EduFund Blogs

Purchasing a mutual fund is fairly simple; you can even do it quickly online! It does, however, have paperwork, just like any other financial transaction. Here is a list of documents required for mutual fund investments in India. Documents you need  The list of documents needed to invest in a mutual fund is as follows: 1. Application form For a mutual fund, you might need to submit more than one application. A mutual fund account must first be opened, a SIP plan within the fund must be chosen, and an  Electronic Clearing System (ECS) form must be completed if you want to make an electronic transfer from your bank account. Other forms, such as a Risk Profile form, may be requested by some asset management firms. 2. KYC compliance To invest in mutual funds, your PAN must be validated by the Know Your Customer (KYC) regulations of the Government of India. Through the CDSL Ventures Limited website, you may assess your KYC compliance or sign up for it (CVL). The KYC acknowledgment letter or a copy of the KYC-compliance page must be sent if you are currently KYC-compliant. If not, keep the necessary paperwork on hand: KYC individual form Passport-sized photograph 3. Proof of identity As identification documentation, any of the following is acceptable: PAN with photograph Aadhaar Passport Voter's ID card Driving license 4. Proof of address  You can provide any of the following documentation as evidence of address: Aadhaar Driving license Passport Voter's ID card Ration card Registered lease/sale agreement of residence Flat maintenance bill Insurance copy Utility bills that are less than three months old, such as a landline phone bill, an electricity bill, or a gas bill It is also appropriate to provide proof of address in the spouse's name. 5. Third-party declaration for minors  Parents may invest on their child's behalf if they are a minor. For this, a third-party declaration form must be completed. For non-individuals, such as businesses, trusts, partnership firms, Hindu United Families (HUF), etc. The following documents must also be prepared in addition to or in place of those mentioned above. Once you have the necessary paperwork on hand, you can open a mutual fund account and select a fund that matches your risk tolerance and financial objectives. 6. Canceled blank cheque Contrary to the past, there is no longer a need to provide a blank canceled check. Still, it's preferable to present a canceled check if you want to simplify your SIPs. This will provide your fund house access to your account number, MICR code, and IFSC code, as well as allow you to swiftly issue an Electronic Clearing System (ECS) to your bank. If you are investing in mutual funds online, you do not need to provide a voided check. Investing in mutual funds on EduFund App Compared to offline investment, online investing will be much faster and easier. By downloading the App, you may select a mutual fund that fits your aims. You can invest in over 4000 mutual funds and personally designed EduCases to create the corpus you need for your child’s future. When the OTP is ready, enter the necessary data and wait for it to appear on your registered cellphone number. You may then input the amount and select whether you want to invest via SIP or lump sum after that. Using your UPI ID or internet banking are your two choices for completing the transaction. This is common practice for the majority of fund companies. If you wish to invest in a couple of each fund house's programs, you must register on their websites. You can invest in a variety of mutual fund plans from several asset management firms all in one place on the  EduFund App. You can make small investments like Rs. 100, 500, or 2000 in lumpsum or SIP orders. Additionally, you may consult financial professionals through the app, who can direct you toward the best investment opportunities based on your risk tolerance and investing philosophy. Factors to consider before investing in mutual funds As you start making mutual fund investments, you must strictly monitor the following: When investing in mutual funds, you must rigorously take your risk tolerance into account. For instance, it is suggested that you start with investing in debt mutual funds since they carry less risk if you cannot afford to incur much risk with your assets. On the other hand, equities mutual funds should be your pick if you have larger risk tolerance. When investing in mutual funds, it's crucial to take your acceptable investment horizon into account. Consider investing in long-term equity funds, which produce larger returns over the long run.  If your objective is to save for your retirement level of risk appetite will directly affect the results of your mutual fund investments. It has been shown that a larger risk appetite will often result in higher returns. Since its inception, the mutual fund industry has made a concerted effort to draw in more investors. It used to be a tedious procedure to finish the paperwork for mutual fund investments, and you had to visit an AMC or RTA office to do your KYC. But all of these annoyances have been eliminated owing to the development of technology. TALK TO AN EXPERT

What makes a good investment option? Many components could affect your investment decision, like liquidity, size of the investment, goal of investment, the horizon of investment, etc. Top 10 investment ideas for child education 1. Direct stock investment Passive investing may not be everyone's fit, as it is a risky type of asset with no certainty of profit. In addition, it is not only tricky to select the appropriate stock but also difficult to time your entry and exit. The only bright spot is that stocks have been able to outperform all other asset classes in terms of asset price returns for a long time. 2. Equity mutual funds Equity investors primarily invest in stocks. An equity mutual fund scheme should invest a minimum of 65% of its assets in equities and equity derivatives as per the Securities and Exchange Act of India (Sebi) Mutual Fund Rules. An investment company can be controlled directly or indirectly. 3. Debt mutual funds Debt mutual funds are suitable for low-risk or risk-averse investors. Bond/Debt funds generally invest in fixed-income asset classes such as government bonds, corporate debt, treasury bills (T-bills), as well as other alternative investments. The returns are easy to predict, and the investment does not face much volatility. 4. National pension scheme (NPS) The Pension Capital Market Development Authority administers the National Pension Scheme (NPS) and Long Term Investment Program for Pensioners (PFRDA). The annual payment required to keep the NPS Tier-1 fund active has been reduced from Rs 6,000 to Rs 1,000. It consists of a combination of stocks, certificates of deposit, debt securities, liquid money, and public money, among others. You can decide on how much risk you want to factor into your risk tolerance overall. 5. Public Provident Fund (PPF) Since PPFs have a maturity of 15 years, the effect of compounding tax-free interest is significant, especially in later years. In addition, since a state guarantee secures the returns and investing money, it is a safe investment. It is worth recalling that the government reviews the interest rate on the PPF every quarter. Additional read: Mutual funds for child education 6. Fixed Deposits with the bank (FDs) In India, a fixed deposit (FD) account is considered a better investment option than an equity or mutual fund. Effective February 4, 2020, every depositor in the bank is covered up to a total of 5 lakh rupees for both principal and interest as per the guidelines of the Bank Protection and Credit Guarantee Corporation (DICGC). 