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What is there in the Budget for F.Y. 2024-25? 

What is there in the Budget for F.Y. 2024-25? 

The Union Minister of Finance, Nirmala Sitaraman, presented the interim budget for the F.Y. 2024-25 on 1st Feb. 2024. As expected, the budget did not bring any surprising element as it was an interim budget and a full-fledged budget will be presented after the general elections in July 2024. The following are some of the key highlights from the budget speech and The Finance Bill, 2024.  Key Points Vikasit Bharat by 2047.  Infrastructure Spend – Estimated Capex of Rs. 11.11 Lakh Crores in F.Y. 2024-25 – Highest ever Capex with an increase of 11.1% from F.Y. 2023-24.  A one lakh crore rupees corpus is to be established for today's tech-savvy youth, with a fifty-year interest-free loan to boost private sector research and innovation in emerging fields through long-term financing with low-interest rates.  All ASHA, Anganwadi workers and helpers will be covered under the Health Cover under the Ayushman Bharat Scheme.  Government to encourage Cervical Cancer Vaccination for girls (9-14 years).  The deadline for certain tax benefits for startups and sovereign wealth funds/pension funds extended to 31.03.2025 from 31.03.2024.  Proposed changes in TCS on Foreign Remittances:  No TCS if remittance is up to Rs. 7 lakhs, irrespective of the purpose of the remittance (currently, it is only for education or medical expenses).  TCS at 5% of the amount in excess of Rs. 7 lakhs if the remittance exceeds Rs. 7 Lakhs and is for education and medical treatment.  TCS at 20% of the amount in excess of Rs. 7 lakhs if the amount exceeds Rs. 7 Lakhs and is for other than education and medical treatment.  Key Numbers  Particulars Revised Estimates for F.Y. 2023-24 Estimates for F.Y. 2024-25 Total Receipts Excl. Borrowings Rs. 27.56 Lakh Crores Rs. 30.80 Lakh Crores Tax Receipts Rs. 23.24 Lakh Crores Rs. 26.02 Lakh Crores Total Expenditure Rs. 44.09 Lakh Crores Rs. 47.66 Lakh Crores Fiscal Deficit (% of GDP) 5.80% 5.10% Gross Borrowing through Dated Securities  Rs. 14.13 Lakh Crores Net Borrowing through Dated Securities  Rs. 11.75 Lakh Crores  Target to reduce Fiscal Deficit below 4.5% by F.Y. 2026.  There are no changes in taxation with the same tax rates for both direct and indirect taxes, including import duties.  Thanks for reading!  If you have any queries, feel free to write to us at research@edufund.in. 
Margin Money in Education Loans

