Ultimate Guide: SIP plans for child education in India

Ultimate Guide: SIP plans for child education in India

Education has become very expensive in India. SIP plans for child education are the solution! Statistics show that educational inflation is around 11% in the country today, and the cost of education is expected to soar in the future. A report by the National Sample Survey Office (NSSO) during the period of 2008-14 stated that the annual cost of education burgeoned by 2.75 times when compared to 2008, whereas the per-capita income had only increased by 2.49 times, indicating the mismatch in the income growth and the increase in the cost of education. High tuition fees coupled with the difficulty of paying bills and staying independent cause highly qualified and bright minds to even refrain from applying to colleges. Tuition rates are increasing all over the world and are rising faster than the growth in per capita income. Looking at these expenses from an exchange rate perspective, rupee owners will always have a disadvantage in terms of the cost of overseas education due to our country’s current account balance, relative interest rates, and inflation which cause a weakening of the Rupee. In the near future, the trend would continue hence ballooning the fees even further. Investing is a mantra that can be followed to rise above the tide of this soaring educational inflation. A wealthy corpus is accumulated and the effects are more prominent when the investor starts saving at an earlier stage owing to the compounding effect. What is SIP?  SIP is a Systematic Investment Plan. It is a facility offered by mutual funds to investors to invest in a fund properly. With a SIP facility, investors can invest a fixed amount of money in pre-defined intervals.  SIP is the perfect method of investment for newcomers and risk-averse investors – it allows you to participate in the market without timing it or worrying about its highs & lows.   Note that the fixed amount of money can be as low as INR 500. The SIP route to investment is necessary as it helps you to invest in a time-bound manner. There is no need to worry about market dynamics when you are investing via SIPs.  Reason to invest in SIP plans for child education 1. Reduce the financial burden This forms a habit of investment discipline by debiting a fixed amount from your bank account at every periodic interval. This also prevents a lump sum or a sudden outflow of money from your pocket, hence maintaining financial stability. 2. Start investing in small amounts Most SIPs start at a minimal amount of Rs 500, which enables the investors to save for their child’s future – one penny at a time. 3. Rupee cost averaging By investing through SIP, one can also benefit from rupee cost averaging – where the cost of purchasing a unit of the fund is averaged over the time horizon thus protecting its investors from volatile market conditions and price fluctuations. 4. Compounding effect Investors also benefit from the compounding of returns, where the returns earned on the invested capital are re-invested into the fund. Additional read: SIP savings for higher education 5 Benefits of SIP plans for child education   1. Compounding can help you become financially stable  SIP helps everyone make the best of their savings and lets one make the most of compounding. Compounding is when the initial interest earned on your investment starts earning interest over the years. It helps people with small sums of money generate a sizeable amount over the years. Compounding is a great way to meet your financial goals and retire with a healthy sum of money in your pocket.   2. Make the most of rupee cost averaging  Staying invested for long and consistently have its benefits. This benefit is called rupee cost averaging when your overall investment is protected from market fluctuations.   3. A common’s man way of investing  SIP is a method that is suitable for every investor. Whether you are a seasoned or a new investor, you can start a SIP and invest in funds that can help you with your financial goals. It is a common’s way of ensuring their future and helps them invest small sums of money.   4. SIP can help you stay financially disciplined  SIP makes investing easier and affordable for everyone. It is an EMI for your future funds and helps you consistently contribute to it. You can set up an auto-debit from your account so that you continue to invest. SIPs can be paused and even stopped based on your needs. It is a great way to contribute towards your financial goals without worrying yourself out.  5. SIP can be as little as Rs. 100  You can start a SIP for Rs. 100 or even Rs. 500. The choice is yours! Based on your needs and financial goals, your investment can be as little or as big as you want. You can gradually increase your SIP investments. Some mutual funds offer a Step-up option above a certain investment amount which means that as your salary grows, you can increase your investments as well.   Tax benefits of SIP plans  There are certain benefits when you invest via SIP. Starting a SIP in a tax saving like ELSS. This tax-saving fund has certain tax benefits. It also has a lock-in period of three years.   SIP plans in an ELSS fund from April to March (financial year) are eligible for Section 80C benefits for that fiscal year up to Rs.1.50 lakhs.  Top 10 SIP plans for child education Scheme Name1-Yr ReturnAUMProsConsAditya Birla Sun Life Frontline Equity FundExpense Ratio: 1.08%Min SIP Amount: Rs 10014.85% Rs 18,897.76 CrLower expense ratioAssets Under Management (AUM) of the fund are greater than Rs 15,000 Cr. When a fund crosses a certain AUM threshold, the returns from the fund tend to decrease or stagnate. The investors should monitor the performanceAxis Long Term Equity Fund Expense Ratio:0.72%Min SIP Amount: Rs 50014.85% Rs 28,556.83 CrFund has higher 3-year and 5-year returns as compared to the category average.ELSS fund – Tax haven for 80CAssets Under Management (AUM) of the fund are greater than Rs 20,000 Cr. When a fund crosses a certain AUM threshold, the returns from the fund tend to decrease or stagnate. Investors should monitor their performance.Parag Parikh Flexi Cap FundExpense Ratio: 0.96%Min SIP Amount: Rs 100021.11%Rs 8,701.65 CrFund has higher 1-year, 3 years, and 5-year returns as compared to the category average.Low expense ratio.NoneSBI Equity Hybrid FundExpense Ratio: 0.97%Min SIP Amount: Rs 50012.20%Rs 38,080.12 CrFund has higher 1year, 3-year, and 5-year returns as compared to the category average.Low expense ratio.Assets Under Management (AUM) of the fund is greater than Rs 20,000 Cr. When a fund crosses a certain AUM threshold, the returns from the fund tend to decrease or stagnate. Investors should monitor their performance.SBI Focused Equity FundExpense Ratio: 0.97%Min SIP Amount: Rs 50013.08%Rs 14,533.37 CrFund has higher 3-year 5 year and 10-year returns as compared to the category average.The fund has been in the market for over 10 years.High expense ratioAxis Bluechip FundExpense Ratio: 0.55%Min SIP Amount: Rs 500Rs 25,134.85 CrFund has higher 1-year 3-year and 5-year returns as compared to the category average.The expense ratio is on the lower end and the fund has no lock-in period.Assets Under Management (AUM) of the fund are greater than Rs 20,000 Cr. When a fund crosses a certain AUM threshold, the returns from the fund tend to decrease or stagnate. Investors should monitor their performance.L&T Midcap FundExpense Ratio: 0.77%Min SIP Amount:Rs 50067.18% ( 3 year = 7.25%)Rs 6,258.04 CrFund has higher 5-year returns as compared to the category average.The expense ratio is on the lower end.Assets Under Management (AUM) of the fund are greater than Rs 5,000 Cr.When a fund crosses a certain AUM threshold, the returns from the fund tend to decrease or stagnate. Investors should monitor the performance.HDFC Mid-Cap Opportunities FundExpense Ratio: 1.04%Min SIP Amount: Rs 50075.85% ( 3 year = 7.94%)Rs 25,779 CrFund has higher 5-year returns as compared to the category average.The expense ratio is on the lower endAssets Under Management (AUM) of the fund are greater than Rs 5,000 Cr. When a fund crosses a certain AUM threshold, the returns from the fund tend to decrease or stagnate. Investors should monitor their performance. Axis Small Cap FundExpense Ratio: 0.38% Min SIP Amount: Rs 50074.30% (3 year = 17.37%)Rs 4,724.14 CrFund has higher 3-year and 5-year returns as compared to the category average.The expense ratio is on the lower endNoneHDFC Small Cap FundExpense Ratio: 0.95%Min SIP Amount: Rs 50094.91% (3 year = 5.88%)Rs 10,024.44 CrFund has higher 3-year and 5-year returns as compared to the category average.The expense ratio is on the lower end.Assets Under Management (AUM) of the fund are greater than Rs 5,000 Cr. When a fund crosses a certain AUM threshold, the returns from the fund tend to decrease or stagnate. Investors should monitor their performance. Additional read: How SIP calculator can help you? Mistakes to avoid while investing in SIP plans  Here are some SIP plan mistakes that you should avoid as a new investor:  Investing in the wrong fund The most basic mistake in picking SIP plans is to invest in the wrong fund. This usually occurs when an investor is new and invests based on a friend’s advice or hearsay. It's important to do your own research, find out the fund house's previous performance, and the companies listed in the fund, and study its overall progress before starting any SIP plans. It's best to consult a professional before starting on this journey.    