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Comparison is an integral part of our life. Be it our constant nemesis Sharma Ji ka beta or be it our “friend” who always has everything that we aspire to. We all have parameters and factors with which we compare ourselves – salary, number of cars/bungalows owned, or something else. Similarly, there are factors that one should consider when one is planning to invest in mutual funds. There are n (n tending to infinity) number of options in the market for different goals and risk appetite of the investor. So, how do you evaluate a mutual fund and make the choice? Read on to understand the same! Expense ratio The expense ratio is the management fees that the fund charges – for managing your money and giving you the promised returns. This is generally a % of your investments, hence will impact your earnings from the fund. Always chose the fund with a lower expense ratio, as it forms a smaller dent in your long-term earnings. The expense ratio of a regular plan tends to be more than a direct plan. This is due to the intermediary distributor in the value chain who would also need a piece of the pie. For example, if a regular plan has an expense ratio of 2%, 1% goes to the fund and 1% goes to the distributor. However, in the direct plan, you would be charged only 1% which is attributed to the efforts of the fund. While comparing two funds, ensure that you are comparing direct-direct and regular-regular plans. (Apples to apple comparison) Benchmark SEBI mandates that each fund declare a benchmark, as it promises the investor that it would aim at achieving a return that is higher than the market. For example, ABC fund has declared the Nifty 50 as its benchmark. When the market rallies by 15% and the fund have delivered a return of 12%, it indicates that the fund has underperformed. However, when the market falls by 12% and the fund declines only by 10%, it indicates that the fund has outperformed the benchmark. Hence, a fund should beat the benchmark during market upturns and should decline lesser than the market in case of a downturn. Hunt for funds that have consistently performed better than their benchmarks.  Risk measurement A typical thumb rule or mantra in the financial industry is that - higher risk implies higher returns (Bank FD interest rate < Stock Returns). However, measuring the risk with only the returns becomes complex in the case of mutual funds, as there are factors such as sector allocation and other market conditions which affect the returns of the fund. Alpha and Beta then come to your rescue. These Greek alphabets are your crystal balls which give you a fair idea about the risk involved. Alpha indicates the surplus return generated by the fund when compared to its benchmark. Beta indicates the volatility or risk involved in the fund. For example, Fund ABC generated an alpha of 1 and had a beta of 1.5 whereas Fund XYZ had an alpha of 1 and a beta of 2. Then chose Fund ABC, since the risk is lower and the return generated is the same – in finance parlance, the risk-adjusted returns of Fund ABC > Fund XYZ. Allocation of sectors within the fund Consider a large-cap fund, SEBI mandates it to invest over 65% of its portfolio into large-cap companies. However, there is no restriction on the sector in this case. The fund manager may choose to invest in the pharma sector which has seen a boom post-COVID or could invest in the FMCG industry or the financial sector. Sector exposure also determines the risk of the fund. Depending on your risk appetite, and your preference for the sectors - accordingly do a right swipe on your fund match. Category average One last factor to consider would be a comparison against the Category average. What is the category you ask? Large-cap, mid-cap, and small-cap would classify as the category. The category average is the median of all the data of the funds. This gives insights into how our fund has performed when compared to all the other players in the market. There could be cases where your fund has provided returns greater than the benchmark, but all the other funds in the category have also outperformed the benchmark. Comparing with the average in the same class (Category) gives you another realistic indicator of how your fund has performed. For example, if the category average is 33% and your fund has given you returns of 39%, it indicates that your fund has outperformed its peers.  FAQs How can I compare the best mutual funds? There are a few categories to consider when comparing mutual funds such as returns generated over 3 - 5 years, fund managers and their professional history, category average, asset allocation, and portfolio diversification, benchmark, risk management, and expense ratio. Where we can compare mutual funds? You can also compare the mutual fund performance manually, through online investment sites, or ask your financial advisor for help. What is the 15x15x15 rule in a mutual fund? The 15x15x15 rule in mutual funds is a popular rule in investment which says that investing Rs.15, 000 for 15 years at a 15% interest rate can make any investor a crorepati. When there are two mutual funds How will you compare and take investment decisions? By comparing mutual funds' Net Asset Value, you can determine their potential and make the right choice. You can also consult a financial advisor if you are new to the field of investment. Conclusion You can get detailed information on the performance and other aspects covered above on the EduFund app. You can start your investment journey with EduFund and even get advice from wealth experts to invest in the top mutual funds in the country.