Margin Money in Education Loans

Ever heard of the term Margin Money in Education Loans? How does it affect the average student? Do all students need to pay margin money? Find out in this article what margin money is, why it is important for students to know of it, and if it’s a compulsory fee or not!  https://www.youtube.com/watch?v=7Y0V6Z0lcJs&t=2s What is Margin Money?  In the context of education loans in India, margin money refers to the portion of the total educational expenses that the borrower (student or their parents/guardians) needs to fund from their own resources. In other words, it is the borrower's contribution toward the overall cost of education, and the remaining amount is covered by the education loan.  The concept of margin money is prevalent in the education loan process to ensure that students and their families have a financial stake in the education expenses. The margin money requirement helps in sharing the financial burden between the borrower and the lender. The margin money percentage can vary depending on the loan amount and the policies of the lending institution.  For example, if the total cost of education is ₹10,00,000 and the margin money requirement is 5%, the borrower would be required to contribute ₹50,000 from their own funds, and the education loan would cover the remaining ₹9,50,000.  It's important for students and their families to be aware of the margin money requirement when applying for education loans, as it influences the amount that needs to be arranged independently to meet the educational expenses. The terms and conditions, including margin money requirements, can vary among different banks and financial institutions offering education loans. The Role of Margin Money in Loan Disbursement  Margin money plays a significant role in the disbursement of education loans in India. Here's how it typically works:   1. Calculation of Total Cost:  Before applying for an education loan, the borrower needs to determine the total cost of the educational program. This includes tuition fees, accommodation, books, and other related expenses.  2. Determination of Margin Money:  The lending institution specifies a margin money percentage that the borrower must contribute from their own funds. For instance, if the margin money requirement is 10%, and the total cost of education is ₹5,00,000, the borrower needs to provide ₹50,000 as margin money.  3. Loan Amount Calculation:  The loan amount is calculated by subtracting the margin money from the total cost of education. Using the example above, if the total cost is ₹5,00,000 and the margin money is ₹50,000, the loan amount would be ₹4,50,000.  4. Disbursement Process:  The education loan is disbursed based on the approved loan amount. The lending institution releases funds directly to the educational institution or provides the borrower with the necessary funds, depending on the terms of the loan.  5. Use of Margin Money:  The margin money contributed by the borrower is typically used to cover initial expenses or as a security deposit, depending on the requirements of the educational institution.  6. Repayment Structure:  The repayment structure of the education loan is based on the disbursed loan amount. The borrower is required to repay the loan amount along with applicable interest over the agreed-upon repayment period.  Understanding and fulfilling the margin money requirement is essential for students and their families when seeking education loans. It ensures a shared financial responsibility and helps in the smooth disbursement and repayment of the loan. The terms and conditions, including the margin money percentage, may vary among different banks and financial institutions  7. Margin Money Calculation Formula  The formula for calculating margin money is straightforward. It is given by:  Margin Money = Total Cost of Education × (Margin Money Percentage/100)   Let's go through an example to illustrate this:  Suppose the total cost of education is ₹3,00,000, and the lending institution requires a margin money contribution of 15%.  Margin Money = ₹3,00,000 × (15/100)  Margin Money = ₹3,00,000 × 0.15  Margin Money = ₹45,000  Margin Money=₹45,000  So, in this example, the margin money required would be ₹45,000. The borrower would need to provide this amount from their own funds, and the education loan would cover the remaining ₹2,55,000 (₹3,00,000 - ₹45,000) based on the margin money percentage and total cost of education.  https://www.youtube.com/watch?v=AbYbP-HKAd8 Margin Money Requirements by Major Banks and NBFCs  When comparing margin money requirements, consider factors such as:  1. Loan Amount vs. Margin Money Percentage:  Evaluate how the margin money percentage influences the loan amount. Different institutions may have varying percentages.  2. Total Cost of Education:  Check if there are any restrictions on the types of expenses considered in the total cost of education.  3. Flexibility and Terms:  Assess the flexibility offered by each institution in terms of margin money payment and any variations based on the course or program.  4. Interest Rates and Repayment Terms:  Consider the overall terms of the education loan, including interest rates and repayment periods, in addition to the margin money requirement.  5. Eligibility Criteria:  Understand any specific eligibility criteria associated with margin money, such as the applicant's income, credit history, or collateral requirements.  To obtain specific and accurate information, reach out to the education loan departments of different financial institutions, and inquire about their current policies and margin money requirements.  Public Sector Banks vs. Private Sector Banks  The margin money policies of public sector banks (PSBs) and private sector banks differ based on their respective approaches, ownership structures, and government regulations. Here's a general comparison:  Public Sector Banks (PSBs) 1. Government Influence:  PSBs often have margin money policies influenced by government guidelines and regulatory frameworks.  Margin money requirements may vary based on the type of educational course and loan amount.  2. Flexible for Social Objectives:  Some PSBs may have more flexibility in margin money requirements for courses that align with national priorities or social objectives.  3. Government-Sponsored Schemes:  PSBs may participate in government-sponsored education loan schemes with reduced or no margin money for economically disadvantaged students.  4. Interest Rate Subsidies:  In some cases, PSBs may offer interest rate subsidies or concessions to certain categories of students, impacting the overall financial burden.  Private Sector Banks  1. Market-Driven Approach:  Private sector banks often adopt a market-driven approach, setting margin money policies based on their assessment of risk and profitability.  2. Varied Margin Requirements:  Margin money requirements in private banks may vary widely based on factors such as the loan amount, course type, and the creditworthiness of the borrower.  3. Focus on Risk Management:  Private banks may emphasize risk management, adjusting margin money requirements to mitigate potential loan default risks.  4. Customer-Centric Solutions:  Some private banks may offer customized margin money solutions, considering the unique circumstances and financial capabilities of individual borrowers.  General Considerations Regulatory Guidelines: Both public and private sector banks must adhere to regulatory guidelines set by authorities, impacting their margin money policies.  Negotiation Possibilities: While public sector banks may have more standardized policies, private sector banks may allow more room for negotiation based on individual cases and creditworthiness.  Loan Amount and Course Type: The margin money requirements often depend on the total loan amount and the type of educational course. Professional courses might have different requirements than undergraduate or postgraduate programs.  It's crucial for students to directly inquire with specific banks, whether public or private, to obtain accurate and up-to-date information on their margin money policies. Policies can vary not only between public and private banks but also among individual banks within each sector.  Zero Margin Money Options  Some banks and NBFCs in India may offer education loans with no margin money requirement or minimal margin. Keep in mind that these policies can vary based on factors like the course, loan amount, and the lender's discretion. Here are a few institutions that, in the past, have been known for flexible margin money requirements:  1. Avanse Financial Services:  Avanse is an NBFC that has been recognized for providing education loans with flexible terms, including competitive interest rates and customized repayment plans.  2. Axis Bank:  Axis Bank has been known to offer education loans with no margin money requirement for certain loan amounts. Their policies, however, may vary, so it's advisable to check with the bank directly.  3. IDBI Bank:  IDBI Bank has, in some cases, provided education loans with no margin money requirement, especially for specific courses or loan amounts. It's recommended to verify this information with the bank.  4. Canara Bank:  Canara Bank has offered education loans with minimal or no margin money requirement for certain categories of loans. Always check with the bank for the latest policies.  5. Bank of Baroda:  Bank of Baroda may offer education loans with a reduced margin or no margin money requirement for certain courses and loan amounts. Verify the current policies directly with the bank.  The Relationship Between Margin Money and Overall Expenses  The amount of margin money in education loans is often influenced by the total expenses of education. Generally, as the total educational expenses increase, the percentage of margin money required may decrease. Lenders may adjust the margin to accommodate higher overall costs, making education financing more accessible for students. However, specific margin money requirements can vary among lenders and institutions, and regulatory guidelines may also play a role in determining the relationship between margin money and total expenses. It's crucial for students to review the policies of individual lenders and educational institutions to understand how margin money is influenced in the context of the total cost of education.  Impact of Lower Overall Expenses on Margin Money  The inverse relationship between overall expenses and margin money lies in the fact that as overall educational expenses increase, the proportion of margin money required decreases. Higher expenses often lead to more substantial loans, and lenders may be willing to lower the margin percentage to accommodate larger loan amounts.  Strategies for Minimizing Margin Money  To minimize margin money, students can explore scholarships, grants, and part-time work opportunities to cover educational expenses. Negotiate with lenders for flexible repayment plans and consider community college or online courses for cost savings. Efficient financial planning can reduce the burden significantly.  FAQs What is margin money in the context of education loans?  Margin money refers to the portion of the total educational expenses that the student is required to fund from their own resources. It is the percentage of the total cost that is not covered by the education loan, and students are expected to contribute this amount.  Why do lenders require margin money for education loans? Lenders require margin money to mitigate risk and encourage financial responsibility. When students contribute their own funds, it reduces the likelihood of default, and it signals to lenders that the student is financially committed to their education. How is the margin money percentage determined? The margin money percentage is often influenced by regulatory guidelines, institution policies, and the total cost of the educational program. It varies among lenders and educational institutions. Always check with the specific lender or educational institution for their policies.  Can the margin money be borrowed from another source or does it have to be from personal savings? Generally, lenders prefer that margin money comes from the student's personal savings or contributions from family. Some lenders may not allow borrowing the margin money from another loan source. It's important to clarify this with the lender.  How does providing margin money benefit students?  Providing margin money benefits students by instilling financial responsibility, reducing the overall loan burden, enhancing creditworthiness, and fostering a sense of ownership and commitment to their education.  TALK TO AN EXPERT
Union Budget 2024 – What to look out for?

Union Budget 2024 – What to look out for?

As the country gears up for General Elections this summer, all eyes are on the upcoming Union Budget scheduled for February 1, 2024, at 11:00 am. This year's budget labelled as 'Interim Budget,' is a short-term financial plan for the outgoing government to manage finances until the new government takes charge. Unlike regular budgets, an Interim Budget doesn't include the presentation of the Economic Survey, a detailed analysis of the country's economic performance. Generally, the outgoing government refrains from making major announcements in an Interim Budget to avoid significant influence on voters before the elections. However, there have been instances where outgoing finance ministers strategically shaped budgetary measures to leave an impact. In 2014, P Chidambaram of UPA II adjusted expenses to the following year to present a better Fiscal Deficit for FY14, facing criticism for reducing capital expenditure without addressing subsidies. Also, In 2019, Piyush Goyal of the NDA government introduced tax relief for small taxpayers and launched the PM-KISAN scheme, providing Rs. 6,000 per annum support to small farmers. What to Expect? As the BJP government is looking to return to power, some of our expectations for this Interim Budget include: Targeting a Fiscal Deficit for FY25 in the range of 5-5.5% of GDP lower by 30-40 bps from the targeted ~5.8% of FY24. Medium term target of 4.5% by FY26. Targeting a nominal GDP growth between 11%-11.5% for FY25, surpassing the ~9% number for FY24 Continued focus on capital expenditure and infrastructure spending Prioritizing the strengthening of the agriculture and manufacturing sectors. Potential adjustments in standard deduction and tax slabs for individuals to help boost disposable income Reducing the arbitrage between equity and debt investments to make debt attractive. Currently, equities are taxed at 10%/15% for Long/Short-term Gains, while income from debt instruments faces slab rate taxation. This leads to a sub-optimal return post-tax. Thereby, the debt market remains under-penetrated. In summary, an Interim Budget is not a major event that significantly impacts investments. However, there remains a slight hope for positive developments after the budget announcement. Watch out this space for our update on February 1, 2024, when the Finance Minister unveils what’s in store for the people of the Republic of India. Note: The opinions presented reflect the beliefs of the author and the team of analysts. They should not be regarded as recommendations. Investing carries inherent market risks, and it is advisable to carefully read the offer documents before making any investment decisions. Invest for your child's education!
Analysing the HDFC Infrastructure Fund 