Investing a huge amount Many investors start strong but end up regretting it. Entering the market can be exciting and thrilling but you have to be careful where you are investing your hard-earned money towards. When picking up SIP plans, it is important to choose an amount you are comfortable spending and can consistently pay over the next couple of years to get the best returns possible.  Only for small investors or new investors This is a huge mistake while investing in SIP plans. Anyone can invest in SIP plans. Whether you are a financial advisor or a risk-averse investor, you can start a SIP for any amount and invest regularly. That is the beauty of SIP, it allows you to stay invested for a long at your own terms.   It is considered a short-term Investment SIP is not a short-term investment or a purely long-term investment method. It acts as both, the investor can decide how long they wish to stay invested, increase or decrease their SIP amount and even aim for big financial goals like a child’s education or retirement via SIP plans.   Not using the step-up SIP option Many investors do not increase their SIP amount and continue to invest at the same pace for a long duration. This is a huge mistake when selecting SIP plans and investing in them. As your income increases, it is important to increase your investments and SIP plan amount so that your financial goals are met in time and smoothly.  Which funds should you choose? Selecting the funds which are tailored to your investment requirement time horizon, income, target corpus, and risk appetite is the first critical step that you should take as a parent investing in your child’s education. One could start by investing in one fund and then diversifying to 2 or 3 funds by proportionately investing across the schemes. You should ideally aim for a smaller proportion of investments in small and mid-cap funds which bring in high returns (along with high volatility) and balance them with large-cap funds which have stable returns (lower than small and mid-cap). SIP calculator for child education plans SIP calculator allows users to calculate and plan for child education. Users can calculate SIP over a period of time even before they start the investment process. SIP interest is based on compound interest. Just enter the amount you wish to invest and calculate your SIP. How to choose SIP child education plans?  Choosing SIP plans depends on your financial goals. Ask yourself certain questions:   What are your long-term goals?  What are your short-term goals?  How much money do you wish to save for your retirement?  How much money can you save monthly and invest?  You can also consult a financial advisor that can help you create a financial plan to save for multiple goals and that can help you meet your daily wants and needs.   How to invest in SIP child education plans?  Step 1: Download and Sign up with EduFund  Go online with SIP plans with EduFund. Download the application and sign up with personal details. The whole signup process takes just 3 seconds.   Step 2: Identify your financial goals   The application provides a gamut of options for your child’s education. Evaluate the goal. You can save for short-term or long-term goals such as saving for school fees and saving for higher education in India or overseas. You can save for both simultaneously as well!   Step 3: Calculate the total cost with a FREE calculator  After identifying the goals, calculate the total costs of higher education for undergraduate or postgraduate studies.  You could calculate basing National or International academic education expectations. Select the specialization and the country you are seeking higher education.  Step 4: Get your investment map and invest  Soon after filing the details, you will get how much you could get after investing for the respective number of years. You will get a number of SIP plans suggestions that you could compare with yours.  You could increase or decrease the sum to invest monthly as per financials.  We provide an overview of your savings transitioning into returns until you get the investment sum. You could go for a lump sum payment if you are an entrepreneur with unstable finances.  Place the order as a secured investment through UPI or other methods. You could start with just ₹100 in Edufund SIP investments.  Step 5: Track, revisit and reset goals anytime  Once you set up a SIP plan, you can edit goals according to the revised economic situation. Edufund captures the sensitivity that comes with finances.  Revisit the plan and modify it as per goals and finances. You will get a new investment plan with new goals. Plan your savings accordingly.  Conclusion A financial strategy for your child’s education is an absolute necessity, given the high educational inflation that is prevailing in the world today. The strategy should factor in your income, target corpus, investment horizon, and risk appetite. Starting early in terms of investments lowers the financial burden in the future and helps you in paving the path for your child’s dream career. There is no appropriate or right time to start investing in your child’s education because the right time is now. Note - The past track record of a fund is no guarantee of its future performance. FAQs Is SIP good for child education?  A SIP is a great way to save for your child’s education. You have the flexibility to select the amount and invest regularly in your chosen funds. You can also redraw the money when you need it or pause the SIP if you wish to do so. SIP is a systematic and disciplined way to save for your child’s future education.  Which mutual fund is best for child education?  Here are the top mutual funds that offer SIP for your child’s education:  Aditya Birla Sun Life Frontline Equity Fund  Axis Long-Term Equity Fund  Parag Parikh Flexi Cap Fund  SBI Equity Hybrid Fund  SBI Focused Equity Fund  Can I open a SIP for my child?  Yes, you can start a SIP for your child. Download the EduFund App and select the funds you like and start investing. How can invest in SIP for kids?  Explore several saving options on the EduFund app to save for your child’s future. Select the funds that suit your risk appetite and your goals. Invest an amount you are comfortable with and start saving!   Which SIP is best for kids?  Here are some mutual funds that offer SIP investments starting at Rs. 100 or Rs. 500:   Aditya Birla Sun Life Frontline Equity Fund   Axis Long-Term Equity Fund   Parag Parikh Flexi Cap Fund   SBI Equity Hybrid Fund   SBI Focused Equity Fund  Is a long-term SIP risky? Investing in SIP for the long term is highly effective and has lesser risk compared to making a lumpsum investment in mutual funds.  What is the best age to start an SIP? There is no right age to start an SIP. A systematic investment plan is a great tool to save for your child’s education. As many experts suggest, it is always beneficial when you have a long investment horizon, as it reduces the SIP amount needed to reach your goal. You need to invest early to have a long investment tenure. Investing early also may increase your returns on investment. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT DisclaimerMutual fund investments are subject to market risks and EducationFund does not endorse any fund over another in this blog.
DSP Healthcare Fund Direct Growth. Who should invest?