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

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

What is the meaning of arbitrage funds? Are these funds a wise investment option for investors? How do arbitrage funds work? Let's find the answers to all these questions in this article. We work our fingers to the bone to save and invest for our future selves or for our future generations. As investors, the biggest nemesis to our portfolio is the unstable market or an extremely volatile, ever-changing market. What if we told you, that there are funds that thrive in such conditions? An arbitrage fund is a kind of mutual fund, where the fund manager hunts for price differences in the spot market (cash market) and future market (derivates market) to perform the arbitrage. This fund ensures profit in volatile markets with minimal risk. These funds are highly suitable for conservative or risk-averse investors. Too much to handle? Read on to navigate through this financial labyrinth. To demystify this financial product, we need to start by understanding the term Arbitrage. What is Arbitrage? Arbitrage in a simple sense is a transaction or a trade where a commodity or security is purchased and sold in the same time frame in order to profit from the price difference. For example, a fruit retailer would purchase Apples from Kashmir for Rs.100/kg and sell them in Mumbai for Rs. 200/kg. Here, the retailer has made an arbitrage by purchasing and selling the commodity in different markets. Similarly, a stock of ABC company is trading at $100 on the stock exchange. A but is trading at $102 on stock exchange B. As a rational investor (provided that it is legally allowed in the country), I would buy from stock exchange A and sell it at B, hence pocketing a profit of $2.  The opportunity of arbitrage also presents itself in the price difference of securities in the spot and futures markets. Spot market refers to the public financial market where securities or commodities are traded to receive an immediate delivery. For example, if the price of stock ABC is INR 2350, one can purchase this stock and secure ownership of the company immediately. Is it advisable to copy the mutual fund portfolio? Read More Whereas, in the futures market the trades are locked for delivery at a specific date in the future, and the price is determined by the market view of the stock. Hence, if you are buying a share in the future market that has a maturity at the end of 1 month, then the share is delivered to you at the end of maturity (whereas in the spot market, it comes into your possession immediately). Pricing of the stock in the future market can be illustrated from this example: The price of stock ABC is INR 2350 in the cash/spot market. However, if the market feels that the company has a great potential for growth or there is an expectation that the stock would see a potential increase in the next two months, then future contract delivering these shares at the end of two months would be highly valued of a price say, INR 2700. Arbitrage funds are equity funds that employ an active strategy - buying and selling during downturns to deliver good returns. They hence turn volatility, your nemesis, into your friend-in-need. How do these funds do that? Volatility causes chaos and uncertainty in the markets and in the minds of investors. This leads to a large price differential in the future and spot market, hence opening up an opportunity for arbitrage. These funds also allocate ~10% or higher of the asset value into debt instruments that are considered stable. In a stable market condition where the opportunity of arbitrage is lesser, this allocation is altered, and the fund invests more in the highly stable debt securities becoming a bond fund or a debt fund would have a large impact on its profitability. This makes it a product that is highly suitable for risk-averse investors and investors who want to benefit from the volatility.  In a typical mutual fund, the securities are purchased with the view that the prices would increase over a period of time. However, in an Arbitrage fund, when the market is bullish or optimistic for the future, (which implies a potential growth in prices), the fund buys the stock in the cash market and sells it in the future market, hence pocketing the profit, Cha-Ching! Similarly, when the market is pessimistic or is taking a downturn, the fund buys the future contracts which would be priced lower, and then sell these shares in the spot market, where it would get a higher price – Cha-Ching again! Conclusion  These funds are suitable for a medium time horizon of 1- 3 years, where you are saving to get that Gaming laptop that you always wanted to buy that beautiful lehenga for your wedding or to fund any expense in the foreseeable time horizon. Reason: Because the volatility over a longer period of time would appear smoother, making other options superior investment alternatives. Arbitrage funds also have a higher expense ratio (management fees paid to the fund) than typical mutual funds. Reason: The profit made from the arbitrages is marginal and hence requires a large number of transactions to be executed to have a sizable gain. Hence, the fund charges you a higher fee than the regular mutual funds. The exposure to risk is very minimal as the purchase and sale trades occur almost simultaneously. As there would be a dearth of arbitrage opportunities as the prices in cash and futures markets converge, one would have to invest in other instruments to augment their overall returns. These funds are treated as equity-related instruments. Hence the funds are taxed at capital gains tax depending on the holding period.  a) If the holding period is >1 year – Returns earned are subject to long-term capital gains tax – 15%. b) If the holding period is <1 year – Returns earned from the fund are liable to a short-term capital gains tax -10%. A little more Financial Gyan To choose one of the many arbitrage funds available in the market, assess them on the following factors - Performance Consistency over the last 3 years 1-year returns How much has it outperformed the benchmark? Expense Ratio Asset Size  FAQs What is Arbitrage? Arbitrage in a simple sense is a transaction or a trade where a commodity or security is purchased and sold in the same time frame in order to profit from the price difference. For example, a fruit retailer would purchase Apples from Kashmir for Rs.100/kg and sell them in Mumbai for Rs. 200/kg. What is an arbitrage fund? Arbitrage funds are equity funds that employ an active strategy - buying and selling during downturns to deliver good returns. They hence turn volatility, your nemesis, into your friend-in-need. Is it good to invest in arbitrage funds? Arbitrage funds are good funds for investors who wish to gain good returns in a volatile market without the added risk. These are relatively less risky with a good margin of returns. Can you lose money in arbitrage funds? Yes, it is possible to incur a loss while investing in arbitrage funds. TALK TO AN EXPERT

