakhs for candidates studying at Indian Institutes. On the other hand, they will charge 15% of the margin money if your child enrolls in a foreign university.   In most cases, private lenders typically don’t charge margin money when you apply for education loans from them. But as a responsible parent, you should make sure not to pay higher interest just to avoid margin money.     By keeping these facts in mind, you can ensure that your child can repay the loan quickly and become debt-free! Plan your finances well and educate your child wisely to help them become successful in their careers. TALK TO AN EXPERT

A bond is a debt instrument that an investor purchases from the issuer and receives interest on it periodically. Financial institutions, companies, banks, non-banking financial companies, and the government provide bonds. Bond is one of the financial instruments that help companies finance themselves; it acts as a loan for these companies that raise money directly from investors.   Bonds are ideal for investors seeking low-risk investments, and they carry lower risk than equities and help diversify the portfolio. https://www.youtube.com/watch?v=iYJzL-H5sds What are some primary differences between bonds and stocks? Bonds Stocks In bonds, you provide an amount to the lender to invest in an organization/ government In a share, you own a portion of the company equity by investing. The person who invests in a bond receives a fixed interest over time from the issuer. An individual dealing in stocks sells the shares once the price rise.    These are a debt. The long-investment bonds are riskier. These investments are long-term and short-term. Long-term offers the potential to the investor. Safer investment option than stocks Profitable investment option than bonds   However, bonds are not entirely free from risks. If the company goes bankrupt, the investors stop receiving interest payments. In many cases, individuals do not get the principal amount as well. It is thus advisable to invest in bonds in India carefully. Analyze the growth and issuer’s creditworthiness. Companies with AAA ratings like HDFC Bank Limited or Infosys are considered the best bond issuer.   How to Invest in Index Funds? Read More What are the 5 types of bonds to invest in India?   Here are the top 5 bond types of investing in India:  Government security bonds   The Government of India issues this debt instrument. These are one of the safest bonds in India, and they do not carry any credit risk and pay interest semi-annually.  Corporate Bonds   Firms provide these bonds to individuals for a fixed period, and the account holder earns consistent interest over time. However, companies use the money to fund their business requirements; hence, these are highly risky.   Zero Coupon Bond  A Zero-Coupon Bond is a pure discount bond. In this, individuals do not receive interest or any benefit until the bond’s maturity.  Convertible Bond  It is a hybrid bond that acts both as equity and bond. However, it does not happen simultaneously, allowing the investor to convert a bond into equity and qualify for shareholder benefits.  RBI Bonds  It is also known as a Floating Rate Savings Bond (RBI). Released in 2020, the government pays interest every six months on the bond, and one has to repay the bond post 7 years of expiry.   https://www.youtube.com/watch?v=_vd24QDztRo Is Investing in a Bond beneficial?   Here are some popular benefits of investing in a bond:   Provides investors with a steady income source  Flexibility to receive interest income or receive both cumulative interest and principal on maturity  Some bonds offer tax benefits on returns and interests  Investors receive benefits from preserving or increasing the investments  Investors share a higher priority claim to assets in comparison to stockholders  7 Tips to Choosing the right bond  Individuals often dwindle between the right bond and a profitable bond. Here is how you must pick the bond:  Define your investment objectives  Analyze your risk-taking abilities  Identify the bond provider rating  Expected yield on the bond  Research the bond’s strengths, weaknesses, and future scope  Read the terms in fine print carefully  Decide whether a long-term investment is ideal for you.   How to invest in bonds in India?  One can invest in bonds through a primary or secondary market. In the primary market, an investor can invest in bonds issued by big companies. In this, the companies provide bonds to build capital. They release IPO (Initial Public Offering) to raise funds for generating capital. When a company raises capital from the market to expand its business or growth, it is termed an IPO.  In contrast, a secondary market exchange refers to organizations like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). Investors buy and sell stocks by operating in any of these organizations independently.  If you need a pre-mature exit, you can view a secondary market.  In the primary market, an individual has to undergo a documentation process to invest in bonds in the DEMAT account.   Purchasing a bond in the primary market is subjected to strict screening. The company offering securities reviews it and creates a prospectus outlining the details of the securities. In opposition, the secondary market offers more flexibility in trading.   Ways to invest:  By Connecting with a Bond Broker  Connecting with an authentic broker is one of the ways to choose and invest in the right bonds. Fees may vary from broker to broker.   Invest through Institutional Investors   In this, investors bids on government securities. The yield on the bond is less than the interest rate one receives. But a higher bid rate makes it profitable.  Purchasing Mutual Funds and ETFs   It is among the best and fastest methods for bond investing. The provider provides the best ETFs (Exchange Traded Funds) on your behalf.   Buying Bonds through RBI retail   If you are seeking government securities to invest in, you can do so through RBI retail. Register for a GILT security account under RBI. An investor needs to update the dashboard post-logging:  An investor must update details like- issue size, date of bidding, price per security, and bid value range  Place the bid by mentioning the investment value and security  Complete the payment  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. Corporations 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-and 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