DSP Healthcare Fund Direct Growth. Who should invest?

One of the largest AMCs in India, DSP has been helping investors make sound investment decisions responsibly and unemotionally for over 25 years. DSP is backed by the DSP Group, an almost 160-year-old Indian financial giant. The family behind DSP has been very influential in the growth and professionalization of capital markets and the money management business in India over the last one-and-a-half centuries. About DSP Healthcare Fund Direct Growth Investment objective The primary investment objective of the scheme is to seek to generate consistent returns by predominantly investing in equity and equity-related securities of pharmaceutical and healthcare companies.  Investment process   This thematic fund invests in established & upcoming companies in the pharmaceutical & healthcare space in India and internationally (primarily, in the United States). While selecting stocks, they focus on their growth, value, and stability. In portfolio construction, they maintain a judicious balance between sub-segments and maintain liquidity considered for stock sizing.  Portfolio composition  The portfolio major exposure of 40% in large cap followed by 23% in small cap. The top 3 sectors hold nearly 94% of the portfolio, with major exposure to Pharmaceuticals and Biotechnology. Note: Data as of 30th Nov 2022. The bar graph shows the top 5 sector weightage of the fund’s portfolio. Source: dspim.com  Top 5 holdings Name Sector Weightage % Sun Pharmaceuticals Industries Ltd. Pharmaceutical 16.48 Cipla Ltd. Pharmaceutical 9.33 Apollo Hospitals Enterprise Ltd. Healthcare Company 6.96 IPCA Laboratories Ltd. Pharmaceutical 5.42 Lupin Ltd. Pharmaceutical 5.41 Note: Data as of 30th Nov 2022. Source: ICICI Pru DSP Healthcare Fund Direct-Growth: performance over 4 years  If you would have invested 10,000 at the inception of the DSP Healthcare Fund, it would be now valued at Rs. 22,427. This fund has outperformed the benchmark in all time horizons. Note: Performance of the fund since launch. Inception date – Nov 30th, 2018. Source: Moneycontrol  The DSP Healthcare Fund has given consistent returns and has outperformed the benchmark over the period of more than 4 years by generating a CAGR (Compounded Annual Growth Rate) of 22.01%  Fund Managers  Chirag Dagli: Chirag has a total work experience of Over 20 years. He joined DSP Investment Managers in November 2020 as Vice President in Equity Team. He is a Chartered Accountant (ICAI India) and also holds a Bachelor of Commerce Degree.  Vinit Sambre: Total work experience of 16 years. Vinit joined DSPIM in July 2007, as Portfolio Analyst for the firm's Portfolio Management Services (PMS) division, which manages discretionary accounts and provides advisory services to institutional clients.  Jay Kothari: Total work experience of 20 years. Vice President & Product Strategist -Jay has been with DSP Investment Managers since May 2005. He completed his Bachelor of Management Studies (Finance & International Finance) from Mumbai University, followed by an MBA in Finance from Mumbai University.  Who should invest?  An experienced investor with a well-defined core portfolio.  Investors with high patience understand that sectoral bets may come with changing cycles.  Why invest?  Offers the potential to grow your wealth & 'earn big' returns if this theme does well (a high-risk, high-return strategy).  Can help you beat the impact of rising prices over the long term.  Horizon  One should look at investing and holding the investment for more than 7 years.  Investment through a Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  FAQs Who should invest in DSP Healthcare Fund?  An experienced investor with a well-defined core portfolio.  Investors with high patience understand that sectoral bets may come with changing cycles.  What has DSP Healthcare Fund Direct-Growth performance been like over 4 years?  If you would have invested 10,000 at the inception of the DSP Healthcare Fund, it would be now valued at Rs. 22,427. This fund has outperformed the benchmark in all time horizons. The DSP Healthcare Fund has given consistent returns and has outperformed the benchmark over the period of more than 4 years by generating a CAGR (Compounded Annual Growth Rate) of 22.01%  What is DSP Healthcare Fund Direct-Growth's investment approach? This thematic fund invests in established & upcoming companies in the pharmaceutical & healthcare space in India and internationally (primarily, in the United States). While selecting stocks, they focus on their growth, value, and stability. In portfolio construction, they maintain a judicious balance between sub-segments and maintain liquidity considered for stock sizing.  Conclusion  This DSP Healthcare Fund offers favourable sector dynamics - Rising income levels, increasing health consciousness, and government policies mean an increase in healthcare spending, so companies in this space could do well. This scheme is suitable for an investor with a high-risk appetite and who believes in high-risk high rewards.  Consult an expert advisor to get the right plan TALK TO AN EXPERT
DSP Midcap Fund. Who should invest?

DSP Midcap Fund. Who should invest?

One of the largest AMCs in India, DSP has been helping investors make sound investment decisions responsibly and unemotionally for over 25 years. DSP is backed by the DSP Group, an almost 160-year-old Indian financial giant. The family behind DSP has been very influential in the growth and professionalization of capital markets and the money management business in India over the last one-and-a-half centuries. About DSP Mid Cap Fund  Investment objective The primary investment objective is to seek to generate long-term capital appreciation from a portfolio that is substantially constituted of equity and equity-related securities of mid-cap companies. From time to time, the fund manager will also seek participation in other equity and equity-related securities to achieve optimal portfolio construction.  Investment process    The DSP Mid Cap Fund has an investment philosophy that selects stocks with durable business, which are run by able managers and have high sustainable Returns on Equity. It focuses on small and mid-cap stocks that have a strong alpha generation potential, competitive advantage, and high cash flows.  Portfolio composition  The portfolio major exposure of more than 70% in mid-cap followed by 17% in small cap. The top 5 sectors hold nearly 48% of the portfolio, with major exposure to Pharmaceuticals and Biotechnology. Note: Data as of 30th Nov 2022. The bar graph shows the top 5 sector weightage of the fund’s portfolio. Source: dspim.com  Top 5 holdings Name Sector Weightage % Supreme Industries Ltd. Plastic Pipes Company 4.67 The Phoenix Mills Ltd. Retail Mall Developer 3.65 Atul Ltd. Chemicals Company 3.49 IPCA Laboratories Ltd. Pharmaceutical 3.36 Bharat Forge Ltd. Forging Company 3.28 Note: Data as of 30th Nov 2022. Source: ICICI Pru Performance over 16 years  If you would have invested 10,000 at the inception of the DSP Mid Cap Fund, it would be now valued at Rs. 77,034. This fund has outperformed the benchmark in all time horizons.  Note: Performance of the fund since launch. Inception date – Nov 14th, 2006. Source: Moneycontrol  The DSP Mid Cap Fund has given consistent returns and has outperformed the benchmark over the period of more than 16 years by generating a CAGR (Compounded Annual Growth Rate) of 14.37%  Fund Managers  Resham Jain: Total work experience of 9 years. He joined DSP Investment Managers in March 2016 as Assistant Vice President of the Equity Income Team.  Abhishek Ghosh: Total work experience of 14 years. He joined DSP investment managers in September 2018 as Assistant Vice President of the equity team.  Vinit Sambre: Total work experience of 16 years. Vinit joined DSPIM in July 2007, as Portfolio Analyst for the firm's Portfolio Management Services (PMS) division.  Jay Kothari - Total work experience of 20 years. Vice President & Product Strategist -Jay has been with DSP Investment Managers since May 2005.  Who should invest?  An experienced investor with a well-defined core portfolio.  Investors with high patience understand that this category of funds is associated with high risk.  Why invest?  Offers the potential to grow your wealth & 'earn big' returns if this theme does well (a high-risk, high-return strategy).  Can be a suitable choice for tactical allocation.  Horizon  One should look at investing and holding the investment for more than 7 years.  Investment through a Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  FAQs What are the top five holdings of DSP Midcap Fund? The top 5 holdings of DSP Midcap Fund: Supreme Industries Ltd.The Phoenix Mills Ltd. Atul Ltd. IPCA Laboratories Ltd. Bharat Forge Ltd. Who are the fund managers for DSP Midcap Fund? Resham Jain Abhishek Ghosh Vinit Sambre Jay Kothari What has the performance of DSP Mid cap fund over 16 years?   If you would have invested 10,000 at the inception of the DSP Mid Cap Fund, it would be now valued at Rs. 77,034. This fund has outperformed the benchmark in all time horizons. Conclusion  This scheme offers exposure to mid-size companies that have a durable business run by able managers. Mid-sized companies like these can offer more growth potential than larger companies but at lower risk levels than smaller-sized companies. This scheme is best suitable for investors with a long investment horizon. 
Mutual funds for short-term goals