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

Investing is no longer associated with wealth. To protect one's future it has become essential. In this blog, let's compare Life Insurance Corporation of India (LIC) vs. Public Provident Funds (PPF) vs. Equity Linked Savings (ELSS) funds to see which is a better option for you. What are LIC plans? The insurance and investment firm Life Insurance Corporation of India is owned by the government. It provides individualized policies to meet each person's insurance needs. One of the first life insurance companies and a pioneer in the insurance industry is LIC. Life insurance shields a family from unforeseen events like death. It helps to secure the financial future of a family. In the event that the family's primary provider dies suddenly, life insurance's primary objective is to provide "death benefits" to the dependents. Features of LIC plans Policy Holder: The life insurance policy's premiums are paid by the insured. They also agree to the terms of the company's life insurance policy. Premium: It's the sum that the policyholder pays to the insurance provider to have their life covered. Maturity: It is the period of time following the conclusion of the policy term and the termination of the life insurance contract. What is PPF? A portion of one's annual income is set aside in the Public Provident Fund, also known as PPF, which is a popularly abbreviated savings vehicle. If the money was received on maturity, PPF investors may receive tax-free interest income on their capital. PPF is a government-backed saving method for risk-averse people. Features of PPF  Tenure: A Public Provident Fund account has a 15-year term. The lock-in period is, therefore, 15 years as well. Eligibility: PPF investments are open to all Indian nationals. Additionally, a PPF account can be opened in a minor's name, and the parent or legal guardian can manage it. Risk: The PPF program is supported by the Indian government. As a result, it is one of the most secure investment strategies available to private investors. What are ELSS funds? The only type of mutual fund that qualifies for tax deductions under the terms of Section 80C of the Income Tax Act of 1961 is an ELSS fund, also known as an equity-linked savings plan. You can save up to INR 46,800 in taxes each year and get a tax credit of up to INR 1.5 lakhs by investing in ELSS mutual funds. The majority of the portfolio of ELSS mutual funds is allocated to equities and equity-linked instruments, such as listed shares, making up 65% of the portfolio. They could also be somewhat exposed to fixed-income securities. The shortest lock-in period among all Section 80C investments is three years for these funds. Lowest Lock-in: In the tax-saving category, ELSS investments have a 3-year lock-in period, making them a relatively more liquid option. SIP Option: The Systematic Investment Plan allows you to start investing in ELSS with as little as INR 500 each month (SIP). When it's convenient, you can start and stop the SIP. High Returns: One of the best returns in the group of tax-saving products has been provided by ELSS. PPF vs ELSS Following is the difference between PPF vs ELSS:  CharacteristicsPPFELSSSafetyVery High (Govt Guaranteed)Low-Moderate (Invests in Equity)ReturnsModerate – Fixed by Govt every quarter.High – Equity compounds over the long term.Lock-in15 years3 yearsLiquidityLow High Tax on ReturnsExempt10% of capital gains over the long term. Gains up to 1 lakh are exempted.Tax on MaturityExemptAs indicated above, taxes only apply to gains. PPF vs LIC  Following is the difference between PPF vs LIC:  Basis of DifferencePPFLIC PolicyPurposeSavings and investmentInsurance and risk protectionReturns7.1% p.a., compounded annuallyDepending on the policy, usually 4%-6%Tenure15 yearsFlexible tenure, as chosen by the subscriberPremature closureNot allowedAllowed with penaltiesRegulatory authorityCentral GovernmentInsurance Regulatory and Development AuthorityDeposit amountThe minimum is INR 500 and the maximum is INR 1.5 lakhsFixed Premiums LiquidityPPF enables loans from the third year and permits partial withdrawals from the seventh year.A 3-year lock-in term applies to insurance plans before they may be redeemed.TaxationPPP belongs to the EEE group. As a result, the corpus of the investment, interest, and redemption is entirely tax-free.If the premium is less than 10% of the amount assured, it is tax-free. Additionally tax-free is the death benefit. LIC vs PPF vs ELSS: Which is better? People frequently mix up investments with insurance. Investments are for a secure future, whereas insurance options like LIC are for risk protection. Having sound financial standing is important for any investor. A person needs an emergency fund for unforeseen costs, insurance to protect against unfortunate events, and investments to ensure a secure financial future. While both PPF and ELSS programs save taxes, it's still important to choose one based on your investment time horizon, risk tolerance, and expected returns. PPF is best for those who can afford a 15-year lock-in period and are utterly risk-averse. While ELSS is a good option for investors who are willing to take a moderate risk in exchange for higher returns. The best way to keep ELSS risk to a minimum is to keep your investments for the long run. Each person has a unique style of thinking and attitude while creating investment strategies. Some people desire higher earnings, while others seek financial security. Examining your financial condition is essential before making any form of investment, including those in PPF, LIC, or ELSS plans. Consult an expert advisor to get the right plan TALK TO AN EXPERT