7. Senior citizens savings plan (SCSS) Senior Citizens' Saving Scheme (SCSS) is a government-backed pension scheme. Senior citizens resident in India can invest a lump sum in the scheme, individually or jointly, and access regular income along with tax benefits. Any person over 60 can apply for SCSS through a postal or commercial bank. SCSS has 5 periods which can be extended for another 3 years if the program develops. The total capital limit is Rs 15 lakh, and many accounts can be opened. SCSS money is taxed and billed on a fixed schedule. It should be mentioned that the property interest rate is subject to frequent reviews and adjustments. Additional read: Best sip plans for child education 8. Pradhan Mantri Vaya Vandana Yo PMVVY is a program for older adults age 65 and over that guarantees a 7.4% annual return. The scheme provides pension contributions which can usually be paid monthly, quarterly, or annually depending on the option chosen. The lowest pension payment is Rs 1000 per month, and the highest retirement payment is Rs 9250 every month. The plan allows a total investment of 15 lakhs. The program is valid for 10 years. The validity of program is valid until March 31, 2023. The invested amount will be returned to the elderly person when he becomes elderly. The amount will be issued to the applicant in the event of the death of the senior citizen. 9. Real Estate The place you live in is for personal use and would never be considered a business. If you don't really plan to live there, the family property you are buying can serve as an investment. The location is one of the most critical aspects in determining the value of a home, along with the rental income it can generate. Real estate investments provide profits in 2 directions: holding value and rental income. Besides, real estate investments are costly compared to other investment vehicles. Another significant risk is obtaining adequate regulatory approvals, which has largely been resolved since the arrival of the Real Estate Investment Authority. 10. Gold investment Owning gold in ornaments creates its own problems, including increased efficiency and lower costs. Then there are "production fees", which typically range from 6% to 14% of the gold price. People who want to get digital gold still have a better choice as these charges are not applicable to digital gold. Conclusion There are numerous investment options are available in the financial world. But which one suits your profile is the question. The equity mutual fund scheme as an asset class has outperformed all the other classes and if you want to invest in digital gold or mutual funds, but do not have any idea, how to choose the fund. Then, you can schedule a call with the EduFund advisory team. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Children's fund programs are a form of mutual fund with specific goals related to children. They can also be termed plans to solve the rising cost of children's education and other necessary expenses. The best mutual fund for a child's education usually invests in equity and debt-related securities.  However, investors can also choose between higher debt and higher equity investments according to their individual preferences and risk appetite. Children's funds come with a minimum 5-year lock-in period and can be extended until the child becomes an adult. These are long-term investment options, and holding investments even during market fluctuations ensures higher returns than liquidating funds during a market downturn. What is a children's gift mutual fund? Child gift funds are mutual fund plans that provide financial benefits to your children for things like wedding expenses, future school fees, etc. This leads to long-term capital growth and is classified as Hybrid Fund or Balanced Mutual Fund. Gift funds invest in equity and debt asset classes. Fixed income securities are the type of debt instrument, while stocks are the type of equity. Purpose of the children's fund The primary purpose of the children’s fund is to provide financial support for the child’s future if they want to pursue higher studies abroad or in India. A mutual fund ensures that parents do not compromise on their child’s growth due to a lack of funds. A child plan fund is a better option compared to an education loan. With them, you can get the maximum and guaranteed return on the money you invest. Parents can opt for a minimum of five years or more extended lock-in period for the funds until their child turns 18. And if an investor is considering liquidating a child plan mutual fund before the minimum lock-in period of five years, then the fund can charge a penalty of up to 4%. Who should invest in a children’s fund? A child plan fund is ideal for those looking for a long-term investment primarily to save for child-related expenses. Even those who do not want to get involved in schemes with huge risks and want good returns can invest in children's mutual funds. Most mutual funds with a child plan are customizable, which offers additional relief to investors. When a child crosses the age of 18, authorization can be given through the KYC process from the financial institution. Additional read: Dollar to rupee investing Best mutual funds for child education 1. SBI Magnum Children’s Benefit Fund  The fund is an Aggressive Hybrid Mutual Fund Plan. It is a mid-sized fund in its category, with assets under management (AUM) of Rs 151 crore as on June 30, 2021. The fund has an expense ratio is 0.82%, which is comparable to the expense ratio charged by most other Aggressive Hybrid funds. 2. UTI CCF Investment Plan The fund has a market cap of Rs 504.40 crore. The UTI CCF investment plan is benchmarked against the flagship CRISIL Balanced Fund - Aggressive Index as well as NIFTY 50 - TRI and NIFTY 500. 3. HDFC Children's Gift Fund This is a mid-cap fund in its category with assets under management (AUM) of ₹ 4,667 crores. The fund's expense ratio is 1.04%. The fund now has a 67.10% equity allocation and a 19.07% debt allocation. 4. Axis Children Gift Fund - No Lock-in This is a children's fund focused on Axis mutual fund solutions. It has a market cap of Rs 607.91 crore. Nifty 50 (TRI) index is used as the primary index, and NIFTY 50 Hybrid Composite Debt 65:35. 5. LIC MF Children Fund  The fund has an expense ratio of 1.89%, which is higher than the category average of balanced hybrid funds. The fund currently holds an equity allocation of 88.16% and a debt exposure of 10.87%. The returns of LIC MF Direct-Growth Fund Children's Gift Fund for the last year were 33.91%. Why should you consider child education mutual funds?  Choose an investment option that can beat inflation over a long-term period. Always consider investing your money as per your risk appetite to build a fund for your child's college education. If you want to save money for your child's higher education and you have a longer horizon to save, then equity mutual funds are a good choice. Investing in mutual funds over time provides much better returns than any other type of savings. Returns are better if the time horizon is longer. Conclusion Irrespective of the fund you choose, there is no alternative to starting early. In addition to several advantages, the long-term horizon enables maximum returns from equity mutual funds while mitigating the risks of market volatility. Additionally, consider increasing the SIP amount yearly for a healthy corpus to fund your child's education. Note: All funds mentioned in the article are Direct mutual funds Consult an expert advisor to get the right plan TALK TO AN EXPERT