“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. FAQs What is the difference between the actual value and the market price of an ETF? ETFs have an actual value determined by the net asset value (NAV) based on the underlying securities prices. The market price, on the other hand, is influenced by supply and demand on the stock exchange and may differ from the actual value, leading to premiums or discounts. What does it mean when an ETF trades at a premium or a discount? If an ETF's market price is higher than its determined NAV, it trades at a premium. Conversely, if the ETF's market price is below its NAV, it trades at a discount. Premiums and discounts occur due to the interplay of supply and demand in the market. Why do premiums and discounts occur in ETF trading? ETFs respond swiftly to shifts in market sentiment, causing their market price to fluctuate more quickly than the NAV. In choppy markets, this can lead to premiums or discounts as the market price adjusts while the NAV may take longer to catch up. 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. https://www.youtube.com/watch?v=MwQWKYxxJ8o 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.   https://www.youtube.com/watch?v=Ew2MC3RCo68 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 to better understanding skills and improves communication among 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, 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 an 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, helping 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.   1. 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.   2. Accommodation fees   The on-campus accommodation is affordable, which starts at around 440 AUD monthly than any other accommodation in Australia. The 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.   The Hidden Cost of Education in Australia Read More 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!  FAQs How do I start planning my child's bachelor's degree in Australia? Start by researching universities and courses in Australia. Consider factors such as reputation, rankings, course offerings, and tuition fees. Look into admission requirements, including English language proficiency tests. Plan for accommodation, student visas, and finances. Seek guidance from education consultants or online resources. What are the steps to apply to universities in Australia? Check application deadlines and gather required documents, including academic transcripts, English language test scores, and recommendation letters. Submit online applications through the university's admission portal. Pay the application fees and monitor communication from the university regarding the application status and any additional requirements. How can I support my child's transition to studying in Australia? Help your child with pre-departure preparations, such as obtaining a student visa, booking flights, and organizing travel insurance. Familiarise them with Australian culture, lifestyle, and local customs. Connect with university orientation programs and student support services. Encourage open communication and emotional support throughout their journey. 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 the Economic Times, “The number of index funds grew from 32 in February to 78 in July 2020”. ETF draws the investor’s interest during this 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  Early savings help in child's future Read More How to invest in index funds?   Index Funds are a type of investment vehicle 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 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. FAQs What are the benefits of investing in index funds in India? Index funds offer benefits such as broad market exposure, diversification, low costs, and simplicity. They track a specific index, like the Nifty 50 or BSE Sensex, providing exposure to multiple stocks. Their passive nature keeps costs lower compared to actively managed funds. Index funds are easy to understand and suitable for long-term investors seeking market returns. How can I choose the right index fund in India? Consider factors like the index being tracked, fund performance, expense ratio, and fund house reputation. Look for funds with a low tracking error and a consistent track record. Evaluate the fund's size and liquidity. Read the scheme's offer documents, prospectus, and seek expert opinions to make an informed decision. What are the risks associated with investing in index funds in India? Index funds are subject to market risks and fluctuations. Their returns are influenced by the performance of the underlying index. If the index experiences a downturn, the fund's value will also decline. Additionally, tracking errors may occur, resulting in deviations from the index's performance. It's important to understand these risks and have a long-term investment horizon when investing in index funds. Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT

We have seen how exchange-traded funds differ from mutual funds. Now let us focus on the difference between ETFs and stocks since both are tradeable on the 'stock' exchange.   In today's day and age, investors have many choices to invest in to grow their wealth. Investing in stocks, bonds, mutual funds, ETFs, etc., the list is virtually endless.   The main aim of any investor is to see his investments grow; thus, each instrument brings many advantages and disadvantages.  Retail investors like you and I can choose from stocks and ETFs. Both are available on the stock market for trading. On the one hand, a stock offers ownership in a single firm; an ETF gives you a basket of securities depending upon the type of ETF you choose.   Thus, ETFs give you access to virtually any part of the financial market. ETFs are collections of stocks, bonds, commodity derivatives, and other investments traded on an exchange.  There are several differences between stocks and ETFs, but first, look at their similarities. Both the ETFs and stocks are taxable upon redemption. Both offer a steady income.   Stocks’ dividends are credited directly to the investors' accounts after tax deductions. Similarly, the assets underlying the ETFs also generate dividends and returns, either invested back into the fund or given back to the investors after proper deductions.   You can choose both ETFs and stocks from various sectors. Similar to stocks, ETF trading can be done on the stock exchange.  What are the differences, then? ETFs are a group of securities packaged as a unit and listed on the exchange. These assets need not be only stocks but can be any security.   These ETFs are managed by professional fund managers who own the underlying securities. The investors concerned about the ETFs do not own the underlying assets directly and hence give no ownership and voting rights.   On the other hand, stocks listed on the exchange offer ownership and voting rights (if they are not preferencing shares) in a single company. Preference shares are the shares that give the investor a promised return at the cost of forgoing voting rights in the AGMs.  ETFs are managed by a professional, thus saving you the trouble of deciding which securities in the underlying assets of the ETF to sell or hold. In the case of stocks, investors need to be very vigilant in the market to know when to buy, sell, or hold.   Conversely, in the case of ETFs, investors don’t have any control over what happens to the portions of ETFs. Since ETFs have a diversified profile of assets, the risk associated with the investment reduces significantly.   Whereas in stocks, the risk attached is higher as the stock price depends entirely upon the company's performance and other external factors (outside the control of the person in question).  The liquidity of a stock is way higher than the liquidity of an Exchange Traded Fund. However, in rare cases, the latter can have higher liquidity than the former.  The bottom line is that you should make every investment by studying the risks involved. The investor should keep his risk profile in mind before proceeding.   Most importantly, the strategies and goals of the investor are vital when choosing securities. The right for one might not be the right choice for the other.   Keeping these fundamental differences and similarities in mind helps in better decision-making.  FAQs How are ETFs different from stocks? ETFs are a group of securities packaged as a unit and listed on the exchange, while stocks represent ownership in a single company. ETFs offer diversification across multiple securities, while stocks offer ownership and voting rights in a specific company. Who manages ETFs and stocks? ETFs are managed by professional fund managers who own the underlying securities, relieving investors from the need to make individual buy/sell decisions. Stocks require investors to actively monitor and make decisions regarding buying, selling, or holding shares. What is the difference in risk between ETFs and stocks? ETFs typically have a more diversified profile of assets, reducing the risk associated with the investment. Stocks, on the other hand, have a higher risk as their value depends on the performance of the specific company and external factors beyond an individual's control. Which has higher liquidity, ETFs or stocks? Generally, stocks have higher liquidity than ETFs. However, in some cases, ETFs can have higher liquidity depending on factors such as popularity and trading volume. Liquidity refers to how easily an asset can be bought or sold on the market. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Earlier we discussed the cookie jar investment method. In this article, we will discuss more investing options. Every investor wants to put their money into the best investment alternatives to get the best returns. Some people invest for financial security, while others meet their investment objectives.   Your investing alternatives are dependent on your risk tolerance, investment horizon, financial goals, and liquidity requirements.  In reality, risks and returns are precisely proportionate. That means the greater the risk, the greater the likelihood of returns will be. There are primarily two kinds of investment opportunities in the country.   That is financial and non-financial assets. We can further split financial assets into market-linked assets such as mutual funds, stocks, and ETFs. Some fixed-income products are bank FDs, PPFs, and Bank RDs.   