With the dual advantage of tax-saving & potential for better returns than traditional tax-saving investment products, tax-saving mutual funds are a must-have for every investor. In this blog, we will discuss the best mutual funds to save taxes  What are tax-saving mutual funds? Mutual funds with a tax-saving component are identical to other mutual funds in every way. Because investments made in tax-saving mutual funds are eligible for tax benefits under section 80C of the Indian Income Tax Act, this form of mutual fund has a unique characteristic. Most tax-saving mutual funds participate in the growth-oriented stock market and are ELSS programs. The benefits of tax-saving mutual funds that save taxes provide investors with a variety of advantages. The following are a few of the crucial ones: Tax advantages of up to Rs. 1.5 lakh may be available for investments made in these kinds of funds. Under these plans, long-term capital gains are not taxed. Investments in these plans can be made as a way to set aside money for future expenses like car or home down payments. Through these programs, investors can make monthly investments through SIPs, eliminating the need for lump-sum investments. In order to reduce the danger of significant losses, the assets in the portfolios are not all invested in one location. If you decide against withdrawing your investment, it will keep growing and turn into a respectable sum of savings for an emergency. You may not be able to withdraw the original amount, but even during the lock-in period, you can withdraw the dividends that were received. These mutual funds have a lock-in term of just three years, as opposed to the six to fifteen years offered by other investing alternatives. Investments may be made at any time of the year because these schemes are open-ended in nature. Professional fund managers with extensive market understanding professionally oversee the funds. As a result, individuals who are unfamiliar with the market can also participate in these funds. Best mutual funds to save taxes 2022 The following are the best mutual funds to save taxes in 2022: Funds1-Year Returns (%)3-Year Returns5-Year ReturnsIDFC Tax Advantage (ELSS) Fund-Growth23.111.722.3Tata India Tax Savings Fund Growth14.612.3L&T Tax Advantage Fund Growth16.21320.3Aditya Birla Sun Life Tax Relief 96 Fund Growth19.312.123.5Aditya Birla Sun Life Tax Plan-Growth18.911.622.6DSP BlackRock Tax Saver Fund Growth911.421Axis Long-Term Equity Fund Growth18.19.324Kotak Tax Saver Fund Growth-4.7910.2517.66Invesco India Tax Plan Fund Growth0.611.119.0HDFC TaxSaver Fund-11.18.515.0 Who should invest in the best ELSS mutual funds? Any person or HUF that wants to reduce their annual tax liability by up to Rs 46,800 should think about investing in ELSS. The only people who should invest in ELSS are those who are ready to take some risk and can commit to holding their investment for at least the three-year lock-in period. To benefit from the greatest returns given by mutual funds, investors are urged to hold their investments for at least five years. It is appropriate to provide five years. You'll give your assets the necessary time to experience market cycles and generate great profits over the long term. Young investors who are just beginning their careers in finance can invest for the long term. Young investors are the greatest candidates for ELSS since they have the time to maximize the power of compounding, enjoy excellent returns, and save up to Rs 46,800 in annual taxes. FAQ Do tax-saving mutual funds outperform other tax-saving options like PPF and others in terms of returns? As of March 1, 2022, the category returns for ELSS are, respectively, 18.96%, 18.76%, and 14.38% for the 1-year, 3-year, and 5-year time periods. While Sukanya Samriddhi Yojana's current yield is 7.6%, the current return on PPFs, a popular fixed-income tax-saving device, is 7.1%. Financial analysts estimate that a ULIP plan produces an average return of 10–12% over a ten-year investment term. What are the hazards connected to different tax-saving tools? Since they are linked to investments in equity-related products, ELSS & ULIP investments are often high-risk. However, there are still some risks associated with fixed-income instruments. The government frequently assesses the interest rate on these programs (usually every quarter), and it is impossible to ignore the effects of interest-rate variations on them. Does ELSS have a minimum investment requirement? Undoubtedly, ELSS has a minimum investment requirement. Although the mutual fund provider determines the minimum investment amount, it is often approximately Rs. 5,000. Consult an expert advisor to get the right plan TALK TO AN EXPERT

According to Capgemini, "the number of Indians with over 1 million US dollars investments will increase by 80-% in 2025."  Around 50% of Indian students study in North America. It contributed $ 7.6 billion to the US economy in August 2021. The country recorded the highest number of Indian student applications. Given the popularity of the USA education deciding the best US investments for a child's higher education is crucial. Rupee depreciation and rising education costs form the base. Investing in US stocks helps earn profits even with a fixed stock price. Before investing, undertake the existing or predictable application costs, examination fees, cost of living, and tuition fees. Edufund helps individual circumstances by addressing the total money you need to invest in the top US stocks (zero commission fee). It concludes by determining the expected sum in the dedicated year. Knowing so, you can re-arrange the investments and invest in the Best US stocks and other products calculatingly. For example, suppose you invest ₹4000/month ($48.79) in a particular US stock and income slashes. In that case, Edufund helps stabilize the momentum by providing options at a lower investment amount (if the investment type does not have a minimum investment limit). You can always know the revised investment plan after investing ₹2000/month ($24.40)—the platform grants immense freedom to regulate investment securely. US Investment opportunities for your Child's education According to Business Standard reports, "9.2% depreciation in Indian Rupee against the US dollar may translate into a hefty sum for Indians planning US education for the child."  And as Statista puts it, "The average cost of higher education in the USA for the year 2022-2023 stands at $23,250."  To build up a good investment pot, guardians can buy individual shares or ETFs in the US market from India. S&P 500 index fund It lists the top and poorest 500 US stocks to invest in. To invest in these funds from India, follow the below guidelines: Select a fund that best suits your investment goal Open a share-trading account with Edufund Deposit a comfortable sum (no fee) You can buy the ETF or S&P 500 index  It is ideal for long-term savings with lower management fees. It yields high returns on maturity. ETF (Exchange Traded Funds) ETF funds are those in which one trades on exchanges by tracking a specific index. You must own a trading account to invest in this. The most popular ETFs in the US are- the NASDAQ-100 and the Rusell 1000 Index It helps Indians invest in companies that do not exist in India. It is ideal for those investors and guardians who lack the minimum money to meet the mutual fund investment requirement. It is a great way to create a cluster of the best securities leading to a diversified portfolio. This is it if you find a safe escape to the best US investments for a child's higher education. Corporate Bonds Corporate bonds are bonds through which you can invest in a US company. It is not capped or regulated by government regulations. It is ideal for individuals to share good knowledge about supporting and regulating investments.  