Trying to figure out the average cost of sending your child for MS to the US? The cost of studying MS in the US comes to a total of about ₹76 lakhs - 1.1 crores. The total cost of completing an MS in the United States is constituted of both tuition fees and living expenses. Overview of costs of studying MS in the US The cost of an MS in the United States for Indian students throughout the program, including expenses made in India and the United States, is detailed below: Factors/ParameterAmount (in INR)GRE₹17,000TOEFL₹15,000Applications₹70,000 - 1,20,000Other Expenses During Applications₹10,000 - 15,000VISA Fee₹13,100SEVIS Fee₹17,600Airfares (one-way)₹90,000 - 1,20,000Tuition Fee₹65,00,000 - 90,00,000Living Expenses₹9,00,000 - ₹20,00,000Total₹76 lakhs - 1.1 crores These figures were calculated using a variety of assumptions, and individual costs may change. We have just summarised a few significant costs to estimate the average cost of studying abroad, focusing on the price of an MS in the US. How to save for your child’s MS in the US Here are several financial planning techniques that parents can employ to lessen the stress and increase the productivity of their child's MS in the US. By following these guidelines, you can help your child achieve their goals while also safeguarding your long-term financial stability. 1. Think about long-term financial planning before you start An early start to planning is crucial. Plans for your child's international education should be started as soon as possible. As a parent, you may need to make some sacrifices right now, so start analyzing your spending habits and cutting back on unnecessary expenses. Regularly set aside funds for your child's education. Additionally, consider other saving and investment choices. You must account for the greater cost of living in the US and incorporate this element into your plan from the start. 2. Keep exchange rates and inflation in mind For many years, the US dollar has consistently ranked among the strongest currencies in the world, with nearly all other currencies gradually depreciating in comparison to it. You should expect that your currency will also experience this in the future. No matter when you plan to send your child to the US for education, you must factor in inflation in your country and potential currency depreciation in your budget. By taking inflation and exchange rates into account, the EduFund College Cost Calculator may assist you in determining the average total cost you will need to send your child to the US for MS. Longer periods provide you more freedom to invest in risky assets like stock, which might help you in the long term to fight off the effects of inflation and fluctuation in exchange rates. 3. Find the most suited investment options Even though your child's journey to the US won't happen for several years, you might not be able to meet all of your child's future expenses by merely setting up an education fund with your current regular pay. Future living expenses will undoubtedly rise from current levels. If you want to decrease the impact of these possibly higher costs, you need to start looking for additional sources of funding straight away that are separate from your (and your partner's) salary income. As a result, you ought to research potential medium and long-term investment options that you may start pursuing right away. Recognize your ability for risk-taking and adjust your investments accordingly. In your hunt for mutual fund-based Systematic Investment Plans (SIP), academic investments, or savings plans particularly created for your child's MS in the US, EduFund’s financial experts can help. 4. Consult a specialist before investing or studying abroad The process of getting ready for education abroad is scary to the majority of people. Even if you start early, create a budget and a costing plan, and research the various investment options, you could still feel entirely unprepared despite having an action plan and strategy in place. If you're having trouble, talking to a professional can be a smart idea. With the help of our investment advisors and study abroad specialists, you may examine your options and develop a more detailed and useful approach. You might even come across fresh options that you weren't aware of or hadn't thought of before. Conclusion The practical costs of sending your child to the US for a master's degree in science can be confusing, but with systematic planning and a realistic outlook, you and your child can both gain over time from pursuing this desired goal. EduFund’s financial experts are constantly available for any assistance or advice you need. Consult an expert advisor to get the right plan TALK TO AN EXPERT

This Diwali, you might be receiving some bonuses. Well, let's invest and grow it. There are many categories of mutual funds, from equity to debt & hybrid. But there is one more category that invests in other funds/mutual funds schemes. These funds are known as Fund of Funds (FoFs) Important points before investing in FOF this Diwali 1. Types of FoFs Fund of Funds (FoFs) not only invest in international funds but also invest in domestic funds. Below are some categories of funds available in India for investment. International FoFs: These funds invest your money in mutual funds schemes offered by foreign companies. For example, Franklin India Feeder Franklin US Opportunities Direct-Fund Growth. This fund invests in Franklin U. S. Opportunities Fund, an overseas Franklin Templeton mutual fund that invests in securities in the United States of America. ETF FoFs: These funds invest your money in ETFs (Exchange Traded Funds). An ETF invests in the Index of stocks, bonds, commodities and gold. To match the performance of the Index, subject to tracking error. For example, Motilal Oswal Nasdaq 100 FoF. This fund invests in units of Motilal Nasdaq 100 ETF, which invest in companies of Nasdaq 100 in the same proportion, to deliver index-like returns, subject to tracking error. Gold FoFs: These funds primarily invest in gold funds and can also invest in gold or stocks of companies involved in gold mining. For example, Axis Gold Fund and Kotak Gold Fund. Asset Allocation FoFs: These funds invest in multi-asset classes like equity, debt, gold and commodities, etc. For example, ICICI Prudential Asset Allocator Fund (FoF) Direct Plan-Growth. 2. High expense ratio These categories of funds can charge a high expense ratio as the expenditure on these funds could be high, which is charged in the form of an expense ratio from the investors. One should always look for the expense ratio charges by the fund. 3. Offers diversification These funds offer good diversification. Diversification can be in multiple funds or multiple asset classes, etc. But sometimes, investing in these funds could lead to over-diversification of the portfolio, which might hamper the portfolio's performance.  4. Moderately risky With the quality of diversification, the fund's risk falls under the moderate risk category. As these funds invest in multiple funds, the fund's risk is balanced out. Let's say, in the case of multi-asset fof, if one asset class underperformed but another asset class outperformed, then the overall portfolio balanced out. 5. Taxation FoFs are considered debt funds, irrespective of the type of funds they invest in.  If you sell FoF mutual fund units before 3 years from the date of investment, then it will be treated as Short-Term Capital Gain (STCG) and will be taxed as per your income tax slab. If you sell FoF mutual fund units after 3 years from the date of investment, then it will be treated as Long-Term Capital Gain (LTCG) and will be taxed at 20% flat with the benefit of indexation. Conclusion Before investing in FoFs, always first look for the holdings in which the fund is investing and then other factors that we discussed in this blog. You can also download the EduFund app. Check your risk appetite and invest accordingly. FAQs Is investing in a fund of funds good? Fund of Funds (FoF) is a good investment choice for investors who do not need liquid funds immediately. However, the downside of investing in FoF is the expense ratio. What is the difference between FOF and MF? Mutual funds invest in different equity and debt instruments. They invest in a company's stocks and debt papers on behalf of their investors. The FoF invests in other mutual funds. What are the disadvantages of fund of funds? The biggest disadvantage of fund of funds is the management fees or the expense ratio.