Analysing the HDFC Infrastructure Fund 

HDFC Asset Management Company Ltd. (HDFC AMC) is one of India's largest mutual fund companies. It is among one of the most profitable asset management companies (AMC) in the country. The company manages assets of over Rs. 5.5 Lakh crores (excluding domestic fund of funds) as of 31st December 2023. Let us talk about the consumer product – HDFC Infrastructure Fund.  About HDFC Infrastructure Fund Investment Objective: The scheme aims to invest predominantly in a diversified portfolio of equity and equity-related securities of companies that are either engaged in or expected to benefit from the growth and development of infrastructure.  Must Read: Top Mutual Funds for your child's education in 2024! Investment Process  The portfolio mainly invests in the following segments:  Asset Financiers – Banks and infrastructure financing companies.  Asset Creators – Engineering and construction companies.  Asset Owners/Developers – Companies that own infrastructure projects.  The scheme may invest up to 20% of the funds in non-infrastructure-related companies. Also, there is no bias related to the market cap of the companies, and the scheme shall invest across all market capitalization.  Portfolio Composition  The fund holds 92.11% equity, 3.06% real estate, and 4.83% in Cash and cash equivalents. The top five sectors hold more than 77% of the equity portfolio.  Note: Data as of 31st December. 2023Source: Value Research                                                          Top 5 Holdings for Infrastructure Fund  Name Sector Weightage % J Kumar Infraprojects Construction 7.11 Coal India Materials 6.21 ICICI Bank Financial 6.20 Larsen & Toubro Construction 5.64 Premier Explosives Capital Goods 5.03 Note: Data as of 31st December. 2023. Source: Value Research  Past Performance  If one had invested Rs. 10,000 at the fund's inception, it would now be valued at Rs. 37,776.  Fund name 1Y 3Y 5Y 10 Y Since Inception HDFC Infrastructure Fund (%) 55.42 38.54 18.86 14.90 8.77 Benchmark Returns (%) 61.08 41.24 22.65 16.09 9.12 Additional Benchmark Returns (%) 21.30 17.24 16.25 14.56 11.34 Note: Data as of 31st December. 2023 and the performance is of regular plan.Benchmark - S&P BSE India Infrastructure Index (TRI), Additional Benchmark - NIFTY 50 (Total Returns Index)  Source: HDFC Mutual Fund  Fund Managers for HDFC Infrastructure Fund  Currently, the HDFC Infrastructure Fund is managed by the following fund managers.  Mr. Srinivasan Ramamurthy is a Fund Manager – Equity and has collectively over 15 years of experience in equity research and fund management.  Mr Dhruv Muchhal is a Senior Equity Analyst and Fund Manager for Overseas Investments  Explore More: HDFC Hybrid Equity Fund Who Should Invest in HDFC Infrastructure Fund?  This product is suitable for investors who are seeking.  To generate long-term capital appreciation/income  Investment predominantly in equity and equity-related securities of companies engaged in or expected to benefit from the growth and development of infrastructure.  Why Invest in this Fund?  As Infrastructure plays a critical role in India’s self-reliance and economic prosperity, receiving significant focus from the government an investor gets an opportunity to invest in India’s infrastructure space through asset developers, asset owners, and asset financiers.   Investors can benefit from the growth and development of infrastructure due to increased budgetary capital spending and favourable policies.  The HDFC Infrastructure Fund has been in existence for the last 15 years. It provides an opportunity to invest in India’s infrastructure. The fund has consistently underperformed its benchmark. However, keeping in mind the government's focus on infrastructure and capex requirements in India for the economy's growth, the sector can show good performance in the upcoming future and can benefit the companies engaged in the sector. Hence, investors need to remain invested long-term to witness capital appreciation and outperformance with an understanding of high risk.  Disclaimer: This is not recommendation advice. All information in this blog is for educational purposes only.  Invest Now
Expenses under Education Loans

Expenses under Education Loans

Education loans to pay for your higher education overseas are common and effective; let's look at all the expenses under education loans to help you make the right choice. What are some expenses under education loans? Do education loans only help with tuition fees? Can education loans cover the cost of flights or help pay the living expenses?   Keep reading to find out the expenses under education loans.    One of the main issues facing the majority of Indian students who want to study abroad is how they would pay for their higher education. An education loan makes sure that all of the financial conditions for the application process for an education loan overseas are satisfied within the allotted time limit.  For the majority of students, the cost of an education loan in India for studying abroad is the main topic of conversation when it comes to financing higher education overseas. The information on this page is relevant to both secured and unsecured education loans in India for international studies.  https://www.youtube.com/watch?v=7Y0V6Z0lcJs&t=1s Costs of a typical course abroad for a student loan  One widespread misconception is that student loans do not fully cover the costs associated with studying abroad. This is untrue, though, as all educational loans, whether secured ones from government banks or unsecured ones from private lenders, cover the following list of costs that are essential to the educational process.  1. Student fees  One of the two main components of both forms of education loans in India for studying abroad is the tuition prices charged by foreign universities. An education loan in India for the international study is intended to assist students in covering their tuition costs. In India, all student loan repayments include tuition. Therefore, when deciding on the overall amount of your student loans, you should give top priority to covering your tuition costs.  2. Housing Costs  The term "factors" can refer to a wide range of things. The main living costs for a student include their rent or room and board, food, and costs for other daily necessities like transportation to and from school, a security deposit for housing, etc.  3. Medical Insurance  International students are frequently required to obtain health insurance by many foreign universities. This specific cost is covered by an education loan in India for studying abroad as it is one of the prerequisites for studying abroad for many students. Therefore, while applying for an education loan, health insurance can also be taken into account.  https://www.youtube.com/watch?v=4gTQkdePOWM 4. Flight Tickets  Another significant price covered by an education loan when applying for one overseas is airline tickets to the location of your choice. When quoting the education loan amount to your bank, this component might also be included.  5. Research Aid  You can include this information in the education loan application if your foreign university's offer letter states that you are responsible for paying for excursions and other extracurricular activities throughout the course of your studies. In addition, when applying for both forms of school loans in India, students can include the price of products like books, computers, and other study supplies in their total expenses.  https://www.youtube.com/watch?v=fufyFB9aMQI What elements must a student take into account when determining costs?  There is no way to change the loan arrangement because the student loan is a one-time transaction. Therefore, a student needs to be aware of the costs they can cover on their own and those for which they might require a loan. The student's financial stability at the time of study is of utmost importance, so the loan amount should be chosen with that in mind.  Before assessing the costs, a student must take the following into account:  The price of housing in a specific country and whether it will be possible to live in shared housing for a lower cost of living.  Food prices in the city where the university is situated.  Additionally, a student's ability to prepare meals on their own can significantly lower the cost of tuition.  Since academics are not just available on-campus, the cost of eating out or intercity travel will be included in the total fee.  Many regions, including the US and Australia, have cheap used car markets and reasonable gas prices. In contrast, students in countries like Ireland receive discounts on public transportation. All of this requires preliminary research.  In the city where the university is situated, there are opportunities for part-time employment. There are enticing part-time occupations with regulated minimum earnings in several nations. This assists students in paying for a sizable portion of their living costs.  Consult an expert advisor to get the right plan TALK TO AN EXPERT
Financial Checklist for New Parents in India