These are risky bonds with high yields. If you eye a fixed income security to cover up for your child's education savings, check this. Bonds that large-cap companies issue are generally low-yield driven and vice versa. You will have to balance your investment in a way that maximizes investments along with balancing the loss. Mutual Funds  Mutual funds grant immense flexibility to you to diversify your investments in shares, bonds, and other assets.   It optimizes the risk possibility by balancing the trading opportunities. It is ideal for a long-term goal and eliminates any hassle of regular monitoring and management. Mutual Funds call for a minimum mandatory investment amount.  With Edufund, you can set up automatic mutual fund investments as per income and shifting circumstances. Choose the right industry before investing. Biotech and technology company shares pay the highest dividends and returns.  Money Market funds These mutual funds invest in short-term liquid assets and pay investors dividends. It is a type of short-term, high-quality corporate debt. Regulated under the Investment Company Act of 1940 and registered under the Securities and Exchange Commission, it is the safest investment option. Individuals looking to diversify investments by relying on safer options can consider money market funds. It is ideal for individuals looking forward to saving more than relying on returns. You can purchase these from a direct mutual fund provider.  Conclusion Earmark your timeline, and risk tolerance and partner with us for expert guidance. EduFund helps you provide the best US investments for a child's higher education as per risk appetite. TALK TO AN EXPERT

“Sukanya Samriddhi Scheme vs LIC Kanyadan Policy – which one is better” is an important query that needs to be answered so that an investor can invest in the scheme which is more suited and helpful for their girl child.  By assuring the safety of the capital and providing a fixed income, both schemes have managed to gain popularity amongst the masses. What is Sukanya Samriddhi Scheme? The Sukanya Samriddhi Scheme is a small savings scheme that comes under the “Beti Bachao Beti Padhao” scheme. It was launched by the central government to build a secured financial corpus and ensure a bright future for the daughters of India. What is LIC Kanyadan Policy? LIC Kanyadan Policy is a small savings scheme offered by LIC to protect the financial future of a girl child. It is a customized version of the LIC Jeevan Lakshya Policy, where a father can deposit money for the marriage and education of his daughter at a low premium. The policy offers both protection and savings benefits. Sukanya Samriddhi Scheme vs LIC Kanyadan Policy 1. Type of Scheme The Sukanya Samriddhi Scheme comes under the Beti Bachao Beti Padhao Scheme and is purely a small savings scheme launched for the education and marriage of a girl child. The LIC Kanyadan Policy is a modified policy based on the LIC Jeevan Lakshya Policy to financially secure the future of a girl child for later years.  2. Launched By The Sukanya Samriddhi Scheme was launched by the Government of India, whereas LIC Kanyadan Policy was launched by LIC. Both policies are exclusively meant for a girl child.  3. Account Holder The girl child is the account holder of the Sukanya Samriddhi Scheme until her marriage, whereas in the LIC Kanyadan Policy, it is the father who is the account holder and not the daughter as he operates the account in her name.  4. Age Criteria The age criteria of Sukanya Samriddhi Scheme vs LIC Kanyadan Policy are different as the first can be purchased after the birth and before the girl child is 10 years old, and the latter can be purchased when the girl child is at least 1 year old, and the age of her father is between 18 years and 50 years.  5. National Eligibility The Sukanya Samriddhi Scheme is open only to the citizens of India, whereas outsiders have the option of choosing the LIC Kanyadan Policy for their daughters.  6. Premium Limit In the Sukanya Samriddhi Scheme vs LIC Kanyadan Policy, the premium limit for the first scheme is INR 1.5 lakhs for a financial year, whereas there is no limit for the latter scheme.  7. Sum Assured Limit The sum assured in the Sukanya Samriddhi Scheme is limited as it is dependent upon the premium paid, whereas the minimum and maximum limits are INR 1 lakh and no limit, respectively, in LIC Kanyadan Policy. 8. Payment Terms In Sukanya Samriddhi Scheme, the amount should not be more than INR 1.5 lakhs and has to be paid every fiscal year. The payment term of the LIC Kanyadan Policy is 3 years under the policy term.  9. Account Maturity Tenure In the Sukanya Samriddhi Scheme, the girl child can handle the account until she is the age of 21 Years or married after 18 years, whereas in LIC Kanyadan Policy, the account maturity tenure is between 13 years – 25 years.  10. Loan Facility There is not any option for a loan facility in the Sukanya Samriddhi Scheme, whereas in LIC Kanyadan Policy, the policyholder can opt for a loan if the account is active and the premium has been paid for three consecutive years.  11. Compensation Offered (in case of the account holder’s death) No compensation is offered in case the account holder of the Sukanya Samriddhi Scheme dies. In LIC Kanyadan Policy, if the death of the account holder is natural then the girl child is eligible for immediate payment of INR 5 lakhs, and in case of accidental death, immediate payment of INR 10 lakhs. If the death is suicidal within 12 months of the policy purchase then 80% of the premium amount is paid by the LIC corporation, along with the surrender value and the tax amount.  Conclusion By now, you must have got a clear idea about which one amongst the Sukanya Samriddhi Scheme vs LIC Kanyadan Policy will suit the personal needs of your child. Remember, both schemes provide financial assistance to low- and high-income group parents who want to fulfill their dream of educating or simply marrying their girl child. So, consider their differences well and choose the one you find most beneficial.  Consult an expert advisor to get the right plan TALK TO AN EXPERT