Building wealth in today's world is everyone's dream. If you are planning to invest for long-term financial goals, then equity mutual funds are the best option to opt for as they have and can outperform many other asset classes like gold, fixed deposits (FDs), etc., over a long period. However, equity mutual funds can be unpredictable in a short duration. But if you remain invested for longer, it delivers good returns. There are many strategies to build wealth, but there's no fixed formula for it. Invest in Mutual Funds Steps to create wealth by investing through mutual funds 1. Define goals and horizons  When you want to create wealth, always set an achievable target and time horizon. This process will make your investment journey realistic and manageable. Everyone has financial goals such as retirement, a child's higher education, a house, etc. If we set a target amount for each goal and the time to achieve them, then the process of wealth creation will become effortless. Your financial goals should be S.M.A.R.T., i.e. specific, measurable, achievable, realistic, and time-bound. https://www.youtube.com/watch?v=uYlrsx9_yog 2. Invest as per risk appetite Calculate your risk appetite using a questionnaire; many are available on the internet. See under which category you fall, whether it is a high risk, average risk, low risk, etc. Then accordingly, choose your asset class to invest in. Don't fall for attractive or high returns; remember, high returns come with high risk. Every mutual fund serves different purposes and has different risks that can be measured. Invest in High Dividend Mutual Funds Read More 3. Identify funds After setting goals and calculating your risk appetite, identify funds to invest in. Do proper research to select suitable funds to meet your goals and objectives. If you don't know how to evaluate mutual funds, consider getting help from the experts because a wrong decision might lead to lower returns than anticipated. There are various categories of mutual funds available in the market, and not every fund suits your requirements, so do proper research and then select the right one. https://www.youtube.com/shorts/zNJA1PbawD0 4. Create a focused portfolio After selecting the funds, create a focused portfolio for each goal. It will help you track your funds' progress towards your financial goals. While creating a focused portfolio, consider some essential points like giving your portfolio proper diversification, including multiple asset classes if required, etc. Also, remember quality over quantity while creating your portfolio. How to Track Mutual Fund Performance? Read More 5. Regular investment through S.I.P  Consider investing regularly in these funds to make your investments more affordable and disciplined. S.I.P. (Systematic Investment Plan) helps you to give the option to invest in a small amount regularly, which could be done weekly, monthly, quarterly, or yearly. Regular investing will make your portfolio grow more stable as you will buy mutual fund units at higher and lower prices. The best advantage of investing through S.I.P. is cost averaging. Start SIP Investment 6. Make a lumpsum investment Try to make a lumpsum investment whenever possible, like when you get bonuses or profits. This way, you can achieve your goals before the target date. Let's understand this with an example, suppose you are investing Rs 15,000/month for ten years, and the expected growth rate is 13% annually. The wealth you will be accumulating is Rs 37 lakhs, but after one year, if you put a lumpsum of Rs 50,000/-, then you will be able to accumulate the same amount in ten years, or you can accumulate Rs 39 lakhs after ten years. FAQs Are mutual funds a good idea in 2023? Yes, mutual funds can be a good idea in 2023 for building wealth. They offer diversification, professional management, and the potential for long-term growth. However, it's important to choose funds that align with your financial goals and risk tolerance. What investment strategies do you have going into 2023? In 2023, consider a balanced approach to investing, including a mix of equity and fixed-income mutual funds. Diversify your portfolio, focus on long-term goals, and regularly review and adjust your investments to stay aligned with your financial objectives and risk tolerance. When should you exit the mutual fund? You should consider exiting a mutual fund when your financial goals change, the fund's performance consistently underperforms, or you need to rebalance your portfolio to maintain your desired asset allocation. Always review your investments periodically to make informed decisions. What is the best investing strategy? The best investing strategy depends on your financial goals, risk tolerance, and time horizon. Diversification, long-term focus, and periodic portfolio review are generally solid principles to follow. Consider seeking advice from a financial advisor to tailor a strategy that suits your specific needs.

If you want to become financially secure, it is extremely important to set short-term, mid-term, and long-term financial goals. Even if you plan everything, you cannot be fully prepared for a crisis that may come up anytime. The unexpected bills are the main reasons that affect our financial goals.   Ways to set financial goals 1. Establish a budget  Determining a particular amount of budget is the first and most important thing. You should have a clear idea of where you stand and how you can proceed forward. Money tends to slip through the cracks in the pockets of individuals. You can download an app that can track all of your expenses. Moreover, you need to have the information from all of your accounts in one single place so that you can conduct a proper analysis of the same.   In due course of time, you will realize that the small spending that you do in the canteen every day might add up to a considerable amount. Once you get an idea of how you spend, you will be able to track and save your expenses.  Create Smart Education Goals 2. Categorize your financial goals Proper categorization of your financial goals will help you target your orders. This should be the basic rule when you are proceeding toward your financial goals. It should be broadly divided into short-term, mid-term, and long-term financial goals. When you are setting up your long-term goal, you need to keep in mind all the targets that you have for the short term.   Start by listing all of your routine non-negotiable expenses that are involved. The amount that is left after all the expenses are over goes for investment. You have to make sure that you have set down the goals with an estimate of their costs. Make wise decisions when you are choosing different investment options. For this, you will have to figure out the amount that you need to keep aside monthly for investment. Additional read: Financial mistakes to avoid 3. Deadline for each goal When you have set the categories of different types of financial goals, start setting deadlines for each of them. Long-term financial planning should be followed religiously. There can be minor changes that can be made to short-term goals. Suppose you have a child who will start going to college by 2035, then you should start saving and investing accordingly with a deadline in mind. When the deadline arrives, you must be ready with the funds that will be required for your college education.   Next, if you plan to take a trip to your favorite luxurious destination, start saving and investing with a specific deadline that has to be followed at all costs. You can keep a tab on all the deadlines through a financial goals worksheet. It will also help you to analyze your dates from time to time. 4. Prioritizing all types of financial goals  With all the types of financial goals queued up, you need to start prioritizing all types of financial goals. If a situation of urgency is created, you would know which goal has to be prioritized first. Moreover, label each goal on your worksheet as need, critical, and want. This will create a distinct difference between the types of priorities that you keep for your finances. 5. Clear off your debts and build an emergency fund  Clearing off your debts will help a lot to streamline your entire financial planning. First and foremost, take a look at all of your existing debts. Make a proper plan for it and clear it off as soon as possible. Once that has been done, you can start creating your emergency fund. Your emergency fund should contain at least 12 to 24 months of your living expenses which will include your loan EMI as well. Make sure that you dip into your emergency fund only if it is extremely necessary. It can prove to be extremely counterproductive on your part if you set aside this fund completely. FAQs Why is setting financial goals important? Setting financial goals is crucial for achieving financial security and planning for unforeseen financial crises. How can I track my expenses effectively? You can track expenses by using budgeting apps that consolidate your accounts and analyze your spending patterns. Why should I categorize my financial goals? Categorizing goals into short-term, mid-term, and long-term helps you allocate resources efficiently and plan for each type of goal. How can I set deadlines for my financial goals? Establish deadlines by considering the nature of each goal and your specific target, ensuring timely savings and investments. Why is prioritizing financial goals important? Prioritization helps you identify which goals to focus on first, and labeling them as "need," "critical," or "want" clarifies their importance in your financial plan.