Financial Checklist for New Parents in India

Becoming a parent is extremely exciting. It's the start of a host of new responsibilities, especially when it comes to finances. This blog will help you keep track of the most important decisions and presents a consolidated financial checklist for new parents to help you manage and secure your child's future! 1. Create a Budget and Emergency Fund Establishing a budget is crucial for managing your household expenses effectively. Determine your monthly income, fixed expenses, and discretionary spending to ensure that your finances are on track. Additionally, build an emergency fund to cover unexpected expenses, such as medical emergencies or home repairs, aiming for at least three to six months' worth of living expenses. 2. Secure Health Insurance for the Family Healthcare expenses can be a significant financial burden, especially with a new addition to the family. Invest in comprehensive health insurance coverage for yourself, your spouse, and your child to safeguard against unforeseen medical costs. Look for policies that offer adequate coverage for maternity and newborn care, ensuring peace of mind for your family's health needs. 3. Protect Your Family with Life Insurance As new parents, it's essential to prioritize your family's financial security in the event of an unfortunate circumstance. Invest in a suitable life insurance policy that provides financial protection and support for your loved ones in case of your untimely demise. Calculate the appropriate coverage amount based on your family's future financial needs, including living expenses, education costs, and outstanding debts. 4. Plan for Your Child's Education Education expenses are a significant financial commitment, and it's never too early to start planning for your child's future. Research various education savings options, such as mutual funds, education savings plans, or dedicated savings accounts, to help fund your child's higher education. Start investing as early as possible to take advantage of the power of compounding and ensure sufficient funds are available when your child reaches college age. 5. Get all their Documents Sorted As new parents, you need to sort out all their documents beforehand within the first year. From their birth certificate, PAN minor, Aadhar, make sure all their documents are created and ready for use. Also, it's essential to have a clear plan in place for the distribution of your assets and ensure your child is added as a beneficiary legally. Conclusion Becoming a parent is a life-changing experience that brings immense joy and responsibility. By following this comprehensive financial checklist, new parents in India can take proactive steps to secure their family's future and provide a solid foundation for their child's growth and development. Remember, early financial planning and investing, especially in mutual funds, can make a significant difference in achieving your family's long-term financial goals. Start planning today to ensure a brighter tomorrow for your loved ones.
Tips to Get Education Loans for Abroad Studies

Tips to Get Education Loans for Abroad Studies

Securing an education loan for abroad studies opens the door to a world of academic and personal growth. Let’s break down the process for getting educational loans for abroad studies and find out the eligibility criteria, documents needed, how to get an education loan, and much more. Education Loans for Abroad Studies In an increasingly interconnected world, pursuing education abroad has evolved from being a mere aspiration to a transformative experience. The exposure to diverse cultures, cutting-edge academic programs, and unparalleled opportunities for personal growth has made international education a sought-after endeavour. However, the costs associated with studying abroad can be overwhelming. This is where investment in education loans comes to the rescue, acting as a bridge between dreams and reality. https://www.youtube.com/watch?v=4gTQkdePOWM Are you eligible to get a study loan abroad? To be eligible, applicants often need to meet certain requirements that the bank has set. For instance, if you are applying for a study loan to study abroad from India then here are the basic eligibility criteria that you need to meet. The applicant must be 16 years old and an Indian citizen Co-applicants must be an Indian citizen Ability to offer collateral for certain cases Co-borrower(s) must have a bank account in any bank in India with cheque facilities and a good credit history. Confirmed admission to the colleges before disbursement. Admission Confirmation: Having an admission offer from a recognized foreign institution is a prerequisite for applying for an education loan. The institution's reputation and the chosen course play a role in determining loan approval. Co-Applicant/ Guarantor: Many lenders require a co-applicant, usually a parent or guardian, to share the responsibility of repaying the loan. The co-applicant's financial stability can influence the loan's terms. Collateral: Depending on the loan amount, lenders might ask for collateral as security. Property, fixed deposits, or other priceless assets can be used as collateral. Eligibility criteria differ on the basis of your nationality. Co-Applicant Education Loan Guide Read More How should you apply for an education loan abroad? Navigating the education loans for abroad studies application process can be overwhelming, given the multitude of options and procedural complexities. To get an education loan, you can visit public and private banks and international lenders, find out the interest rate and start the process with your chosen provider. Rather than visiting all the banks, you can opt for an education loan counselor. An educational loan counselor is an expert who serves as an intermediary between aspiring students and financial institutions, helping them find the best loan options tailored to their needs. They streamline the loan application process, help with documentation, and get your fast approval. Education loan counselors can help you save both time and effort. https://www.youtube.com/watch?v=fufyFB9aMQI Documents you need for an Education Loan When applying for an education loan, the documentation process is a crucial step. Commonly required documents you must have: Loan application form Passport-size photos PAN card and Aadhar card Indian passport (if you are going abroad) Marksheets for 10th, 12th & Graduation Entrance exam results (like IELTS, GMAT, GRE, TOEFL, etc.) Offer letter or a conditional admission letter (if received) Work experience proof (if any) In the case of self-employed co-applicant 8-month bank statements of savings & current account 2- years ITR statement Collateral documents (if needed) In the case of salaried co-applicant6-month bank statements of the salary account of the co-applicant2-year ITR / FORM 16 co-applicant3-month salary slips Collateral documents (if needed) How to use the Education Loan Calculator for abroad studies? An education loan calculator is a way to find out the monthly payments you will be making to close your student loan! An education loan for abroad studies is a huge responsibility, and the calculator helps you find out the EMIs you will potentially be repaying, the duration of repayment, and the total payable amount after adding the interest. It’s very easy to use and can help you determine the future EMIs on your loan. For instance, you decide to take a loan of Rs. 25,00,000 at an interest rate of 10%. The decided loan tenure is 10 years. If you put all these details in an educational loan calculator, it will tell you the exact EMI amount, which is Rs. 33,038, the total payable amount, that is Rs. 39,64,522 along with the payable interest amount (Rs. 14,64,522) on top of the principal amount of Rs. 25 lakhs. An education loan calculator is a powerful tool that helps you prepare for the future, let's gauge the estimated costs you will be repaying and helps you budget for it in advance. What is the interest rate of education loans abroad? The interest rate depends on many factors. The interest rate of education loans for abroad studies is determined by the bank, individual profile, co-applicant history, and whether it’s a secured or unsecured loan. If you are applying with EduFund, you can get low and attractive interest rates starting from 9% with the top loan providers like Prodigy Finance, IDFC First Bank, ICICI Bank, Axis Bank, and many more. Things to Know Before Choosing an Education Loan Selecting the right education loan requires a careful evaluation of several factors: Interest Rate: The interest rate significantly impacts the overall cost of the loan. For the best deal, compare the rates provided by several lenders. Repayment Tenure: Longer repayment tenures might result in lower monthly installments but higher overall interest payments. Choose a tenure that aligns with your financial plans. Processing Fees: Understand the processing fees associated with the loan application. Some lenders might have hidden charges that could affect your repayment burden. Tax Benefits: In some countries, education loan interest payments are eligible for tax deductions. Familiarize yourself with the tax implications of the loan. Prepayment Terms: Check if the lender allows prepayment without penalties. This can help you save on interest payments if you have the means to repay the loan early Higher interest rate of education loans for abroad:  While investing in education loans serves as a lifeline for many students aspiring to study overseas, the interest rates can vary significantly. Factors like the bank's policies, the applicant's credit history, and the loan type (secured or unsecured) play a role in determining the interest rate, exchange rate fluctuations, repayment challenges in foreign currency, and the global economic scenario. https://www.youtube.com/watch?v=TJ4qgFj46Uw Importance of selecting the right repayment plan Choosing the right repayment plan for your education loan is a critical decision that can significantly impact your financial well-being post-graduation. Financial institutions often offer various repayment options, such as fixed, variable, or income-based plans. Understanding the nuances of each plan and aligning it with your future income projections and financial goals can ensure a smoother repayment process and alleviate undue stress. Partnering with EduFund: Shaping a Bright Future for International Education Pursuing education abroad is a transformative experience that opens doors to academic and personal growth. However, the costs associated with international education and education loans for abroad studies can be daunting. Amidst this process, EduFund stands as a reliable partner, offering attractive interest rates and partnering with esteemed institutions to make the dream of studying abroad a reality. EduFund provides access to a range of loan providers, each with its own interest rate structures. Keeping in mind that lower interest rates can significantly reduce the long-term financial burden, applicants should strive to secure the best possible rate for their circumstances. With EduFund's support, students can embark on their educational journey confidently, knowing that their financial needs are well taken care of. Talk To An Expert FAQs Can I apply for a loan before receiving the admission offer? It's recommended to have an admission offer in hand before applying for a loan, as lenders often require it for processing. What's the typical loan repayment grace period after completing the course? What's the typical loan repayment grace period after completing the course? Does a good credit score essential for loan approval? While a good credit score can enhance your chances of approval, some lenders offer loans to students with co-applicants who have strong credit profiles. What happens if I'm unable to secure a job immediately after completing the course? Some lenders offer extended grace periods or flexible repayment options for students who face challenges in finding employment Can I get a loan for living expenses in addition to tuition fees? Some lenders do offer education loans that cover both tuition fees and living expenses. Check with the lender for specific terms. An education loan for abroad studies bridges the financial gap between your aspirations and the realization of international education. EduFund aims to help you bridge that gap by offering low and attractive interest rates on your education loan. EduFund connects you with India’s top lenders, helps you compare loan plans, and even get collateral-free education loans up to Rs. 1 crore!
A comprehensive guide on applying for an Education Loan with EduFund