Gold investments, real estate, Treasury bills, and other non-financial assets are also examples.   Let us now see which of these different investment options is suitable for India's various categories of investors.   Source: pexels Investment Options for Housewives   Housewives are often left behind in the race to make investments. However, there are many options in which a housewife can put her savings to grow her money.   Some of the best options are investments in direct equity (if they have a relative level of experience) and mutual funds. By investing in mutual funds, they can reap the benefits of professional management of their money and diversification of investment.   Investment in ETFs, bonds, and even PPFs are viable options to grow their savings over time steadily.  Investment options for salaried people  Salaried people often struggle with managing their expenses. As a salaried employee in India, you will have various investment opportunities to invest and increase your hard-earned money wisely.  Different instruments are available for investing ranging from traditional investment options like fixed deposits, recurring deposits, national pension schemes, and ULIPs to modern investment options such as investing in shares, cryptocurrencies, etc.   Investments in stocks and cryptocurrencies can provide returns as high as 10 to 15% per annum. At the same time, safer investment options include mutual investment in mutual funds like equity mutual funds and debt mutual funds.   Most risk-free investment options are bank fixed deposits, government bonds, etc. Salaried people have great potential to create wealth if they budget their expenses and investments.   Investment options for senior citizens  In old age, the thirst for returns is not as high as in youth. So, senior citizens usually need investment alternatives that mainly protect their money rather than growing it.   So, the need is for safe investment options. For elderly people over the age of 60, the Senior Citizens' Savings Scheme. It is one of the risk-free tax-saving investing choices available in the country.   It is one of the most significant investment ideas for seniors because they get a steady income in the form of a competitive interest rate of 8.6% per annum, making it a highly profitable investment option.  Another viable option is the Pradhan Mantri Vaya Vandana Yojana. It is for elderly adults aged 60 and up and provides them with a guaranteed return of 7.4% p.a.; pension income is payable monthly, quarterly, semiannually, or yearly depending upon the option selected.   Some other instruments include the Post Office Monthly Income Scheme and National Pension Scheme.   Low-risk investment options  Investments with low risk are always popular because they do not exhibit unnecessary volatility, so investors have less worry about the undertaking.   Low-risk investment options include Fixed Deposits, National Savings Certificates, Public Provident Funds, National Pension Schemes, and Gold. All these investment options are primarily fixed-income type investments – guaranteeing a particular level of return.   Gold has historically risen in value through tough times and often proves to be a hedge against inflationary pressure in the economy.   Investment options for students   As a student, you usually do not have too much money, but the biggest thing you have is time – which you can use to your advantage. Also, as a young investor, you have the option to take a significantly higher risk in terms of your investment options.   Students can invest even fundamental amounts through Systematic Investment Plans (SIPs) every month in mutual funds, index funds, and ETFs. Acquiring knowledge about bond investment will also be beneficial.   Since students have a higher risk appetite, they can also mobilize a small part of their investment amounts into cryptocurrencies after thorough research. Since there is less expendable money, choosing free brokers or low-cost brokers is essential.   Using simple rules of spending, students can save and invest small amounts over a long period and thus, grow their wealth. Investing Options - Summarised 1. Equity Shares Direct equity investment, out of all the investment options covered here, delivers the best combination of stock appreciation and dividends.   When a long-time horizon (10 years or more) is taken into account, equity markets can be somewhat unpredictable in the short run, but they provide greater inflation-adjusted returns.   You can diversify your portfolio by purchasing stocks from companies in different industries, allowing you to account for economic growth in other sectors.   Equity is the riskiest asset class due to the unpredictability of global markets and the probability of sectoral instability. When markets crash during difficult economic circumstances, there is always the risk of significant capital wipe-out.   2. Equity Mutual Funds Mutual funds that invest in equities are known as equity mutual funds. Instead of buying individual stocks in a specific industry, you can buy a mutual fund that encompasses that industry's growth. These are less hazardous due to their diversified nature.   An equities mutual fund invests more than 65 percent of its assets in the stock market (according to SEBI rules). An equity mutual fund can be active or passive.   Fund management's expertise also influences these mutual funds' performance.   3. Debt Mutual Funds Debt mutual funds, as the name implies, invest most of their assets in debt instruments. These funds are appropriate for investors with a moderate risk appetite and desire for consistent returns.   