Rising inflation is eating your money. If you don't park your savings in a suitable asset class that can beat inflation, then with time, the value of your savings decreases. Basically, with time, the value of the currency decreases. For example, in 2002, you could buy 20 apples for Rs 100, but in 2022, you can only buy two apples for the same Rs 100. So, you must put your savings in a suitable asset class to beat inflation.  Saving as a parent is essential for your child's future needs. Not only to fulfill the child's needs but also to maintain and upgrade the quality of living. Almost every parent wants to save for their children, but some fail to do that. The reasons could be that they cannot save enough, don't know where to put all their savings, etc. In this topic, we'll explain how parents can save through SIP investment. How does SIP work? SIP stands for Systematic Investment Plan, a financial tool to invest a fixed amount regularly in a mutual fund scheme. Investing regularly gives you the benefit of rupee cost averaging. This means that you buy at a low and high price and the overall cost of buying averages out. With the SIP, you don't need to time the market. How can SIP investment help parents to save? Parents can do the proper planning for their child's higher education and marriage. A financial plan will help them know how much to save for a specific goal and the amount required to save on a monthly basis to achieve the desired target. Putting a lumpsum amount for any specific goal may be a difficult task. But saving monthly could make it easy. SIP investment gives you the option to save as low as Rs 100. So, you can save and invest with Rs 100 only. With an example, let's see how much you need to save as lumpsum and as SIP for your child's higher education. Let's assume your child's age is one year old, and you want to send your kid for an MBA from IIM Ahmedabad. So, technically you have almost 20 years to save. The present cost of attending a master's degree from IIM Ahmedabad is Rs 30 Lac. And after 20 years, it might cost you Rs 1 Crore, assuming an inflation of 7% annually. Let's see how much you need to save as lumpsum and as SIP for your child's higher education. If you look at the table below, you can see that you only need to save Rs 10,000/month for your target, whereas if you want to invest a lumpsum amount, you need Rs 9 Lac for the same target. That's how SIP investment helps your little money to grow over the period and helps you to achieve the desired target. Investing through SIP can make your investment journey more affordable and efficient. Monthly SIP AmountTotal Amount InvestedAccumulated Amount ₹10,000 ₹ 24,00,000 ₹1,03,84,852Note: The calculation is done for 240 months.Source: EduFund Research Team Calculate Investment Returns Lumpsum Amount RequiredTotal Amount InvestedAccumulated Amount ₹9,00,000 ₹ 9,00,000 ₹1,03,33,790Note: The calculation is done for 240 months.Source: EduFund Research Team Conclusion: Investing through SIP can help parents by saving little money to make a large corpus. SIP has been the most effective way of saving and investing. FAQs Can I invest in SIP for my child? Yes, you can invest in SIP (Systematic Investment Plan) for your child's future. It's a smart way to save and build wealth for their education, milestones, or financial security. Just ensure you choose the right mutual funds and set up the SIP in your child's name or as a guardian. At what age should I start SIP? You can start a SIP (Systematic Investment Plan) at any age. The earlier you begin, the more time your investments have to grow, potentially leading to better financial outcomes. Starting in your early 20s or as soon as you have the means is generally advisable. How do I start SIP for my child? To start a SIP for your child, follow these steps: Choose suitable mutual funds. Approach a mutual fund company or a financial institution. Complete the required documentation. Open an account in your child's name or as a guardian. Set the SIP amount and frequency. Link your bank account for automatic payments. Is SIP good for child education? Yes, SIP (Systematic Investment Plan) is an excellent way to save for your child's education. It allows you to invest regularly, potentially building a substantial fund by the time your child needs it for higher education expenses.

What is a Balanced Advantage Fund? A balanced advantage fund is a fund that can invest 0-100% in the equity market or 0-100% in the debt market dynamically as per the prevailing market condition. For example - If a fund manager finds that the price of the equity market has gone up, he will tilt the portfolio more toward the debt market. Likewise, if the equity market trades at a discount, then the fund manager can tilt/shift the portfolio toward the equity market.  The valuation is the internal process of the fund. Based on valuation, the fund manager can take the call. This way, the fund manager can take the opportunity and change the asset allocation. The fund manager can go aggressive in the equity market or can also decide to play conservatively to reduce the portfolio's volatility. The aim is to minimize the portfolio's downside risk and maximize the returns.  Who should invest? Investors who are looking for long-term wealth creation. Investors who are not comfortable with the market volatility. Investors who do not want to face high volatility and looking for equity-like returns. Investors who are unsure which type of fund they should invest in, whether in the equity or debt-oriented fund. Risk-averse equity investors with an investment horizon of more than three years. Additional read: Financial mistakes to avoid Why should you invest? A balanced advantage fund is a dynamically rebalancing fund between two asset classes, i.e. equity and debt. It has the complete flexibility of rebalancing from 0-100% in both asset classes. It provides you with better risk-adjusted returns. It manages the equity market volatility and provides stability in the portfolio by diversifying the portfolio into the debt market. It offers you equity-like returns, which help your portfolio to grow at a much faster rate than debt funds and also helps you to beat inflation. Minimizes the downside risk and provides scope for growth by investing in the equity market. When should you invest? When the volatility in the equity market increases you do not want to have such high exposure to the prevailing volatility. When you want equity-like returns but do not want to face high liquidity. First-time mutual fund investor looking for long-term wealth creation. Conclusion Try to allocate some portion of your portfolio towards a balanced advantage fund if you want to reduce the portfolio's volatility. A balanced advantage fund is like a season fund. FAQs What is a Balanced Advantage Fund? A Balanced Advantage Fund can dynamically invest 0-100% in either the equity or debt market, depending on market conditions. Who should consider investing in Balanced Advantage Funds? Investors seeking long-term wealth creation, those uncomfortable with market volatility, and those unsure about equity or debt-oriented funds can benefit. Why invest in Balanced Advantage Funds? These funds offer flexible asset allocation, better risk-adjusted returns, and stability by diversifying into the debt market. They provide equity-like returns, growth potential, and risk mitigation. When is the ideal time to invest in Balanced Advantage Funds? Consider these funds when equity market volatility increases, and you want equity-like returns without excessive risk. What is the aim of Balanced Advantage Funds? The aim is to minimize portfolio downside risk, maximize returns, and adapt to market conditions, providing both stability and growth.