A comprehensive guide on applying for an Education Loan with EduFund

India has the largest youth population in the world. In the past few years, a tremendous number of students have joined higher education and a majority rely on education loans for paying the fees and cost of living. The demand for education loans has spiked up making the process more selective for the average Indian student. To make this process easier and less burdensome, apply for an education loan with EduFund is the answer. Here is a step-wise guide on securing the right loan for your college degree.    https://www.youtube.com/watch?v=gbPJ_XjILUA Understanding EduFund Before we embark on the journey of understanding the application process, let us take a moment to familiarize ourselves with the ethos and mission of EduFund. As a trusted and reputable education planning platform, EduFund is deeply committed to empowering students by bridging the financial gap between their aspirations and the resources needed to achieve them. EduFund offers 3 different financial products to help Indian parents and students achieve their dreams: Investments in the Indian market, Scholarships, and Education Loans. Benefits of applying for an education loan with EduFund 1. Research and planning The first and foremost step in successfully applying for an education loan with EduFund is conducting thorough research and meticulous planning. This initial phase involves exploring EduFund's website in detail, where you will find a wealth of comprehensive information pertaining to their loan offerings, interest rates, repayment options, and eligibility criteria. Take the time to carefully peruse the website and make note of any specific requirements or documents needed, based on the course or institution you intend to pursue. 2. Eligibility criteria EduFund's education loan program has been thoughtfully designed to cater to a wide range of students hailing from diverse backgrounds. To determine your eligibility, it is imperative to take into account various factors such as academic performance, the chosen course and institution, financial background, and any collateral that you may be able to provide. By thoroughly reviewing these criteria, you can ensure that you meet the necessary requirements before proceeding with the loan application process, thereby maximizing your chances of approval. Apply for Education Loans 3. Online application process EduFund has meticulously crafted an intuitive and user-friendly online application process, ensuring that applying for an education loan is a hassle-free and accessible experience for all prospective borrowers. To initiate the application process, simply visit the EduFund website and navigate to the dedicated loan application section. Once there, fill in the required information accurately, providing comprehensive details pertaining to your personal information, academic background, the course you wish to pursue, and an estimated cost of education. https://www.youtube.com/watch?v=4gTQkdePOWM 4. Document submission Once you have completed the online application, the subsequent step entails gathering and submitting the requisite documents. These documents may include proof of identity, address, academic records, admission letter from the educational institution, an estimate of the cost of education, income proof of co-borrower (if applicable), and any collateral documents, should you possess them. It is of utmost importance to ensure that all the documents are properly attested and prepared for submission, as this expedites the loan processing and verification stage. https://www.youtube.com/watch?v=fufyFB9aMQI 5. Loan processing and approval Upon receipt of your application and accompanying documents, EduFund promptly initiates the loan processing and verification procedure. Their team of experienced professionals meticulously assesses your application, verifies the provided information, and evaluates your creditworthiness. It is crucial to note that this process may take a few weeks, as EduFund adheres to a meticulous and diligent approach to ensure a fair and accurate assessment. During this period, it is essential to maintain open lines of communication with EduFund, remaining proactive and responsive to any updates or additional requirements that may arise. https://www.youtube.com/watch?v=tdwqQH0xkFw 6. Loan disbursement and repayment Congratulations! Upon approval of your loan application, EduFund proceeds with the disbursement of the loan amount directly to the educational institution, in accordance with the agreed-upon disbursement schedule. It is imperative to familiarize yourself with the terms and conditions of repayment, including the interest rate, repayment tenure, and monthly installment amounts. EduFund prides itself on providing flexible repayment options, tailored to suit your individual financial capabilities. Additionally, they offer a grace period for repayment, allowing you to settle into your post-graduation phase before commencing repayment in earnest. 7. Regular communication and support Throughout the entire loan application and repayment process, EduFund places great emphasis on establishing and maintaining regular and transparent communication with its borrowers. Their dedicated customer support team is readily available to address any queries, concerns, or updates that you may have. It is highly recommended to remain in close contact with EduFund and promptly inform them of any changes in your circumstances that may potentially impact the repayment of the loan. By fostering open lines of communication, you can ensure a smooth and mutually beneficial partnership with EduFund. Applying for an education loan with EduFund is an empowering and transformative step toward realizing your educational dreams. No hidden fees or processing hassles, you get the right education loan for your degree without the daily bank visits! CONNECT WITH OUR STUDY ABROAD EXPERTS
How tough is it to get an Education Loan?

How tough is it to get an Education Loan?