Becoming financially independent is one of the ultimate goals behind pursuing any profession of your choice. Of course, everybody needs to work to earn money. But will earning money alone ensure your financial independence? We’ll discuss the possible ways to become financially independent in this blog. What financial independence means? Everyone defines financial independence in their own terms and goals. For most people, it usually means having financial freedom and not having to worry about finances and money-related issues. Financial independence comes when you intelligently invest and can afford a certain lifestyle of your choice. It also means you retire without worry or have the freedom to pursue your passion without second thoughts. 1. Set life goals A mere desire to achieve financial independence won’t help you reach your goal. If you wish to be financially independent as soon as possible, you should set realistic and ambitious goals. Setting life goals, big or small, would help you create a blueprint for achieving those goals. Be focused and specific about your goal and make timelines accordingly. This will not only help you meet your goal’s deadlines on time but also increase your chances of achieving your goal. 2. Make a monthly budget Making a monthly household budget is one of the best ways to control your spending and track your bills. Sticking to your budget is a great way to ensure that bills are paid and savings are on track. It also acts as a regular routine that reinforces your goals. 3. Start investing now In the midst of rising debt, financial emergencies, medical expenses, and excessive spending, achieving financial independence can be quite challenging. However, it is attainable with discipline and careful planning. Bad stock markets and low returns can make people question their wisdom in investing and whether they should keep investing their hard-earned money. But there is no better way to grow your money than investing. Investing is basically making your money work for more money rather than you working for the money. The magic of compound interest, dividends, growth in the share market, increments in shares you have invested in, etc., will grow your money exponentially. But you need a lot of time and patience to achieve this meaningful financial independence. Investing in the right tools at the right time with expert advice can help you reach your goal. Remember that not everyone is a professional investor from the beginning, so it would be a mistake to attempt the kind of stock-pinning and risky investments made famous by billionaires like Warren Buffett. Instead, start simply by opening an online brokerage account that will help you learn how to invest, create a manageable portfolio, and make weekly or monthly contributions to it automatically.  Track your investments on a regular basis and keep learning more about investments and better opportunities to invest in. More importantly, consult financial experts while investing your savings. 4. Avoid loans and debts and pay off your credit cards in full One of the vital hacks for becoming financially independent is to avoid loans, credits, debts, etc. You need to be smart when it comes to money and financial freedom. It might seem easy to pay back loans, but in reality, there are many challenges. When loans are being taken, they should be intelligently calculated and only be taken when necessary. Credit cards and other high-interest consumer loans may be hurdles to wealth-building. Make sure to settle the entire balance every month. Paying off mortgages, student loans, and other loans with comparable terms often have significantly lower interest rates, so doing so is not urgent. Even yet, timely repayment of these loans with lower interest rates is crucial. On-time payment of these loans would not only help you get financially independent early but also help you build a good credit score which is very beneficial. 5. Watch your credit score The credit score is a very important number for you as it determines the basis on which interest rate will be offered to you when you decide to take loans for any personal reasons like renovating your house or buying a new car, or taking any loans for any purpose. Credit score also plays an important role in determining the premium rate you will have to pay for any kind of insurance you take. Since someone with careless financial habits is thought to be irresponsible in other areas of life, credit scores are given a lot of importance. This is why it's crucial to obtain credit information on a regular basis to ensure that no incorrect defaults are harming your reputation. Stay educated on financial issues. 6. Create automatic savings Automatic saving basically means setting money aside the day you get paid so that it never reaches you. You can also call it paying yourselves to be ready for retirement. To be financially independent, it’s very important to enroll in an employer’s retirement plans and make full use of any matching contribution benefits, which are essentially free money. Having an emergency fund that may be accessed for unforeseen needs is a good idea as well. 7. Do not stop having fun And last, ensure your life does not seem too boring because you do not let yourself have a little fun and relax. Join parties, travel from time to time, and do not forget that you need to strike a reasonable balance between achieving financial independence and your everyday life as a young and happy person. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

The asset management branch of State Street Corporation, State Street Global Advisors, was created in 1978 in Boston, Massachusetts.  The company's first three products  The domestic index fund An international index fund (based on the MSCI EAFE index) Short-term investment fund  By 1989, the division's assets were $53 billion (USD). State Street Global Advisors was established in 1990 as a distinct company from State Street Bank to expand internationally.   With the S&P 500 SPDR product release, traded on the American Stock Exchange in 1993, SSGA established the investment vehicle known as the exchange-traded fund (ETF).  State Street Global Advisors (SSGA) is State Street Corporation's investment management subsidiary and the 4th largest asset manager, with roughly $4.14 trillion in assets under administration as of December 31, 2021.   After BlackRock and Vanguard, SSGA is the world's third-largest ETF manager. States, corporations, foundations, non-profit foundations, business financial officers and CFOs, investment firms, financial advisors, and other intermediaries worldwide use the company to create and manage investment plans.  The company has won several accolades for its services. Some of the prominent awards are  Asia Asset Management's 2022: Best of the Best Awards- At Asia Asset Management's 2022 Best of the Best Awards, State Street was named Best Global Custodian in Asia-Pacific (25 years) and Best Middle and Back Office Provider.  HFM Asia Services Awards 2021: State Street was named Best Hedge Fund Custodian for the second year in a row at the HFM Asia Services Awards 2021.  