A target maturity fund is a fund category with a fixed maturity date. As the maturity date gets closer, the maturity value decreases to zero, and the fund ends its existence. The maturity date of these funds is typically marked in the framework name. The regularity of target maturity funds' returns distinguishes them. Investors who maintain these funds until maturity hope for returns connected to the indicative yields when invested. Returns on target maturity debt funds According to several fund strategists and fund planners, the emergence of bond yields will likely offer the chance for wealthy investors to acquire a 6.5% return in target maturity strategies within the next five years. They genuinely think investing in a combination of such strategies that mature between 2026 and 2028 will provide investors with superior risk-adjusted returns. Target maturity funds provide investors with a predictable return if held until maturity. Such schemes have set maturity and engage passively in bonds with related maturities, which serve as the fund's market portfolio and provide visibility of returns. When the fund matures, investors receive their investment proceeds back. They have occasional liquidity because they are open-ended, and venture capitalists can purchase and sell them at Net Asset Value (NAV). The expense ratio in direct plans is 15-20 basis points and 30-40% points in regular programs, reducing the cost for venture capitalists. Investment advisors recommend target maturity funds because speculators have been having difficulties with their fixed-income investment portfolio over the last year, as bond yields have risen by 142 basis points, weakening the rate of return. Additional read: How to start investing in mutual funds? Target maturity funds are more tax-efficient With increasing and decreasing interest rates on assured financial products, numerous risk-averse speculators, who previously invested in product lines such as financial institution fixed deposits, PPFs, and NSCs, have shifted to debt funds for understandable reasons.  According to these investors, debt funds have become less volatile than general equity funds and much more tax-efficient than fixed deposits, PPFs, and NSCs, with the potential for higher returns.  However, investors are still vulnerable to the risk of default, which is the possibility of losing interest and principal payments, as well as interest rate risk, which is the risk of price volatility due to interest rate changes. TMFs offer greater liquidity than FMPs Target maturity funds (TMFs) assist investors in better exploring the risks linked to debt funds by integrating their investment portfolio with the fund's maturity date.  All those are debt funds that passively measure an underpinning bond index. Thereby, such funds' investment strategy consists of bonds that are a component of the total bond portfolio, with maturities that are close to the fund's outlined maturity. All investment returns obtained during the holding period are invested back in the fund, and the bonds in the investment are retained to maturity.  Target Maturity bond funds, like FMPs (Fixed Maturity Plans), continue operating in an accrual mode. TMFs, unlike FMPs, are open-ended and are available as target-maturity debt index funds. As a result, TMFs provide more liquidity than FMPs. TMFs have a uniform portfolio in terms of duration because all of the bonds in the fund's portfolio are deemed to be maturing as the stated maturity of the fund. The fund's duration decreases over time by holding the bonds until maturity, making investors less vulnerable to price volatility induced by shifts in interest rates Additional read: What are offshore funds? Strong interest in target maturity funds Investors have shown a strong interest in Target Maturity Funds, with maturities ranging from 2026 to 2027. Financial planners recommend this maturity portion to investors for tax indexation and optimal yields. These maturities offer yields ranging from 7.48% to 7.55%. Beyond these maturities, such as 2028 and 2029, the market is relatively illiquid. Passively-managed target maturity funds The portfolio of passively managed target maturity funds is well-known because it is linked to an index of bonds of investment promotion loans, government securities, or a composite index of the two. There is also greater return predictability because the fund aims to provide returns closer to the index's yield to maturity if the investor holds the fund until maturity. Mutual funds have initiated further index-based goal maturity funds, as all ETFs may not generate enough liquidity on stock exchanges, resulting in wider deviations between the executed price and the ETF's intraday NAV (iNav). The new SEBI regulations for passive funds aim to increase retained until maturity because they provide some predictive ability of return, which is liquidity for ETFs on exchanges by stating that no transaction under Rs 25 crore could be sorted directly with the AMC. All such transactions must go through exchanges. SEBI also wants to grow the economic ecosystem by rewarding market-makers who will provide liquidity for ETFs. Conclusion Target Maturity Funds must ideally be important for investors transitioning from long-established deposit accounts to debt funds. FAQs What are Target Maturity Funds, and how do they work? Target Maturity Funds, also known as Target Date Funds, are investment funds designed to align with an investor's target retirement date. They automatically adjust their asset allocation over time, becoming more conservative as the target date approaches. How do Target Maturity Funds choose their investments? Target Maturity Funds typically invest in a mix of stocks, bonds, and cash equivalents. The asset allocation is determined by the fund manager and adjusts over time to reduce risk as the target date nears. What's the primary benefit of investing in Target Maturity Funds? Target Maturity Funds provide a convenient, hands-off approach to investing for retirement. They automatically rebalance to manage risk, making them suitable for investors who prefer a set-and-forget strategy. Can I invest in a Target Maturity Fund for a different financial goal, not just retirement? While they're primarily designed for retirement, some investors use them for other financial goals. However, it's essential to understand that the fund's asset allocation will still follow the specified target date strategy. What happens when a Target Maturity Fund reaches its target date? When a Target Maturity Fund reaches its target date, it typically becomes more conservative, shifting towards income-generating assets. Investors can choose to redeem their shares or reinvest in a new fund.