As you look to plan your child’s career and consider their higher studies in a good institute in India or overseas, the question that most parents ask themselves is, how hard is it to get an education loan? Today, education in India has become quite expensive from the school level onwards. Given the rising inflation rate, fees across the board for higher education in reputed Indian and international universities are going up yearly. In this scenario, if you are serious about sending your child to an excellent Indian institute or abroad for higher studies, chances are high that you will be required to take an education loan. Taking an education loan for a four-year undergrad engineering course from a private institute in India can cost you upwards of Rs. 12 lakhs in tuition fees. The same course in an international university can go up to Rs. 60 - 70 lakhs, with travel and stay extra. Most parents today opt for an education loan to fulfill their child’s educational and career aspirations. That brings us to the topic of this article: how hard is it to get an education loan? To understand the challenges, you must understand what the lenders look for in an education loan application. Apply for an Education Loan What lenders look for while reviewing education loan applications There are several education loans available, as RBI promotes these extensively. So most nationalized banks will offer you these loans. Here is the list of factors they consider when reviewing an education loan application: 1. Financial history of the borrower and co-borrowers Especially in the case of undergraduate courses, parents as co-borrowers must have an excellent credit rating and must show the financial capability to meet the need for repayment, should the need arise. 2. Co-borrower or Co-applicant While international lenders may not ask for a guarantor, most public sector/govt lenders do. They require a guarantor or co-applicant, especially if the loan is for a significant amount. Again, the guarantor's credit history will be scrutinized while sanctioning the loan. 3. Collateral Public sector/nationalized banks and several private lenders need collateral to issue an education loan if the amount is enormous. The value of the collateral is worked out in light of the loan required and varies depending on the lender, but collateral is a must. There are various non-collateral options available for students as well. Most of these even offer loan amounts up to 1 crore, but it depends upon the individual and their application. 4. University of your choice This is another crucial aspect for lenders. Most leading lenders have their preferred list of universities and courses for which they will issue loans. So, you must ensure that the institute your child is shortlisting is on that list and an accredited educational institute that the banks recognise. 5. The academic record of the student An excellent academic record goes a long way in assuring the lender of the child’s seriousness toward education and career. It works as an indicator for them that the student will complete the course for which the loan is being given and will be able to repay the same by building a promising career. FAQs Do we get education loans easily? The easiest way to get an education loan is to connect with EduFund. EduFund helps students by connecting them directly to the right education loan provider! With EduFund, you can get the lowest interest rates, express approvals, and end-to-end assistance in securing the right education loan for your profile. EduFund experts can also help you avoid hidden fees, get approvals without an offer letter, and ensure a smooth loan disbursement for your future plans. Connect with our experts here! Do education loans get rejected? Yes, education loans can be rejected. Banks can reject your loan application if there are any discrepancies in the documents. If your co-applicant does not meet the set criteria, or if you have opted for a course or university that the bank does not recognize. There are many reasons - the best way to avoid rejection is to plan with experts like EduFund, who offer end-to-end assistance. Why is it difficult to get an education loan in India? Yes, the loan process in India can be lengthy and tiresome if the candidate is applying on their own. With the help of experts from EduFund, you can avoid the lengthy process of getting in touch with the right providers directly and applying for a loan in no time. TALK TO OUR EXPERTS
6 basic ways to teach kids about taxes!

6 basic ways to teach kids about taxes!

Planning to teach kids about taxes? Then this blog is for you. Taxes are an integral part of human lives and every person must be aware of how to manage them from an early age. Children can understand financial concepts quite early in life and most of their monetary habits are also developed during these times. Every person on earth knows that taxes are inevitable and you cannot escape from them. So why not take a progressive step forward and understand how to teach your kids about taxes as it will prove beneficial for them in the long run? https://www.youtube.com/watch?v=30q9fjLitHM 6 basic ways to teach kids about taxes 1. Start the lessons from home The first step in how to teach kids about taxes is becoming their teacher at home and giving them lessons relevant to taxes. Some children are aware that we pay taxes, but the majority are unaware of the fact. Remember, it is the basic responsibility of every parent to make their kids aware of all the things that are relevant in their lives. Personal finance and taxes are important topics of discussion as kids should know how and why a portion of their earnings is given to the government and how it uses the said money for the welfare of its citizens. Start Investing in TAX Saving Mutual Funds 2. Start from the basics Explain the basic concepts of taxes; for example, what are taxes, and why are taxes levied on earnings? If your child has grown up, you can also discuss the various types of taxes levied by the government and related topics like income tax, property tax, sales tax, capital gains, deductions, and tax credits. Inform the kids about why taxes are important and how levying taxes helps the community on the whole. Tax Benefits on Child Education Fees Read More 3. Make it as real as possible  Make it as real as possible with the help of real-life examples because children learn more quickly when they have live demonstrations in front of them. Parents should apply the basic concept of taxes in everyday life to make the kids understand. For example, when you take your kids shopping, show them the price tag of a commodity and the price that is shown on the bill. Explain that the difference is the tax that every person has to pay the government. Familiarise your child with deductions and tax paperwork and how it impacts the total individual income. Making it real will help the child get a better grasp of the concept. https://www.youtube.com/shorts/p2Bj4VgVHgQ Source: EduFund 4. Explain why we pay taxes Teaching the kids about taxes from an early age gives them a solid foundation in the concept of finances and how to tackle the various types of taxes later on in life. Explain to them who pays the taxes and why they have to pay them. Point out the essential infrastructure that is maintained with the help of the taxes that the government levies on its citizens. Examples include parks, schools, hospitals, roads, post offices, etc. Make sure to use simple words and common examples to explain why we pay taxes so that the kids can understand the concept of taxes and the reasons behind why we pay them. Learn about Taxation in Mutual Funds Read More 5. Make it a fun game Sometimes the best way to learn about a topic is by making it into a fun activity. Parents can take the help of a simple piggy bank to explain their point. Make it a fun game as games are effective learning tools that kids can easily relate to. Whenever you pay your child’s weekly/ monthly allowance ask them to pay specific funds on allowance and expenses as tax. For instance, the child is given INR 2000 as a monthly allowance, then levy 1% tax on their total allowance. This will amount to INR 20. Ask them to deposit it in the piggy bank. Next, whenever they make an expense that is higher than INR 200, ask them to deposit INR 5 as tax.  This is a simple method that can help the kids to grasp the concept of taxes more easily. By now you must have gained a basic understanding of how to teach your kids about taxes. Take all the related points into consideration and start talking about taxes, personal finance, and how taxes impact human lives with your kids to create an engaging environment. https://www.youtube.com/shorts/wzl2t-Czh8o Source: EduFund FAQs What is a tax? A tax is a fee paid by citizens to the government that helps fund public goods and services. Why should you teach kids about taxes? Taxes are a big part of our lives. We pay taxes on the food we eat, the services we use, and the money we make. By explaining why we as citizens are responsible for paying taxes to the kids will help them become more informed and aware of the financial responsibility of every individual. It is also a good practice to help teach kids the value of money. What is the best way to teach kids about taxes? Use everyday examples to help your kids understand taxes. The income tax you pay, the toll tax on the roads, the GST on everyday items, and much more. This is a simple start to explain why we pay taxes and helps children understand the importance of money.
Understanding Recurring Deposits: A Smart Way to Save!

Understanding Recurring Deposits: A Smart Way to Save!