The Asset Triple A Sustainable Investing Awards for Institutional Investor, ETF and Asset Servicing Providers 2021- For the seventh year in a row, State Street was named Best in Securities Lending at The Asset Triple A Asset Servicing Providers Awards.  Aite Group 2020 Impact Innovation Awards The organization earned operational efficiency after being recognized as a financial institution that has used technology to raise the bar.  Asia money FX Survey 2020 In South Korea, Taiwan, and Thailand, State Street has been named Market Leader. The company provides several ETFs and mutual funds to be chosen from. The company has a set of thematic ETFs which focus on cutting-edge innovation.   The SPDR S&P Kensho New Economy ETFs have the backing of S&P Kensho's forward-thinking and dynamic approach, which employs artificial intelligence to analyze regulatory filings to find and classify innovative enterprises based on factors other than revenue and balance sheet data.  Some such ETFs are associated with Future security, clean power, smart mobility, space exploration, intelligent infrastructure, etc.   Fixed-income ETFs come at a high degree of diversification with a 60% lower expense ratio than competitors. Investment worth $621 billion has been made by the firm in fixed-income assets with over 100 strategies.  SPDR Blackstone Senior Loan ETF and SPDR Portfolio TIPS ETF are some of the fixed-income ETFs. There are more than 250 low-cost passively managed ETFs offered by the company all over the globe.  Investors can use SPDR Portfolio ETFs to build large, diversified portfolios by choosing from equities and fixed-income exposures. SPDR Portfolio S&P 400™ Mid Cap ETF, SPDR Portfolio S&P 500® Growth ETF, etc., are some core ETFs.  Gold-backed exchange-traded funds (ETFs) combine the gold market's flexibility, openness, and accessibility with the cost-effective liquidity of an ETF wrapper through the company's offerings. The company offers two distinct products 1. SPDR Gold Shares 2. SPDR Gold Mini Shares The company also provides a variety of ESG investing options along with sectoral investing options and Smart Beta ETFs.  Along with ETFs, the firm also offers a variety of mutual funds to choose from - grouped into four categories SSGA Funds, State Street Institutional Funds, State Street Institutional Investment Trust, and State Street Variable Insurance Series Funds. These funds track indices like FTSE Russell, MSCI, Multiple/Blend, S&P Dow Jones, etc.  Multiple ESG investment strategies 1. Screening Negative screening excludes specific firms, sectors, or nations based on environmental, social, and governance (ESG) issues and an investor's values-based goals. Among the advantages are reduced reputational risk and the ability for investors to avoid providing capital to organizations or sectors that contradict their views.  2. Best in class This strategy focuses on investing in sectors and firms that outperform the industry peers in terms of ESG performance.  3. ESG integration To limit risk and uncover possibilities for long-term outperformance, active portfolio managers routinely include ESG signals and factors in the investment analysis and decision-making process.  4. Climate investing This thematic investment strategy aligns portfolios with the transition to a low-carbon economy and limits global warming to far below 2 degrees Celsius.  5. ESG for index investing ESG investors can benefit from index investing in various ways, including diversification and transparency. Index methods give investors a simple way to acquire broad diversification in their portfolios, which improves risk management.  Thus, the pioneer of ETFs should be taken into account whilst creating a portfolio! FAQs What are State Street Global Advisors known for? State Street Global Advisors is an investment management firm located in the USA. It offers the following services such as portfolio management and advisory services to individuals, institutions, trusts, private funds, charitable organizations, and investment companies Where is the Headquarters for the State Street Global Advisors? The headquarters for State Street Global Advisors is in Boston, Massachusetts, United States. Who are State Street's clients? State Street's clients are Consumer Healthcare Products Association (CHPA) CIGNA. Everytown for Gun Safety Action Fund. Health Partners Plans. Lilly USA Is SSGA an established investment firm? State Street Global Advisors (SSGA) is State Street Corporation's investment management subsidiary and the 4th largest asset manager, with roughly $4.14 trillion in assets under administration as of December 31, 2021.   TALK TO AN EXPERT

In the previous article, we read about what are equity mutual funds. In this article, we will talk about the benefits & types of equity mutual funds. Equity mutual funds invest in shares of different companies. The fund manager aims to maximize the returns by diversifying the portfolio across stocks of various industries and companies with varying market capitalization. There are various types of equity mutual funds based on different categories. Let us have a look at them Types of Equity Mutual Funds Market capitalization-based differentiation  1. Large-cap funds These equity mutual funds invest more than 80% of their assets in the shares of large-cap companies (companies with a market capitalization of > Rs 20000 crores).  Large-cap funds are safer than mid-cap and small-cap funds because the stocks in the large-cap funds are of stable and solid companies with a proven historical track record. 2. Mid-Cap funds As the name suggests, equity mutual funds invest around 65% of the total amount in shares of mid-cap companies (companies with a market capitalization of > Rs 5000 crores but < Rs 20000 crores).  These funds tend to provide slightly better returns than large-cap funds because most of the stocks in these funds are of companies that are still growing to become bigger and better. Apart from offering higher returns, the funds are relatively more volatile. 3. Small-cap funds  Small-cap equity mutual funds invest around 65% of the assets in equity shares of small-cap companies (companies having a market capitalization of < Rs 5000 crores).  This is the riskiest type of fund in the market-cap-based category because the fund invests in companies that are potential superstars that may multiply your money by significant amounts and the risk of capital wipeout if the company fails.  A considerable number of companies in India fall into this category Investment style-based categorization 1. Active funds  These equity mutual funds are ones that fund managers actively manage; they use their knowledge of the markets and situation of the industries to choose stocks that become a part of the portfolio. 