According to a Times of India survey, single mothers head 4.5% of Indian households. Moreover, over 7% of parents are single and solely responsible for their child’s expenses. With education inflation pushing the cost of education over the roof, here is how single parents can save for higher education so that their child’s future is secure.   1. Proper budgeting  First tip on how single parents can save for higher education is Budgeting! It is extremely important for both the parent and the child. Your finances may suffer if you do not keep a track of when and where are you spending. Moreover, if you follow proper budgeting then it will help you track your monthly cash flow and analyze where you need to spend less.   You should set aside money for all your necessities as soon as you get your monthly amount. You must remember that if you follow proper budgeting and start saving early, it will help you gather a good corpus for your child.  2. Budget child expenses  The second tip is a tip on how single parents can save for higher education by budgeting child expenses! It’s important to track your child’s expenses as well. As a parent, you want to give the best to your child but it should not be beyond your monetary means. If you are a single parent responsible for pick and drop then try carpooling! Try to cut back on expenses where you can save and ensure your child gets the best of opportunities!    If you are choosing a school for your child, make sure that you make a list of them and then choose the one which provides good education and which fits your budget. Do not go for high-end schools just for the sake of the name. Make sure it’s in the neighborhood so that you don’t have to spend more money on transportation and your child can get home sooner to relax!  3. Create an emergency fund  The third tip is tip of how single parents can save for higher education is by creating an emergency fund! Emergency funds prove to be extremely handy in certain situations. If an unexpected circumstance comes up, it might as well take away all your savings which will be detrimental to your financial planning. Hence, you should focus on gathering an emergency fund for you and your child which should cover 12 to 24 months of living expenditure. It should also include loan EMIs. You have to be vigilant enough regarding any event which may come up and suck your savings. Make sure that you use this amount wisely and constructively.  You can build up an emergency fund in just three steps:  Decide the Size of the Emergency Fund  The thumb rule to generate an emergency fund is to focus on saving a corpus amount that can cover your expenses for more than 6 to 12 months.  Identify Highly Liquid Savings Product  Some of the common options for creating a contingency fund will include liquid or money market funds, short-term debt funds, savings bank accounts, floating rate funds, and so on.  Proper Financial Planning  In the final step, you have to make sure that you set aside a portion of your monthly income for generating this emergency fund. You should go for an automated procedure by setting up a SIP in a liquid fund or alternative debt fund.  4. Establish bank limits  Another tip is to set bank and credit card limits! Avoiding debt is the initial basic step that is crucial for saving up for your child. Next, you need to make sure that you are not spending more than what is required. For this purpose, you can set a limitation on your bank account. In such a scenario, you need to have a proper discussion with your child over the needs and the expenses involved.   The discussion should be candid or transparent with proper financial concerns, boundaries, and needs.   5. Invest wisely  The last tip is a tip on how single parents can save for higher education is to invest wisely. Investing in wise options is quite essential for single parents. Risk factors can lead to the demolishment of the generated corpus for your child’s education. Hence, you should invest in equity and mutual funds only if you have 10 to 15 years left for your child’s higher education. You can go for public provident funds which assure you a basic amount of interest for the amount that you put in.   There are recurring and fixed deposits in which you will get an interest based on what has been fixed by the bank. Moreover, you have options such as gold ETF where you can invest in gold.   While investing in gold ETF, make sure that you do not invest in the physical form of gold. These investment options will work really well if start with them as early as possible.  FAQs What are some practical strategies for single parents to save for their child's higher education? Single parents can save for higher education by creating a budget, exploring government aid, starting a monthly SIP to save for their child's education, and seeking scholarships and grants. How can single parents balance saving for education with other financial responsibilities? Single parents can strike a balance by setting clear financial goals, creating a budget, and prioritizing saving for education alongside other essential expenses. Can single parents benefit from education-focused scholarships and grants? Yes, many scholarships and grants are available specifically for single parents. Research and apply for these opportunities to help reduce the financial burden of education. How can single parents involve their children in the process of saving for higher education? Single parents can teach their children about financial responsibility and the importance of education by involving them in discussions about saving, setting financial goals, and exploring scholarship opportunities together. Are there community resources or organizations that provide support for single parents saving for higher education? Yes, some community organizations and non-profits offer financial literacy programs and support for single parents seeking to save for their child's education. Research local resources for assistance.