Mutual funds for short-term goals

While investing or saving, we have always come across one thing, “Be prepared for long-term goals”. We are always advised to save early to fulfill our long-term goals, objectives, and dreams. But, what about the short-term goals? What about an emergency corpus? How do you pay for or fulfill your immediate monetary requirements?  The answer to all the above goals is answered in this article! What are short-term goals?  Short term goals are something you want to do in the near future which can be today, this week, this month, this year, or even within two years.  Some examples of short-term goals in investment are: Paying for your child’s school fees every year.  Purchasing a smartphone.  Purchasing a laptop.  Purchasing jewelry for an occasion, etc.  Short-term goals are characterized in the following ways: They’re specific.  They’re measurable  They’re achievable  They’re relevant  They’re time-bound How can you save for short-term goals?  There are two main ways of saving for short-term goals with very low-risk levels.  Savings account: Keeping money or maintaining some cash balance in your savings accounts is one of the ways for achieving your short-term goals. But one main drawback of this method is that the interest on savings accounts is not at par with the inflation rate. This may cause you to lose money over time.  Mutual funds: For short-term goals debt funds are the best option. Based on the investor’s time horizon and risk appetite there are also various subcategories in debt funds for investors to choose from. These funds generate returns that are at par with inflation.  Best debt mutual funds for short-term goals  Now that we know what investment mode to choose, let’s look at some debt funds that are performing well. Fund name Annualized Returns (1yr) (%) Annualized returns (3yrs) (%) Short Term Fund Aditya Birla Sun Life Short-Term Fund 4.937.03ICICI Prudential Short-Term Fund 5.467.15 Banking & PSU FundUTI Banking & PSU Debt Fund 10.557.43Corporate BondICICI Prudential Corporate Bond4.816.63Aditya Birla Sun Life Corporate Bond Fund4.326.77Money Market Funds (for immediate short-term goals)Aditya Birla Sun Life Money Manager Fund3.014.92HDFC Money Market Fund2.954.88 When you have a time horizon between 3-5 years, you can also opt for Hybrid funds as they give you the added advantage of equity exposure along with debt diversification.  The above-mentioned funds are suitable for a time horizon of fewer than 3 years and for investors with a very low-risk appetite.  FAQs What are short-term goals? Short term goals are something you want to do in the near future which can be today, this week, this month, this year, or even within two years. Which mutual funds are best for short term? Here are some mutual funds for short term - Aditya Birla Sun Life Short-Term Fund  ICICI Prudential Short-Term Fund  HDFC Money Market Fund This is not an investment advice. Please consult a financial expert for investing in mutual funds for short-term goals. Are mutual funds good for short term investing? Mutual funds are good for short term investing. There are some mutual funds that you can invest in for 3-4 months. These funds are likely to get you better returns than fixed desposits and savings account. While planning for investments to achieve a goal, always consult an investment advisor who will help you with your goal-based investment journey in detail. Consult an expert advisor to get the right plan TALK TO AN EXPERT DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only.
Tax saving options for salaried individuals

Tax saving options for salaried individuals

In this blog, we have shared top tax saving options for salaried individuals. Every assessment year, the tax filing season serves as a signpost for anxieties and a frenzy among paid people. You seek tax-saving strategies since you must pay money for taxes for the relevant fiscal year. Top tax saving options for salaried individuals Following are the top saving options for salaried individuals:  1. Employees' provident fund (EPF)  The Employees' Provident Fund, or EPF, is one of the most well-liked ways for salaried individuals to save on taxes. The Central Board of Trustees oversees the Employees' Provident Fund and Miscellaneous Act of 1952, which established it. Under this plan, 12% of the employee's income is contributed by both, the company and the employee to the EPF. The employees earn interest at a specific rate on their contributions.  For salaried workers, tax savings through EPF take the form of tax exemption. The money accrued in an employee's PF account and any interest is tax-free. A salaried person's income plan is lacking without an investment in a Public Provident Fund, or PPF. You may start a PPF, a savings plan supported by the government, for as little as Rs. 500. Maximum investment allowed is Rs. 1.5 lakh. 2. Public provident fund (PPF)  PPF has the category of EEE or Exempt-Exempt-Exempt. This indicates that all contributions made to the fund, interest received, and maturity amount are tax-free. As a result, it's an excellent way for you to invest and save on taxes. 3. Equity-linked savings scheme (ELSS)  Consider ELSS if you're searching for financial solutions that let salaried workers deduct income taxes from their pay. One of the finest tax-saving choices for salaried people is the equity-linked savings scheme or ELSS. Investments in ELSS plans may be written off from an employee's taxable income under Section 80C. You should also be aware that it differs from all other mutual fund schemes because it qualifies for a tax deduction. For salaried persons, ELSS distinguishes itself from other tax-saving choices because of its dual benefit of relatively more significant returns that are partially taxable. For profits over Rs. 1,000,000 in ELSS returns after March 31, 2018, there is a 10% tax. 4. National Pension Scheme The National Pension Scheme, or NPS, is designed for those who wish to save for retirement but have limited tolerance for risk. Being directly governed by the central government, it is a secure alternative for investments and a great way for salaried people to save on taxes. Under section 80C of the IT Act, you may claim tax advantages for the donation. Additionally, you are eligible for further deductions of up to Rs. 50,000 under Section 80CCD (1b). 5. Health insurance Chronic health disorders have become more prevalent due to an increase in sedentary lifestyles, long work hours, bad eating patterns, and other environmental variables. Additionally, the rising healthcare expense has elevated health insurance to the status of an essential investment. It also offers tax advantages while protecting you and your family from health problems that might drain your bank account. Premiums paid under Section 80D are eligible for deductions. One of the tax-saving investments that have several advantages is health insurance. 6. ULIPs ULIPs, which stand for Unit Linked Insurance Plans, offer investment and insurance benefits. With the money you pay in premiums, you may give your family financial security and invest in various assets to earn returns via careful planning. ULIPs come under the EEE category. This means that you can save taxes* since the premiums paid, the returns earned, which are not subject to deduction, and the maturity sum are all tax-advantaged, provided certain requirements are met, and recent tax* standards are followed. 7. House rent allowance (HRA)  According to the relevant regulations, those who rent housing can take advantage of tax incentives for salaried employees. HRA, also known as House Rent Allowance (HRA), is not entirely taxed and is thus deductible from income for salaried employees. Because a portion of HRA is free from taxation under Section 10(13A) of the Income Tax Act of 1961, subject to certain restrictions, it is one of the tax-saving choices available to salaried persons. HRA is subtracted from the total income before calculating the taxable income. Additionally, you should be aware that HRA received from your employers is entirely taxed if you own your home and do not pay rent. It would help if you considered this fully to grasp how a salaried person might reduce their tax burden. 8. Gratuity It is tax-exempt under section 10 when given to an employee upon their death, dismemberment, retirement, or superannuation (10). The maximum exemption amount is Rs. 20,000,000. Remember that to be eligible for the payment, you must have served a minimum of five years in the company. Investments should be made early and frequently for effective tax planning. Your tax planning to-do list should also include studying your pay stub. Don't disregard the investment declaration form your company sent you; it contains a wealth of tax-saving information. FAQs How can I save more tax on my salary? There are many ways to save on taxes on your salary such as: National Pension System House rent allowance (HRA)  ULIPs Health insurance Equity-linked savings scheme (ELSS)  Employees' provident fund (EPF)  How much maximum tax a salaried person can save? Salaried individuals can save up to 1.5 lakhs in India on taxes. How can I reduce my monthly tax on my salary? Salaried individuals can claim up to ₹1.5 Lakh spent on such investments as tax waivers under Section 80C of the Income Tax Act. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Investment tools for creating children's education fund