Understanding Recurring Deposits: A Smart Way to Save Most of us have heard of FDs and RDs growing up! But do you know how an RD or Recurring Deposit works? What is the procedure to start an RD, what are the benefits of investing in Recurring Deposits, and is it a good investment tool for the long run? Can it help you save for your child’s education or your dream home? Find out in this article what a Recurring Deposit is, is financial planning with RDs is effective, its interest rates, and much more!  Introduction to Recurring Deposits  A recurring deposit (RD) is a popular savings option in India that allows individuals to systematically deposit a fixed sum of money into their account at regular intervals, typically monthly. This financial instrument is offered by banks and financial institutions, catering to individuals who aim to cultivate a disciplined savings habit while earning a modest interest on their deposits.  The basic concept of a recurring deposit revolves around the idea of regular and predetermined contributions. Individuals commit to depositing a fixed amount, known as the installment, into their RD account every month for a predetermined period, often ranging from six months to ten years. The interest rates offered on recurring deposits are generally higher than regular savings accounts, making it an attractive option for risk-averse investors seeking stable returns.  Not just an App, but a way to save for your child's education! https://www.youtube.com/watch?v=OQlg-E5rhBM The Mechanics of Recurring Deposits  Recurring deposits work on the principle of regular, fixed contributions over a specified period, allowing individuals to build savings systematically. Here's how they operate:  Opening an RD Account:  Individuals can open a recurring deposit account with a bank or financial institution of their choice. They need to provide the necessary identification documents and details.  Determining Installments:  The account holder decides the amount they want to deposit each month, known as the installment. This can be a fixed sum, and the depositor commits to making these contributions regularly.  Deposit Intervals:  Deposits are made at regular intervals, usually monthly, although some institutions may offer flexibility with quarterly or other periodic contributions. The fixed amount is deducted from the depositor's savings or current account and transferred to the RD account.  Tenure and Maturity:  Recurring deposits have a predetermined tenure, ranging from a few months to several years. The depositor selects the duration based on their financial goals. At the end of this tenure, the recurring deposit matures.  Interest Rates:  The interest rate for recurring deposits is set by the bank or financial institution at the time of opening the account. It's important to note that interest rates can vary among institutions. Typically, the rates are higher than those offered on regular savings accounts.  Interest Calculation:  Interest is compounded at regular intervals, usually quarterly, and is added to the principal amount. The compounding frequency contributes to the overall interest earned. The formula for interest calculation in a recurring deposit involves the principal, interest rate, and tenure.  M=P(1+nr )nt   Where:  M is the maturity amount.  P is the monthly installment.  r is the annual interest rate (expressed as a decimal).  n is the number of times interest is compounded per year.  t is the tenure in years.  Maturity Payout:  At maturity, the depositor receives the total amount, which includes the principal and the accumulated interest.  Recurring deposits provide a structured approach to savings, making them an attractive option for those looking to cultivate a disciplined savings habit with the added benefit of earning interest on their contributions.  Debt Mutual Funds vs FDs Interest Rates and Compounding  The interest is compounded on a quarterly basis, meaning that at the end of each quarter, interest is added to the principal amount. This results in the next quarter's interest being calculated on the updated principal (original principal plus interest accrued). This compounding process continues throughout the tenure of the recurring deposit.  It's important to note that the interest rate is a crucial factor in determining the overall returns. Higher interest rates or more frequent compounding can lead to increased returns on the recurring deposit.  Upon maturity, the account holder receives the total amount, which includes the principal and the accumulated interest based on the compounded interest formula. This structured approach to interest calculation ensures that the depositor earns interest not only on the initial principal but also on the interest that has been added to the account over time.  Minimum and Maximum Investment Terms  In India, recurring deposits offer investors a range of investment terms, catering to various financial goals and preferences. Here's an outline of the typical range of investment terms for recurring deposits, spanning from short-term to long-term options:  1. Short-Term Recurring Deposits:  Tenure: 6 months to 1 year  Purpose: Short-term recurring deposits are suitable for individuals with immediate financial goals or those who prefer liquidity in the near future. They may be used for purposes such as funding a vacation, buying a consumer durable, or handling short-term financial commitments.  2. Medium-Term Recurring Deposits:  Tenure: 2 to 5 years  Purpose: Medium-term recurring deposits are often chosen by individuals with mid-range financial goals. This can include saving for a down payment on a home, financing a child's education, or planning for a major purchase in the medium term.  3. Long-Term Recurring Deposits:  Tenure: 5 years and above  Purpose: Long-term recurring deposits are suitable for individuals looking to achieve long-term financial objectives. Examples include building a retirement corpus, creating a substantial education fund for children, or accumulating savings for a distant financial milestone.  4. Customizable Tenure:  Tenure: Flexible  Purpose: Some financial institutions offer flexibility in choosing the tenure of recurring deposits, allowing investors to align the investment period with specific financial goals. This customization can be beneficial for those with unique or personalized requirements.  5. Special Purpose Recurring Deposits:  Tenure: Varied  Purpose: Some banks may introduce special recurring deposit schemes tied to specific purposes, such as tax-saving recurring deposits with a lock-in period to avail tax benefits under Section 80C of the Income Tax Act.  Investors can select the tenure that aligns with their financial objectives, risk tolerance, and liquidity needs. Short-term options provide quick access to funds, while long-term options facilitate the accumulation of significant savings over time. It's essential for investors to consider their financial goals and time horizons when choosing the tenure of their recurring deposit to maximize returns and meet their specific needs.  Using FDs to pay for my child's education! Benefits of Choosing Recurring Deposits  Opting for a recurring deposit (RD) in India offers several advantages compared to other savings schemes. Here are some key benefits that make RDs an attractive choice:  1. Disciplined Savings:  RDs encourage a disciplined savings habit as individuals commit to making regular monthly contributions. This helps inculcate a sense of financial discipline, making it easier for people to set aside a fixed amount for savings.  2. Accessible for Small Investors:  RDs are accessible to individuals with modest income levels as they allow for smaller monthly contributions. This makes it an inclusive savings option for those who may not have a lump sum to invest initially.  3. Fixed Returns:  Unlike some other investment options, RDs provide fixed returns. The interest rate is predetermined at the time of opening the account, offering stability and predictability in returns over the investment period.  4. Low Risk:  Recurring deposits are considered low-risk investments as the principal amount is secure, and the returns are not subject to market fluctuations. This makes RDs suitable for risk-averse investors who prioritize capital protection.  5. Flexible Tenure Options:  RDs offer flexibility in choosing tenure based on individual financial goals. Whether someone is saving for a short-term goal or a long-term objective, RDs provide varying tenures to align with specific needs.  6. No Market Dependency:  Unlike mutual funds or stocks, the performance of an RD is not dependent on market conditions. This makes RDs a stable option for those who want to avoid the volatility associated with market-linked investments.  7. Loan Facility:  Some banks provide the option to take a loan against the recurring deposit. This can be beneficial in times of financial need, offering a source of liquidity without breaking the RD prematurely.  8. Tax Benefits (in certain cases):  Tax-saving recurring deposit schemes are available, providing investors with the opportunity to save on income tax under Section 80C of the Income Tax Act. However, it's important to note that interest earned on RDs is taxable.  9 .Easy to Open and Manage:  Opening an RD account is a straightforward process, requiring minimal documentation. The management of the account is also user-friendly, making it suitable for a wide range of investors.  10. No Market Timing Concerns:  RDs eliminate the need for investors to time the market. Since the returns are pre-determined, there is no reliance on market movements, making it a hassle-free option for those who prefer a more straightforward approach to savings.  While recurring deposits offer these advantages, it's essential for investors to assess their individual financial goals, risk tolerance, and liquidity needs to determine the most suitable savings option for their specific circumstances.  