Government bonds, corporate bonds, treasury bills, and other money market instruments are also in the portfolio of debt mutual funds. Low risk does not imply that there is no risk.   Credit risk and interest rate risk are two risks that you should be aware of before investing in debt mutual funds.   4. Fixed Deposits (FD) A bank FD is safer than practically every other investment choice. With a high level of safety comes a poor rate of return.   FDs are a method to maintain your money where it is (returns are often so low that they don't even keep up with inflation), not a strategy to increase it.   Depositors have protected up to a maximum of Rs 5 lakh apiece in the event of a bank failure (under the Deposit Insurance and Credit Guarantee Corporation).   Bonds: Bonds are fixed-income securities representing a loan a borrower advanced to the investor. When governments or even listed companies want to raise money in the form of debt, they issue bonds to the public.   You can purchase these bonds in the bond market. Bonds offer fixed interest payments to the bondholders (a variable interest payment system is also there).   Bond prices and interest rates move in the opposite direction. At the time of maturity, the total principal has to be returned. There are different types of bonds, like government, corporate, and municipality bonds.    The risk of investment in bonds also arises from the possibility of potential inflation outstripping the rate of interest on the bonds.   Furthermore, when you buy bonds that are not well-rated, there remains a chance of default, wherein you might lose out on what you lent out.   5. National Pension Scheme (NPS) This investment vehicle is for people over 60. PMVVY offers a 7.4% annual guarantee.   Pension income, payable monthly, quarterly, bi-annually, or annually, with pension sums ranging from Rs 1000 to Rs 9250, is available. With a 10-year duration, the maximum investment amount is Rs 15 lakh.   The senior citizen, or their nominee in the event of the senior citizen's death, receives the maturity amount.   6. Public Provident Fund (PPF) PPF is a tax-free (interest) investment that lasts for 15 years. The government reviews the interest in PPF accounts every quarter.   A PPF account can also be opened with a monthly contribution of Rs 500. PPF is a remarkably safe investment because the interest received is covered by a national guarantee.   7. Gold Gold is often known to be a safe haven for investors. In your portfolio, gold will operate as a hedge.   In the past, gold has proven to be a winner when the economy has been in the doldrums. Gold is an attractive investment in the long run because of its rising price.   Digital gold, sovereign gold bonds, gold ETFs, and physical gold are options for purchasing gold. It's also a highly liquid asset to own. FAQs What are some low-risk investment options? Some low-risk investment options include Fixed Deposits, National Savings Certificates, Public Provident Funds, National Pension Schemes, and Gold. These options offer a relatively stable return on investment and are less volatile. Which investment options are suitable for senior citizens? Senior citizens can consider investment options such as the Senior Citizens' Savings Scheme, Pradhan Mantri Vaya Vandana Yojana, Post Office Monthly Income Scheme, and National Pension Scheme. These options provide steady income and are designed to protect their money. What investment options are suitable for salaried individuals? Salaried individuals have a range of investment options, including traditional options like fixed deposits, recurring deposits, national pension schemes, and ULIPs. They can also consider investing in stocks, cryptocurrencies, and mutual funds like equity and debt funds. What are the recommended investment options for students? Students with a higher risk appetite can consider investing in Systematic Investment Plans (SIPs) in mutual funds, index funds, and ETFs. They can also explore bond investments and allocate a small portion of their investment amount to cryptocurrencies. Using low-cost or free brokers is recommended for students with limited funds. TALK TO AN EXPERT

SIP stands for Systematic Investment Plan; It is an ideal way to invest in your child’s higher education because it allows you as a parent to stay invested for the long term in a disciplined fashion and reap the benefits of compounding.   A SIP helps you set aside a fixed amount (weekly, monthly, or quarterly) based on your goals and make timely investments without feeling overwhelmed.       Why should you save for your child’s education?  Education is expensive more than ever before. The average cost of education has jumped more than 500% in the last 3 decades due to a myriad of reasons like inflation, greater demand, infusion of technology to education, and improved infrastructure.   According to the National Sample Survey Office (NSSO) report, the annual cost of education in 2014 increased 2.75 times while the per-capita income had only increased by 2.49 times. Showcasing the great disparity between cost in education cost as compared to growth in household income.  Conducted in 2017-18, NSSO’s 75th round survey of “Household Social Consumption of Education in India” stated that a majority of Indian families find it exceedingly difficult to afford tertiary education due to the rising school fees, and secondary costs like uniforms, transport, and school supplies.  This increase is reflected in annual fees across Indian educational institutions. An engineering degree, for example, can cost up to Rs. 4 lakhs per year at some universities. If this continues, in the next 15 years, the same degree can cost up to Rs. 15 lakhs per annum.  