Investment tools for creating children's education fund

Where to invest in children's education? What are the best investment tools for creating children’s education fund? How much do you need to get started? Let’s find out in this article.  If you're thinking about setting aside money for your children's educational needs, it's time to get moving and avoid delay at all costs. Education inflation is rising considerably more quickly than general inflation. Parents are finding it more and more difficult to cover the rising fee structure and other expenditures involved with education.   This is true from basic to secondary to higher education. Saving in assets that can produce returns that outpace inflation is crucial. This is why it is important to make a rough estimate of the course's inflation-adjusted cost now, even before you begin saving. Your child might be interested in it in a few years.  Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), or equity mutual funds are the top three investment options for many parents while saving for their children's education expenses. Let's look at what PPF, SSY, and equity MF as the best investment tools for creating child’s education fund:  1. Public Provident Fund (PPF)  Even little children's names can be used to open PPF accounts. A total of Rs. 1.5 lakh per year may be invested in both the parent's own PPF account and the child's PPF account. To construct a tax-free corpus for the child that is secured by a government guarantee for the debt part, one could think about investing in child PPF. The PPF donation made to the child's PPF account may also provide tax benefits to the parent. PPF is a 15-year plan, and when a child turns 18, they can utilize the same account to make partial withdrawals to reduce their tax burden.  The PPF may be extended after 15 years in blocks of 5 years, thus for the child, it will be a 5-year PPF. The interest rate on the PPF account is currently 7.9% per year, compounded yearly, and paid at maturity.  2. Sukanya Samriddhi Yojana (SSY)  The Sukanya Samriddhi Yojana program is designed to meet a girl child's financial needs. The youngster must be younger than 10 years old, and the program matures when the child turns 21. Only the first 15 years must be covered by the parent's SSY deposits. The SSY regulations permit the plan to be terminated after the child becomes 18 as long as it is only done so to facilitate marriage. The interest earned is tax-free, while the SSY contributions are eligible for a tax break under section 80C. The interest rate is currently 8.4% per year, compounded yearly, and paid upon maturity.  While the compounding and tax advantages of SSY and PPF are comparable, SSY has a greater interest rate. A PPF for a girl kid can be formed with only a tiny part of money entering into it, even though SSY can be given precedence for a girl child.  3. Equity mutual funds  Since PPF and SSY are both debt investments, returns will almost certainly fall short of inflation over the long term. One needs to be exposed to equity mutual funds in order to achieve strong inflation-beating returns. Create a mutual fund portfolio by combining at least two to three open-ended, diversified MF schemes, including an index fund, a large-cap fund, and a mid-cap fund. Pick investments that have consistently outperformed their benchmark throughout time. Connect them to your child's goals and keep SIPs going in them till the objective is three away.  The number of years before a goal can also influence a person's choice of plans.  4. Children's mutual fund schemes  There are mutual fund schemes specifically designed to meet the needs of children, but they have a lock-in period. When the market declines, immature investors typically have a tendency to sell their positions. They are unaware that keeping an investment for the long term, despite market volatility, is necessary to get returns that outperform inflation. On the other hand, fund management is given the freedom to make some risky decisions in order to maximize returns.  5. Child insurance plans  There are life insurance policies designed specifically to meet the needs of children. Such child insurance policies have a "waiver of premium" provision that guarantees the child will receive the intended amount of money when it is needed, even if the parent passes away during the policy's term. Such plans are more expensive because they guarantee the necessary sum for a child's demands.  No one investment can be the best. Diversify among all three of these investments based on the number of years till the target and your risk tolerance. Aim to use the long-term potential of equities through equity mutual funds rather than becoming significantly invested in debt products like PPF or SSY.  FAQs What are the best investment tools for your child's education? Public Provident Fund (PPF) Sukanya Samriddhi Yojana (SSY) Equity mutual funds Children's mutual fund schemes Child insurance plans How do I create a child education fund? There are many ways to create a child's education fund. Here are some tools that you should consider building your child's education fund Mutual Funds, US stocks, Sukanya Samriddhi Yojana for girl children by the Indian government, child insurance plans, and Public provident fund. These are effective ways to build wealth for big financial goals like your child's college fees or for your house. Is SIP good for child education? SIP is one of the best tools to invest in your child's education planning. It allows you to create a fund gradually and systematically without spending a huge amount in one go. It is a disciplined way to invest and allows you to stay invested for a long period of time. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Smart ways to plan short-term and long-term goals

Smart ways to plan short-term and long-term goals

When it comes to planning and investing for all your goals, the saying “one plan fits all” doesn’t do. Just like one investment will not cater to all your goals and objectives. Every goal is different and has its own requirements. For example, based on the time horizon itself, short-term goals are those which have to be achieved immediately whereas long-term goals have a good time horizon to be planned and saved for.  Now, are you wondering how all the goals can be achieved by you? In this article, we will tell you how you can smartly plan for your short-term and long-term goals.  Types of Goals  Short-term goals: These are the goals that you want to achieve in the near future. The near future can be today, this week, this month, this year, or within 2 years. These are goals that need you to plan and be prepared immediately to ensure you achieve them on time.   Some examples of short-term goals are: Paying for your child’s school fees every year.  Purchasing a smartphone.  Purchasing a laptop.  Purchasing jewelry for an occasion, etc.  Planning for an international trip with your family?  Long-term goals: These are the goals that provide you with good bandwidth to plan and be prepared to achieve them. There is no specific definition of what long-term really means. It has a timeline of anywhere more than 5 years.   Some examples of long-term goals are:  Saving for your child’s higher education when your kid is young.  Saving for your child’s wedding.  Planning to purchase a car  Planning to buy a house.  Saving up for your retirement corpus.  Investment for short-term goals  There are multiple ways to save for short-term goals which will suit your risk appetite, the tenure of your investment, and your needs.  Savings Accounts: You can always maintain a cash balance to fulfill your immediate goals and objectives. But usually, it is not ideal to maintain your savings only in your savings accounts as it does not even generate inflation-beating returns. In long run, you may end up losing money. It is advised to only maintain an emergency corpus in your savings accounts to have some liquid cash.  Fixed deposits: Fixed deposits are where you invest in an FD with a bank and there is an interest on the investment received by the investor. FDs have a lock-in ranging between 7 days to 10 years. But even after the interest rate revision by the Central Bank, the FD rates are still not generating inflation-beating returns, which causes a loss to the customer.  Debt mutual funds: This is the best option to save for your short-term goals. There are multiple options for an investor to choose from. For example, if an investor has a very short tenure for a goal, one can choose from an ultra-short duration fund, a money market fund, or a liquid fund. Likewise, with a little longer horizon, an investor can choose from a corporate bond, medium-term bond, etc. Debt funds generate returns that are at par with the inflation rate.  Investment for long-term goals  One has multiple instruments to invest to achieve their long-term goals as well, based on the risk appetite, tenure, and requirements.  Direct Equity: An investor can directly invest in the stocks of a company as an investment option. One thing to note here is that direct equity investing is time-consuming. One cannot just randomly choose a stock. Detailed research and analysis have to be done to select a stock. Also, while having direct equity exposure, one has to be prepared for either major profits or major losses due to the high market volatility.  Mutual funds: While investing for long-term goals, an investor has options of both equity mutual funds and hybrid mutual funds. One does not have to do such detailed analysis while doing stock picking for a mutual fund. The fund managers actively manage and rebalance the portfolio as per the market conditions. So, there is always an added advantage of an expert management team in mutual funds.   Real estate: In India, real estate is the most sought for long-term investments. Yes, having a property in one’s name is good and sounds powerful. But it does not provide liquidity to an investor. It may so happen that at the time of achieving a goal, one may not be able to sell the property. The smart way of investing for short-term and long-term goals  An individual will never have just one goal. There will be multiple goals. As discussed above, just like “one size does not fit all”, one investment does not cater to all goals and objectives.   The best solution for this is following a goal-based planning approach. In this approach, all goals are properly planned for.  First, the goals and objectives are clearly mentioned along with a monetary value attached to them. For example, if one of the goals is to pay for the child’s school fees the amount needed is also mentioned along with the goal.  Then, the time horizon is specified. After setting the goals, the investor has to set how much time the investor has to save up and achieve the goal.  After specifying the time horizons, investors’ investment characteristics are specified. What does this mean? These characteristics include the risk appetite of the investor and what amount the investor is able to invest to achieve all his goals.  Sounds scary and lengthy right? Not to worry. You can always approach a Registered Investment Advisor to help you with a detailed investment plan to make your investment journey smoother. Conclusion  Goal-based planning is the smartest way for you to make one detailed investment plan to help you achieve all your goals so that you do not miss out on your dreams! A Registered investment advisor also ensures that your portfolio is well diversified and periodically rebalanced to optimize the portfolio’s risk and volatility.  Consult an expert advisor to get the right plan TALK TO AN EXPERT
Should you copy a mutual fund’s portfolio? 