Investing in all asset classes and all categories of investments is not the right way to create your portfolio, especially if you’re starting with a small investment amount. This causes a significant overlapping of assets and over-diversification, leading to reduced and inefficient returns in the portfolio. How can you choose the right investment option that generates returns to help you meet your objectives with reasonable volatility? Do you want to know about the power of diversification? What is diversification? Diversification is the first and the most critical aspect of investing. Diversification is an investment strategy that involves investing in a mix of instruments to reduce risks and maximize portfolio returns. Mutual funds provide the best form of diversification. They offer exposure to multiple assets (stocks or debt) within a single fund. Moreover, there is a mutual fund for every investor with varying risk appetites and investment objectives. Advantages of diversification Diversification itself is one of the advantages of investing in Mutual funds. The main advantages of diversification are: - Minimize risk: Diversification in a portfolio reduces the overall risk of a portfolio. With proper diversification, there is a considerable reduction in the volatility of investment holdings. Creates a cushion: When diversified optimally, your portfolio can efficiently absorb significant, unpredictable market corrections without causing much loss to your portfolio. Better risk-adjusted returns: Diversification is not done to maximize risk solely. For example, if two portfolios generate the same percentage of returns, the diversified portfolio here takes less risk and has low volatility compared to the other portfolio. Compensating effect: The primary purpose of diversification is to prepare for all market conditions. So, when the market is highly volatile, in a well-diversified portfolio, even if one instrument has significant losses, the other instrument (for diversifying) would be chosen in such a way that it still generates returns to a certain extent to compensate for the losses incurred. Additional read: Why you should geographically diversify your portfolio? Why should you diversify? The first rule of investing is that "you should not put all eggs in one basket, " meaning you should not invest all your savings in one instrument. The primary purpose of diversification is that if one investment instrument in your portfolio tanks, the other having a negative correlation may rise, thereby reducing the overall portfolio loss. Common ways of diversification? Asset allocation can happen in several ways. Some common strategies used for portfolio diversification are: - 1. Different asset classes A portfolio should have a good balance between different asset classes as all would have a different impact when the market takes significant turns. For example, to compensate for the volatility seen in equity investments, one can invest in debt-based instruments or gold to hedge market risks. 2. Different instruments You can diversify into different instruments within the same asset class. While investing in equity mutual funds, you could choose between market cap funds like blue chip funds, mid-cap or small-cap funds, or even index funds for proper diversification. 3. International diversification Geographical diversification also helps maximize the portfolio's risk-adjusted returns. Investing in USD can take advantage of the currency movement and hedge over the currency risk. Different and diverse. What is the difference? One common mix-up investors get into is thinking that investing in different mutual funds is equivalent to diversifying. But different doesn’t necessarily mean diversifying. Even if you invest in different funds, those funds may have the same or similar holdings. This causes overlapping of asset allocation in one portfolio. Diversification does not happen when a factor similarly affects the holdings of both funds. Lastly, we’d say that holding a well-diversified portfolio is much better and more beneficial than just being invested in a single asset that is considered to be safe. In the end, just investing and generating returns is not enough. You should ensure that whatever you're saving is being optimally allocated so that your investments generate returns efficiently and effectively. Also, review your investments periodically to check whether or not they are in line with your goals and objectives. FAQs What is diversification? Diversification is an investment strategy that involves investing in a mix of instruments to reduce risks and maximize portfolio returns. Mutual Funds provide the best form of diversification. Why should you diversify? The primary purpose of diversification is that if one investment instrument in your portfolio tanks, the other having a negative correlation may rise, thereby reducing the overall portfolio loss. This strategy can help you minimize risk and protect your overall investment and capital from loss. How can I diversify my portfolio? As an investor, the best way to diversify is to distribute your investments across different asset classes. For example, to compensate for the volatility seen in equity investments, one can invest in debt-based instruments or gold to hedge market risks. A combination of these investments can help you weather the storms of bull and bear markets easily.

Overseas education can open numerous doors of growth and opportunities for a career, but it is expensive and places a huge financial burden on parents who want to send their children to foreign universities.  The covid-19 pandemic, along with other difficulties, has managed to ravage the savings of some parents to a great extent. Moreover, inflation has also led to high education costs, and it has now become difficult to ensure the education dreams of a student without proper financial planning.  If you are short on money for your child’s overseas education and have hit a roadblock, then it is important to look at options that will help in arranging the money. Tips to arrange study abroad funding 1. Installment option on fees Studying abroad is not easy as it requires a huge amount of money to meet numerous expenses. A big chunk of it goes towards the tuition fees, which have to be paid upfront, at least for a full year.  Times have changed, and educational institutes understand the difficulty of arranging bulk amounts to be paid as tuition fees.  Foreign universities are allowing the option of installment payments or deferred payments. If you are short on money for your child’s overseas education, apply for an installment option on tuition fees. Paying fees per semester is affordable compared to the yearly fees as it minimizes the burden on parents to a great extent. Foreign universities are offering financial assistance to students whose families are facing financial difficulties. In some cases, the fees of the student are reduced, and in other cases, the payments are deferred to a doable period so that the money shortfall does not impact the child’s education.  2. Fast-track your studies  Students can fast-track their study courses if they are facing a shortage of money and are unable to meet the educational expenses in full. Most foreign universities have two to three-year programs, which are subdivided into semester formats. Students have to earn a minimum number of credits during this period. When you are short on money, it is not feasible to complete the degree course by attending college for the entire period. Students can enroll for additional credits and complete the program early. This will bring down the education costs and manage the money shortfall.  3. Apply to university alumni for financial aid  Sometimes unforeseen circumstances can deplete the amount of money that the parents have saved for their child’s overseas education. They may have a considerable shortage of funds and may be unable to meet all the education expenses easily. Students can approach the university for financial assistance. Most universities have an alumni network that provides monetary aid to deserving students with exemplary records who are unable to finish their education just because of money shortages. The alumni network evaluates the student’s grades, work experience, past performances, and the reasons for money shortage and, if found satisfactory, compensates by paying the remaining fees.  Some universities have an existing fund for students who are brilliant performers but, due to circumstances, are unable to pay the fees. If the student applies for financial assistance, then the fees in such cases are either reduced or paid by the fund held by the university itself.  4. Select an education loan with care If you are short on money for your child’s overseas education, then a loan is also a viable option. Select the education loan with care. Banks and NBFCs are vital sources of loans; hence check whether any sources are calculating the interest amount on a flat rate basis or on a reducing balance.   Look at the interest rate and consider other factors like repayment tenure, margin amount, and moratorium period as they are equally important. Remember, the interest rate on a reduced amount will be considerably lower than the total loan amount, so choose wisely. The college cost calculator on the EduFund app helps in calculating the future cost of college, which gives parents time to plan and save for their child’s college expenses in the smartest possible way. Financial experts will create an education savings plan that will meet the requirements of a student’s education aspiration. It also offers an option of taking out low-interest education loans with top banks.   Conclusion The desire to educate a child abroad is natural, but it often takes a toll on the parents who find themselves short on money for their child’s overseas education. Planning the expenses in another country with another currency is a task that, if not done properly, can create serious issues later on.  FAQs What are the best ways for Indian students to arrange funding for studying abroad? Indian students can secure funding for studying abroad through scholarships, grants, education loans, part-time jobs, and assistance from family and sponsors. How can Indian students find scholarships for studying abroad? Indian students can search for scholarships through government programs, universities, private organizations, and online scholarship databases. Many countries and universities offer scholarships to international students. Are there specific scholarships available for Indian students to study abroad? Yes, several scholarships, like the Commonwealth Scholarship, Inlaks Scholarship, and Fulbright Scholarship, are specifically available for Indian students pursuing higher education abroad. Can Indian students work part-time while studying abroad to support their education? Yes, many countries permit international students, including Indians, to work part-time during their studies. Students should check the work regulations of the destination country. What are the options for education loans for Indian students planning to study abroad? Indian students can avail of education loans from Indian banks and financial institutions, which offer loans designed for funding higher education abroad. The terms and conditions vary, so research different loan options.