The  increasing cost of education is a huge financial burden on many parents; a medical degree from a private college in India can easily cost up to Rs. 1 crore. In fact, a majority of Indian parents have to send their children to study medicine abroad due to the inability to pay for private college fees in India.   Another factor that affects education costs is the depreciating value of the Indian rupee against the dollar. The weakening of the rupee can increase the overall cost of education for parents whose children are studying and living abroad.    Let’s consider how you can rise above this expanding cost of education.    What should a parent do amidst rising costs?  Careful and early financial planning strategies are the  key to beating inflation.  There are two facts that all parents should consider- starting early and staying consistent.   Early investing is the best way to prepare for future costs. It helps in developing the healthy habit of saving for their higher education when they are young. The sooner you start saving the better. The perfect time to start saving for your child’s education can and should start before she/he is even born.   Consistency is the key! It is extremely important to be disciplined and consistent with the contributions to your child’s education fund. Whether you invest in Mutual Funds, ETFs, or Equity, the best and only way to approach the giant cost of education is through diligent financial planning. Source: Pexels What is the best way to start saving?   For long-term investments pertaining to higher education, systematic investment plans (SIP) in Mutual Funds are the ideal choice. A SIP is a recurring monthly investment in a Mutual Fund that is automatically debited from the listed bank account.  If you start investing while your child is young, a 10 to 15-year time frame has the potential to help you generate significant returns. A SIP of Rs. 15,000 a month for 15 years can help you save up to Rs. 1 crore.   A SIP gives you the freedom to increase the fixed amount as well. This technique is called the step-up SIP strategy. It can help you in the long run, as an investor because your income is likely to increase as you progress in your career or have a windfall.    Are mutual funds safe?  Mutual Funds are risky yet transparent products. This means that you can study and evaluate the performance of the fund before investing your money. Each Mutual Fund includes a factsheet and its financial performance is available to every potential investor.   Every Mutual Fund comes with a factsheet that includes pointers like the fund manager’s name, the fund’s objective, starting date, benchmark index, and corpus size. This allows you as an investor to analyze its performance over the years and compare its progress with other mutual funds. While it does not guarantee 100% returns, it is a profitable investment choice for those who wish to invest in the long run.   If you are someone who is planning to build a healthy college fund for your child then a SIP is the most effective way to save up and diversify your investments against inflation.  

As an investor, there are many standard rules of money-making that you might have come across. In this article, we will learn about the very famous 15*15*15 rule. We will discuss the compounding magic that works wonders here.   The rule says that if you invest Rs 15000 per month for 15 years and generate 15% returns annually via a SIP in an equity mutual fund, then at the end of the 15 years, you will have an accumulated wealth amounting to Rs 10,027,601 (Rs 1.00 crore).   Breaking it down, we see that the total investment amount over the 180 months is Rs 15000 x 180 = Rs 27,00,000 – this means that the total returns you generate are equal to Rs 73,00,000.   The rule is so powerful that if you double the investment period from 15 years to 30 years, your accumulated wealth will equal Rs 10.38 crores (wealth increases 10x times).   The staggering figures that appear above are the result of compounding. What is compounding interest?  Compound interest implies interest earned on interest. The magic happens when you keep adding funds to your investment and do not break it.   As your invested value grows every year, the base (on which returns are generated) increases. The return generated also rises with time - this is how a very normal amount of Rs 15000 per month can lead you to become a crorepati in 15 years.  A time frame of investment is an essential factor when we talk about compounding. The more time you give your investment, the more returns you will generate. This is because your investment base is growing bigger and bigger over time.   As we saw above, doubling the investment time increases the wealth corpus by ten times.   Let us take an example to see how compounding works. Assume that person A starts to invest from the age of 20 and stops investing at 30 years of age, whereas person B starts to invest from 30 years until his retirement at 60 years. The table below clearly illustrates the magic of compounding.   Person A turned out to be the smarter among the two investors because he started his investment journey ten years earlier than person B and thus, was able to amass a fortune even with just one-third of the investment amount of person B.   The most considerable teaching that the 15*15*15 rule gives us is giving our investments ample time in the market; more importantly, the earlier you begin, the richer you become.   Mutual funds offer you high flexibility in switching from one category to another, with redemption at desirable times. To take advantage of compounding, start your investment journey today.