Should you copy a mutual fund’s portfolio? 

“Mutual Funds Sahi hai” is something we hear every now and then. Yes! mutual funds are good investment options for certain reasons. However, as an investor, one may think to mimic the mutual fund portfolio to avoid the expense ratio or exit fees.   Do you think copying a mutual fund’s portfolio is the right thing to do? Continue reading to know if you should copy a mutual fund’s portfolio or not! Mutual funds are the most popular mode of investment for a large number of investors. They are basically investment vehicles that pool money from investors and then use this money to invest in company stocks (equity), bonds (debt), or other instruments (like other mutual funds).   What are the benefits of mutual funds?  Experienced and expert fund management: Mutual funds have the best fund managers who manage the Scheme’s funds and an excellent research team that perform detailed research and analysis on company stocks or debt to select the investment that is best suitable to the fund’s investment objective.  Reinvestment of Dividend: When the stocks in a portfolio earn dividends, mutual funds provide a reinvestment option wherein the investor gets allotted additional units of the mutual fund scheme.  Optimized risk: In mutual fund schemes there is no concentration in any particular stock. With proper diversification and periodical rebalancing, mutual funds help reduce or optimize the overall portfolio risk and volatility.  Should you copy a mutual fund’s portfolio?  All mutual fund schemes provide a complete monthly disclosure that gives details on the fund’s portfolio holdings and their proportion of holding.   Yes, by looking at the holdings and their ratios it is easy for an investor to copy the same, however, it is not ideal. Let’s see why: -  Choice of strategy: After thinking of copying a mutual fund’s portfolio, the question that now arises is which style to copy. Every Fund Manager and Fund management team is different even within the same category. Moreover, different funds have different investment objectives and different investment strategies and styles. So, whose strategy will you follow?  The fund manager’s thought process: An investor can always copy a fund’s portfolio but not the thought process of the fund manager that goes behind it. It's easy to find out the stocks that are bought or sold by the fund manager in the monthly disclosures. However, there is an entirely different thought process that goes behind the decision-making. The scheme mandates and risk management policy of the fund house influence the stock selection and their weightage decisions.  Periodical rebalancing: While choosing a stock for the mutual fund scheme’s portfolio, the market situation is kept in mind. The markets are well analyzed to find out the opportunities to invest.  Also, the market never stays the same. So, based on market conditions, the fund managers periodically rebalance the portfolio and alter the stock and sector weights to ensure the scheme’s portfolio is in line with the investment objective.  Log in scheme’s disclosure: Mutual funds disclosure comes every month. However, the fund manager may buy or sell some security in the middle of the month. When you get to know of the transaction, it would have been around 5-10 days and the market price of the share will not be the same.  Cost of investment: Some stocks like blue-chip stocks are very expensive and not all investors may be able to invest in them. Mutual funds provide the investor exposure to such stocks at a much lower price. Mutual funds when pooled in money, invest it in such stocks and offer a fractional exposure to the mutual fund exposures. Moreover, what stocks will you buy? There may be over 20 stocks in a mutual fund’s portfolio. Can you purchase all of them? Mutual funds help you not burn your pockets to get such stocks in your portfolio.  Conclusion  Fund Managers exist for a reason they make your investment journey easier and smoother. These fund managers have good experience and expertise in handling such large volumes of funds. They have specialized in this field and have a well-experienced research team to support them as well.  You always have a number of funds to choose from based on your goal, risk appetite, and investment horizon. You can also evaluate a fund manager’s performance by their fund’s up-side and down-side captures.  Remember to always make your investments easier and not more complicated. Why worry when you have a good management team that is actively managing your invested money?  Consult an expert advisor to get the right plan TALK TO AN EXPERT
DSP Equity and Bond Fund

DSP Equity and Bond Fund

One of the largest AMCs in India, DSP has been helping investors make sound investment decisions responsibly and unemotionally for over 25 years. DSP is backed by the DSP Group, an almost 160-year-old Indian financial giant. The family behind DSP has been very influential in the growth and professionalization of capital markets and the money management business in India over the last one-and-a-half centuries  Let us talk about the flagship product of the DSP Equity & Bond Fund About DSP Equity and Bond Fund  Investment objective The primary investment objective of the Scheme is to seek to generate long-term capital appreciation and current income from a portfolio constituted of equity and equity-related securities as well as fixed-income securities (debt and money market securities).  Investment process    The scheme invests in equity (for capital appreciation) and debt (for income generation). It has an auto-balancing element wherein the portfolio is rebalanced to maintain the 65:35 equity-to-debt allocation. The investment framework is such that equity investments seek long-term growth opportunities across market caps and debt investments are only in highly rated instruments with short-term maturity profiles.  Portfolio composition  The portfolio's major exposure of more than 60% in large-cap followed by 28% in mid-cap. The top 5 sectors hold nearly 41% of the portfolio, with major exposure to Banks and Finance. Note: Data as of 30th Nov 2022. The bar graph shows the top 5 sector weightage of the fund’s portfolio. Source: dspim.com  Top 5 holdings in DSP Equity & Bond Fund Name Sector Weightage % HDFC Bank Ltd. Bank 7.20 ICICI Bank Ltd. Bank 5.73 Bajaj Finance Ltd. Financial Services 4.24 Infosys Ltd. Information Technology 2.99 Axis Bank Ltd. Bank 2.85 Note: Data as of 30th Nov 2022. Source: dspim.com Performance over 23 years  If you would have invested 10,000 at the inception of the DSP Equity & Bond Fund, it would be now valued at Rs. 2.21 lakhs. This fund has outperformed the benchmark in all time horizons. Note: Performance of the fund since launch. Inception date – May 27th, 1999. Source: Moneycontrol  The DSP Equity & Bond Fund. has given consistent returns and has outperformed the benchmark over the period of more than 23 years by generating a CAGR (Compounded Annual Growth Rate) of 14.23%. Fund Managers  Atul Bhole - Total work experience of 10 years. He joined DSP Investment Managers in May 2016 as Vice President-Investments.  Dhaval Gada – Total work experience of 13 years. He joined DSP investment managers in Sept-2018 as Associate Vice President and was promoted to Vice President in Feb-2022.  Vikram Chopra - Total work experience of 14 years. He comes from L&T Investment Management. He has also previously worked with Fidelity, IDBI Bank, and Axis Bank Ltd.  Who should invest in DSP Equity and Bond Fund?  Investors  Want to invest in the equity markets but don't know how to begin?  Accept that equity investing means exposure to risk and recognize market falls as good opportunities to invest even more.  Why invest in DSP Equity & Bond Fund?  The simplest way to get the benefit of asset allocation is with a balance of growth & stability orientation.  Offers potential capital preservation during falling markets due to debt allocation.  Horizon  One should look at investing and holding the investment for more than 10 years.  Investment through a Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market.  Conclusion  This scheme offers a diversified portfolio to investors who do not have much experience in the equity markets. Diversification is such that equity investments offer capital appreciation and debt investments offer wealth preservation. The scheme has a slightly lower impact on market fluctuations compared to pure equity funds 
How to budget for short-term and long-term goals?