2. Passive funds Usually imitate a particular segment of the market, and with that, the stocks that will become a part of the portfolio are determined. A fund manager plays no active role in this regard 3. Sectoral funds These types of equity mutual funds invest the majority amount in particular sectors; that is, there is a concentration of investment into specific sectors in the economy, like FMCG, pharma, technology, PSUs (Public sector undertakings), etc. Only investing in a particular industry concentrates your portfolio on all the close activities in the industry. Taxability based categorization ELSS (equity-linked savings scheme) funds allow deductions under section 80C of the Income Tax Act. ELSS schemes allow for up to Rs 1.5 lakh deductions under the act mentioned above of law.  Equity-linked savings scheme funds invest more than 80% of total assets in equity and related instruments. Also, there is a lock-in period of 3 years for these schemes. Other than ELSS, all the additional equity mutual funds in the market are subject to given rates of capital gains tax. Benefits of Equity Mutual Funds 1. Diversified portfolio Equity mutual funds offer diversification by investing in various sectors thereby offering better exposure to the market. 2. Capital appreciation As the company grows, it earns more profits and invests it back in the company, thereby leading to the company's growth, which in turn is reflected in the stock price and thus benefits the fundholders. 3. Small ticket size  Sometimes, buying stocks of companies can be costly, as some good companies' shares are trading in a high price range. However, you can invest in equity funds starting with amounts as low as Rs 500 to Rs 100. 4. Professional management In the event of an actively managed fund, your money is being taken care of by professionals who have tremendous experience in the market. Your money is invested in a way such that your returns are maximized. 5. Risk mitigation  A fund manager follows the rules laid out by asset management companies (AMCs) to mitigate various risks. For example, the risk is reduced by limiting over-exposure to any particular stock or industry. Additionally, parameters like volatility and liquidity are also studied for better risk mitigation strategies. FAQs What are the types of equity mutual funds? Equity mutual funds are divided into three categories- Large-cap mutual funds, Mid-cap mutual funds, and Small-cap mutual funds. Large-cap mutual funds invest more than 80% of their assets in the shares of large-cap companies. While mid-cap mutual funds invest around 65% of the total amount in shares of mid-cap companies. Small-cap equity mutual funds invest around 65% of the assets in equity shares of small-cap companies. Which type of equity mutual fund is the best? Equity Linked Savings Scheme funds offer investors high returns over a long time compared to other funds under Section 80C. For new investors, large-cap mutual funds are the best as they are safer compared to mid-cap and small-cap mutual funds as they invest in big companies with good reputations. Large-cap mutual funds are not likely to offer higher returns than mid-cap and small-cap mutual funds. What are the four types of mutual funds? Mutual funds usually fall into four categories—money market funds, stock funds, bond funds, and target date funds. What are the benefits of equity mutual funds? There are many benefits to investing in equity mutual funds. Equity mutual funds offer diversification by investing in various sectors, thereby offering better exposure to the market. It provides capital appreciation. Professional fund managers look after your portfolio, reducing investment risk. A fund manager follows the rules laid out by asset management companies (AMCs) to mitigate various risks.

Do you know that the value of 1 crore after 20 years will be much less than what it is now due to inflation and high consumption?  Yes, over a longer time frame, the importance of inflation cannot be understated. The buying power of the rupee is reduced by inflation, and the value of each rupee keeps falling over time.  Twenty years from now, assuming a 5 percent annual inflation rate, the value of one crore rupees would be equivalent to about 37.68 lakh rupees. That is the crumbling effect of inflation on our money. Numerous SIP calculators and monthly savings formulas are available to assist you in determining how much you should invest each month if your goal is to save Rs 1 crore. For instance, if you invest 10,000 per month for 20 years at an expected annual growth rate of 12%, you may save Rs 1 crore.  In simple terms, you might have bought a lot more with 1 crore rupees 20 years ago than you can purchase today.  The actual worth of it at that point would therefore be significantly smaller even if you save for one or two decades and are able to accumulate Rs 1 crore or more.  One should remember that even if the economy is experiencing inflation at a 5–6% rate, inflation in the fields of education and medicine will be greater. Therefore, inflation is a crucial element that influences your financial plans, especially long-term objectives like retirement and schooling for your children. Value of 1 lakh after 20 years Read More How can you counter this devaluing of money?  The solution to this issue is to manage your assets by tying them to the rate of inflation. To achieve that, multiply that quantity of the savings plan by the rate of inflation. After that, you can begin a SIP to save for the adjusted inflation amount.  Let's imagine you have higher education plans for your child that will cost about Rs. 15 lakhs over the next twenty years. The cost of the course could increase to about Rs 40 lakh if inflation is projected to be 7%. As a result, you can start saving Rs 8000 per month to amass roughly Rs 40 lakh and put the plan together without difficulty.  In a similar manner, you can manage your long-term objectives by multiplying the present value by inflation. Investing so that you can beat inflation can be tough, which is why taking care of your expenses and seeking sound financial advice can help you maximize the value of your money.  FAQ What will be the value of 1 crore after 30 years?  The value or buying power of Rs 1 crore will be around Rs 23 lakh after 30 years if you really are trying to save Rs 1 crore for a target that is 30 years away.  What would be the value of 1 Cr after 25 years?  In 25 years, a rupee will be valued at around Rs 29.53 lakhs, given a 5% average annual inflation rate. What is the value of 1 lakh rupees after 20 years?  After 20 years, the price of one lakh would be approximately INR 37,000, using a 5% inflation target.  Consult an expert advisor to get the right plan TALK TO AN EXPERT