How to budget for short-term and long-term goals?

Do you plan on buying a laptop? Do you also wish to save for your child’s education? These are two different financial goals, and both require good planning and execution. This blog will discuss “How to Budget for Short-Term and Long-Term Goals”.  It is better to be aware of your financial situation and the different expenses that you incur to plan accordingly.   Budgeting helps to identify financial spending and understand how to allocate the leftover money to various needs for a better future. It encourages people to stay organized and appreciate the value of accounting. Steps needed to budget for short-term and long-term goals Step 1: Prepare for life’s contingencies Life is unpredictable, and it is necessary to be prepared for any events that might set you back, like recession, job loss, illness, or even death. Prepare for some of the contingencies with the help of insurance plans, for example, health insurance or Mediclaim plans are suited for illness and hospital bills, and life insurance plans like term insurance for financial assistance in case of death.  For a recession or job loss, you need to create an emergency fund where you put aside some money regularly. Automate these payments so that they can continue without any hassles.  Step 2: Define the financial goals Identify both short-term and long-term financial goals so that it becomes easy to segregate them and make budgeting plans accordingly. Short-term goals can be credit card payments, emergency funds, or personal expenses, whereas long-term financial goals often include retirement funds, a child’s education fees, and paying off the mortgage.  Define the financial goals and be specific with the goal, be it about buying a new house in 5 years or your child’s education down the line, or a retirement fund? Step 3: Prioritise the financial goals Once you have defined and sorted out the financial goals, it becomes imperative to prioritize them. Consider the time you have in hand to meet them and how vital these goals are for yourself and your family’s future.  Step 4: Consider the timeline  By this time, you have identified and segregated the financial goals and have a few specific goals in mind. Think about the time in hand for instance, for the child's education goal, you need nearly 10 - 15 years, but for buying a house, you need 5 years. Step 5: Consider the money  The next question to consider is the money you will need to fulfill the financial goal, for instance, the estimated price of the house you want to buy (nearly INR 80 Lakhs) or the amount you want to save for the education corpus (nearly INR 60 Lakhs).  Step 6: Review all your expenses Record all the spending for at least a month to know how much and where you have been spending. Review these expenses and identify which ones are necessary, which ones can be reduced and how much money you have left after meeting them.  Step 7: Set a savings target The money must work for you and provide maximum advantage hence look for ways to save it. There are numerous short-term and long-term investment plans available in the market, like SIP, liquid funds, debt funds or PPF, etc.  Take the help of a financial advisor at Edufund to know more about short-term and long-term investment options. Look at your total savings and make sure it accounts for everything from the contingency fund to the long-term and short-term financial goals. The ideal ratio for spending and saving should be 50:50, but you can mold it as per your requirements up to 60:40. Any more spending will create worries hence try to maintain a balance. Step 8: Divide the savings for important goals Divide your savings for all the important goals. Prioritize necessary long-term goals like education corpus for the child, retirement plan, and necessary short-term goals like purchasing a home. Now put the focus on comparatively less important goals like marriage, family vacation, home renovation, etc., and lastly, consider the short-term lifestyle goals.  Tips to make budgeting a success The premium of health insurance and life insurance policies must be on time. Automate the process from your salary account to avoid any discrepancies. Always keep the contingency fund aligned with current income and expenses. Club similar lifestyle purchases and expenses to get better value. Take the help of a credit card to pay for your expenses but pay back the amount within the stipulated time to avoid any charges.  Conclusion It takes both planning and budgeting to stretch your money to the last unit and meet your financial dreams effectively. Once individuals are aware of how to budget for short-term and long-term goals, then it becomes easy to manage their expenses and put focus on spending that will have more value. Consult an expert advisor to get the right plan TALK TO AN EXPERT
How to align short-term and long-term goals

How to align short-term and long-term goals

Planning to align your short-term and long-term plans and want to know the best way to do so? Well, this blog will answer your queries and explain how to go about it systematically. Individuals often have a list of financial goals that will secure their financial future. Both, short-term and long-term goals are equally important and serve different purposes in real life. In most cases, you cannot achieve one without the other. Hence, it becomes feasible to align them as short-term goals depend, to a great extent, on long-term strategy. What are short-term goals? Short-term goals are the goals that have to be met in the immediate future and cannot be avoided. For instance, you might be interested in creating and managing an emergency fund or have to make regular payments towards an insurance scheme that you have taken out or simply your credit card payments. Short-term goals are actionable steps that improve productivity and help to remain focused.   What are long-term Goals? The long-term goals are the financial goals for the future or down the line in the next 10 or 15+ years. These often include a child’s education corpus, retirement fund or mortgage payments, as these will be needed after several years and not just now. Long-term goals give direction and help to develop plans and steps that will take an individual towards his dream.  Steps for aligning short-term and long-term plans 1. Look into the financial goals Look at your financial goals and divide them into two different categories short-term and long-term. Be aware of your goals to know where you have to spend your money. Are you creating an emergency fund or paying rent, or making home improvements? These are short-term financial goals, but if you want to maintain a retirement fund or an education fund for your child, then these will be treated as long-term goals.  2. Prioritize your goals Identifying the various goals is the easy part but prioritizing them is a very different scenario. Every goal looks important at the onset hence you need to sit down and think carefully about the ones with the maximum impact.  3. Be realistic People need to be realistic about their expectations because you need to have the means to fulfil your wishes. Look at the amount left after meeting your expenses and decide how to manage it constructively. You can take the help of the 50/30/20 equation or adjust it according to your personal needs. Realistic and clear goals will enable the alignment process and lead to success.  4. Set long-term goals before the short-term tactics There is a misconception that you have to set up short-term goals first because they are related to the present and need to be addressed first. The truth is that aligning both sets of goals requires you to set clear and defined goals for the future at first. When you know the direction, you need to take it becomes easier to break the long-term goals into specific and measurable short-term tactics, follow a definite timeframe and uphold the long-term vision.  5. Break the long-term goals into shorter goals Aligning and solidifying the short-term and long-term plans will have a positive impact on future objectives, and one of the best ways is by breaking the long-term goals into small defined goals that can be achieved within a specific and small timeframe. Make sure the long-term goals are identifiable and concrete because vague goals will make the alignment process difficult. 6. Specific goals When the goals are specific, it becomes easy to create and follow a definite plan of alignment. For example, if a person has INR 4000 left for savings and investment and he has to pay INR 1000 every month towards his retirement plan, then his path is clear. It becomes vital to keep up with your rising income. If at the start of your professional career, you were saving and investing only a small amount because of a small salary, then you should increase your savings as your salary increases.  7. Take the help of financial experts Sometimes it is better to opt for expert advice and work accordingly. Financial counsellors at Edufund can create a financial plan that will align your short-term and long-term goals perfectly. This will make the journey comparatively easy.  Conclusion  It is important for short-term planning to align with long-term goals and not the other way around. When an individual has a specific long-term plan which is concrete and identifiable, then it becomes easy to mould the short-term tactics and uphold the longer visions. Consult an expert advisor to get the right plan TALK TO AN EXPERT
What is the value of 30 lakhs after 20 years?

What is the value of 30 lakhs after 20 years?

Surprisingly, due to inflation, INR 30 lakh in 2001 is only worth roughly INR 8.1 lakhs now. This indicates that because inflation occurs on top of inflation from the previous year, the result is exactly like compound interest. In this article, we'll look at the causes of this as well as what $30 lakh will be worth in 20 years. What is the value of 30 lakhs after 20 years? Simply put, 20 years ago, you could have purchased a lot more with 30 lakh rupees than you can now. As a result, even if you were to save for 15, 20, or 30 years and eventually be able to buy 30 lakh rupees or more, its actual worth would be far smaller. With today's inflation rate of 6%, it would be equivalent to Rs 9.35 lakh. As a result, at 6% inflation, if you wanted Rs. 30 lakhs in 20 years, you might get Rs. 9.35 lakh now. If nominal inflation were assumed to be 6%, this amount would increase to Rs 96.21 lakh. Therefore, in 20 years, the demand of 30 lakhs will be Rs 96.21 lakh. The solution is to save money that is inflation-adjusted. To establish the requirements for it, you must first inflate the cost of the aim. Start a SIP after that to begin saving for the inflated goal cost. Additional read: Value of 1 lakh after 20 years How can SIP make you rich? Long-term equity investments may be made via SIP. You may use it to consistently invest a little amount in mutual funds without trying to time the market. To build wealth, it would be good if you continued to make SIPs during both bull and down market times. Let's look at an illustration of how SIP might result in financial success. Consider making a monthly investment of INR 10,000 in an equities fund. If you invest just INR 10,000 per month through a SIP in an equities fund for 30 years, you might amass a corpus of INR 3.53 crore. Compounding power makes money grow and makes you richer. You must start saving early so that you may continue to do so throughout your working life if you want to build up a sizeable corpus for retirement. Please be advised that we expect the equities fund to yield an average of 12%. Actual outcomes might be impacted by the markets and the fund. What is inflation? Sometimes the amount of inflation is expressed in general terms, such as the overall rise in prices or the rise in the cost of living across the board. For some goods, like food, or services, like haircuts or travel costs, it may be calculated more accurately. Inflation is a measurement of how much a certain set of goods and services have increased in price over time, independent of the context. You should anticipate paying more for the same goods and services this year than you did last year due to inflationary pressure. If you owned the stocks or homes before the price increase, you may have benefited. But if your salary does not increase at the same rate as inflation, your purchasing power will decline. Your cost of living rises over time due to inflation, which can also have a negative impact on the economy if it is severe enough. High inflation has far-reaching repercussions on a country's economy. How to overcome inflation? The government attempts to control inflation via monetary and fiscal policies. You should, however, have a plan of your own to guard against it. The main reason people invest is so they can continue to live well in the future despite an increase in the cost of living. You must thus make investment decisions that will allow you to generate returns that outpace inflation. These investments do, however, involve a greater level of risk than traditional savings accounts. High-growth potential investments like stocks and mutual funds stand a good opportunity of generating better returns. These investments have frequently produced returns that have outpaced inflation.  You could also take into account other investment options to diversify your wealth. Money should also be invested rather than kept in savings accounts. Investors may consider buying stocks depending on how much risk they can tolerate. Investing in mutual funds has the potential to yield significant rewards in the long run. How to secure yourself and your family's future If you want to save money for your post-retirement lifestyle, you need to be more strategic and careful. You must consider the possibility of living past your anticipated retirement age as well as fluctuations in interest rates in addition to inflation. Your objectives should be reviewed and reevaluated. Working with real numbers is required. If you have questions regarding where to invest or how to do so, you may consult with financial specialists at EduFund. You may help your children achieve their goals by utilizing EduFund to invest your money. To schedule a free consultation call with the experts, download the EduFund app to your mobile. Parents may begin saving for their child's college education early on to avoid having their child's promising future wrecked by education inflation. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Mutual funds for long-term investment

Mutual funds for long-term investment

A long-term investment strategy is very important for your portfolio and for long-term wealth generation. Long-term mutual fund schemes can assist in achieving all of your higher life goals, such as retirement, marriage, children's education, house buying, globe travel, etc.  Let's learn more about long-term investing, who and how one should plan to accomplish long-term goals, and the best mutual funds to invest in for a long-term plan.  What is a long-term investment?   Long-term plans typically include an investment time span of more than five years. There are several goals behind an investment when someone wishes to make long-term investments. The goal can be to build long-term wealth so that the individual can feel safe in the future. Achieving important life goals is possible, as is just doubling your money through profitable investments. The equity mutual fund is the long-term strategy that is most recommended.  Why Equity funds are best for the long term?   Equity funds primarily invest in company stocks and shares. It is also one of the best methods to have a piece of a business without really launching one. These funds are, nevertheless, very dangerous in the near term. The sensitivity of equity markets to macroeconomic indicators and other variables includes, but is not limited to, inflation, interest rates, currency exchange rates, tax rates, and bank policies. The performance of the companies and, consequently, the stock prices are impacted by any change or imbalance in these. For this reason, it is always advised to maintain an equity fund investment for a minimum of five years and a maximum of ten years. Additionally, only individuals who are prepared to assume a high amount of risk in their investment should use these funds.  Equity funds have a history of providing solid returns over time. Most blue chip firms offer dividends to stockholders, which are a reliable source of income. These businesses typically distribute dividends on a regular basis despite the fluctuating market. Usually, they are paid every three months. A diverse portfolio can offer investors a year-round stream of dividend income.  Investors who intend to make long-term investments might do so in the equities of several economic sectors. Therefore, even if the value of one stock declines, the others may enable investors to recover their losses. Low cost, flexibility, diversification, convenience, liquidity, and expert money management are some other advantages of investing in stocks. Best mutual funds for long-term investment Following are the Best equity funds for long-term investment plans  Large-cap funds   These funds invest money in the stocks of large-sized companies. Large-cap stocks are commonly referred to as blue-chip stocks. These funds invest in those firms that have the potential to show year-on-year steady growth and high profits, which in turn also offers stability over time.   Large-cap stocks give steady returns over a long period of time. As these funds invest in well-established companies they are usually considered to be the safest investments compared to mid & small-cap funds. Investors with a moderate to high-risk appetite can prefer investing in large-cap funds.  Mid & Small Cap Funds   Money Market Funds These funds make investments in the equity of big businesses. Blue chip stocks are a typical term for large-cap stocks. These funds make investments in businesses that have the potential to produce large earnings and consistent growth year after year, which provides stability over time. Long-term, consistent gains are provided by large-cap equities. In comparison to mid- and small-cap funds, these funds are typically thought to be the safest investments because they invest in well-established companies. Those who are comfortable taking on moderate to high levels of risk may enjoy investing in large-cap funds.  Diversified funds or Multi-cap cunds   These funds invest across all the market cap large, mid & small cap funds. They typically invest anywhere between 40-60% in large-cap stocks, 10-40% in mid-cap stocks, and about 10% in small-cap stocks. Since these funds are a combination of all the caps, they master balancing the portfolio. Historically, Diversified Funds have come as a winner in most market conditions. Due to their diversified nature, these funds have the potential to survive the tough market phase. Investors with a moderate to high level of risk appetite can ideally invest in these funds  Sector Funds   Of all the equities funds, these are the riskiest. Therefore, a potential investor should only choose sector funds if they have the capacity to take a high level of risk. Sector-specific funds are offered here. They invest in certain industries like banking, finance, pharmaceuticals, and infrastructure. An investor may choose to invest in these funds if they believe a specific industry can experience rapid growth or has the potential to produce positive returns in the near future.  Conclusion  For the long-term, the equity class is the most preferred to save and invest in as the equity mutual funds have delivered consistent and the highest returns compared to other asset classes. Consult an expert advisor to get the right plan TALK TO AN EXPERT Abhilash Anand - Equity Research AnalystProvides financial insights on publicly-traded companies and/or sectors to facilitate investment decisions.
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