11. Building a Savings Habit with RDs  Recurring deposits foster regular saving habits by requiring individuals to commit to fixed monthly contributions. This disciplined approach helps cultivate a consistent savings routine, instilling financial discipline and responsibility. By making saving a routine part of their financial behavior, individuals can steadily build wealth over time, achieving their financial goals through systematic and sustained contributions.   12. Flexibility and Convenience  Recurring deposits (RDs) in India exhibit a flexible nature, allowing investors to tailor their savings to specific needs. The flexibility lies in choosing the monthly installment amount and the tenure, accommodating diverse financial goals. RDs offer the convenience of regular, automatic deductions, simplifying the saving process. This adaptability makes recurring deposits an accessible and user-friendly option, aligning with individual preferences and financial objectives.  Comparing Recurring Deposits and Fixed Deposits  Compare and contrast recurring deposits with fixed deposits.  Recurring deposits (RDs) and fixed deposits (FDs) are popular savings options in India, each with its own set of characteristics. Here are some major similarities. Both RDs and FDs are risk-averse investments and are flexible enough to help Indians grow their investments.   Interest Rates:  Both RDs and FDs offer interest rates determined by the respective banks or financial institutions. Rates may vary based on tenure and market conditions.  Safety:  Both RDs and FDs are considered safe investment options as they are backed by the guarantee of the issuing bank or financial institution.  Tax Implications:  Interest earned on both RDs and FDs is taxable. However, tax-saving FDs have specific benefits under Section 80C.  Understanding the Differences between RDs and FDs  Let’s look at the main difference between the two popular ways of investing in India:   1. Regular Contributions:  RDs: Require regular monthly contributions.  FDs: Involve a one-time lump-sum deposit.  2. Flexible Installments:  RDs: Allow flexibility in choosing the monthly installment amount.  FDs: Have a fixed deposit amount at the time of investment.  3. Tenure Flexibility:  RDs: Offer flexibility in choosing the tenure, typically ranging from 6 months to 10 years.  FDs: Have fixed tenures, ranging from a few months to several years.  4. Interest Calculation:  RDs: Interest is compounded quarterly, based on the monthly contributions.  FDs: Interest may be compounded quarterly, half-yearly, annually, or at maturity, depending on the investor's choice.  5. Liquidity:  RDs: Offer partial liquidity, allowing individuals to withdraw a portion of the accumulated amount without closing the entire deposit.  FDs: Generally, breaking an FD before maturity incurs a penalty, impacting liquidity.  6. Risk and Returns:  RDs: Lower risk, suitable for risk-averse investors. Returns are predetermined and typically lower compared to FDs.  FDs: Moderate risk, with fixed returns known at the time of investment. Returns are generally higher than RDs.  7. Suitability:  RDs: Ideal for individuals with a regular income looking for a systematic savings approach.  FDs: Suited for those with a lump sum seeking stable, fixed returns over a specific period.  8. Choosing the Right Option for You  Both FDs and RDs are great investment options for investors. They are safe, low-risk, low-return investments that remain consistent during market ups and downs. If you have a substantial lumpsum amount for investment, then FD is a good choice but if you have   The Process of Opening a Recurring Deposit Account  Opening a recurring deposit (RD) account in India is a straightforward process. Here's a step-by-step guide to help you navigate the procedure:  Choose the Bank or Financial Institution:  Research and select a bank or financial institution that offers recurring deposit accounts. Consider factors such as interest rates, reputation, and customer service.  Visit the Bank Branch or Website:  If you prefer in-person interaction, visit the nearest branch of the chosen bank. Alternatively, many banks allow you to open an RD online through their official website.  Request Information:  Inquire about the recurring deposit schemes available, including interest rates, tenure options, and any special features. Collect the necessary application form and details about the required documents.  Fill out the Application Form:  Complete the recurring deposit application form with accurate personal information. This form is usually available at the bank branch or can be downloaded from the bank's official website.  Provide KYC Documents:  Submit Know Your Customer (KYC) documents, which typically include proof of identity, proof of address, and passport-sized photographs. Common documents include Aadhar card, PAN card, passport, and utility bills.  Specify Deposit Amount and Tenure:  Indicate the monthly deposit amount you wish to contribute and choose the tenure of the recurring deposit. Some banks may offer flexibility in these aspects.  Nomination Details:  Specify nomination details, if applicable. This involves providing the name, address, and relationship of the nominee who would receive the proceeds in case of the account holder's demise.  Review the Terms and Conditions:  Carefully read and understand the terms and conditions associated with the recurring deposit scheme. Clarify any doubts with the bank staff before proceeding.  Submit the Application:  Submit the completed application form along with the KYC documents and the initial deposit amount (if required) to the bank officials. If you are applying online, follow the instructions provided on the bank's website for document submission.  Receive the RD Account Details:  Once the application is processed and approved, you will receive the recurring deposit account details, including the account number, tenure, and interest rate.  Set Up Auto-Debit (if applicable):  If you opt for automatic monthly deductions from your savings or current account, set up the necessary standing instructions with your bank.  Monitor Your RD Account:  Keep track of your recurring deposit account through statements provided by the bank or online banking services. Ensure that monthly contributions are made on time.  By following these steps, you can successfully open a recurring deposit account and begin your journey toward systematic savings and interest accumulation  Documentation and Eligibility  Here are the documents needed for Recurring Deposit account opening:  Proof of Address:   Aadhar card  Passport  Voter ID  Utility bills (electricity, water, gas, or telephone bills)  Rent agreement  Passport-sized Photographs:  Typically, 2 to 4 recent passport-sized photographs may be required.  PAN Card:  Permanent Account Number (PAN) card is usually mandatory for recurring deposits exceeding a certain amount.  Filled Application Form:  The bank-specific application form for opening an RD account, which can be obtained from the bank's branch or website.  Income Proof:  Some banks may require proof of income, especially for higher deposit amounts.  Eligibility Criteria:  Age:  Generally, individuals of all age groups, including minors, can open an RD account. However, minors may require a guardian to operate the account on their behalf.  Residential Status:  Resident Indians, Non-Resident Indians (NRIs), and Hindu Undivided Families (HUFs) are usually eligible to open recurring deposit accounts. However, the specific eligibility may vary based on the bank's policies.  Source of Income:  Banks may require information about the source of income, especially for larger deposit amounts. However, RDs are generally open to salaried individuals, self-employed individuals, and others.  Nomination Details:  While not mandatory, providing nomination details is advisable. Nomination details include the name, address, and relationship of the nominee who will receive the RD proceeds in case of the account holder's demise.  It's essential to check with the specific bank or financial institution for any additional requirements or variations in eligibility criteria. Additionally, the minimum deposit amount and tenure options may differ between banks, so it's advisable to inquire about these details beforehand.  Risks and Considerations  While recurring deposits offer a secure and stable savings option, potential risks include lower returns compared to market-linked investments and the impact of taxation on earned interest. Additionally, breaking the RD prematurely may incur penalties, affecting liquidity. It's essential for investors to weigh these factors against their financial goals and consider alternative investment options for potentially higher returns.  Premature Withdrawal Penalties  Withdrawing a recurring deposit before maturity often incurs penalties. The exact penalty varies among banks but typically involves a reduction in the interest rate offered. Additionally, some banks may charge a fixed fee for premature withdrawal. Investors should carefully review the terms and conditions provided by the bank at the time of opening the recurring deposit to understand the specific penalties applicable.  Impact of Interest Rate Fluctuations  Changes in interest rates can impact recurring deposits. If interest rates rise, existing RD accounts may earn lower returns compared to the new, higher rates. Conversely, falling interest rates could benefit existing RD holders, as their fixed rates remain unchanged. Choosing the right tenure and staying informed about market trends can help optimize returns in varying interest rate environments.  Tax Implications on Recurring Deposits  The interest earned on recurring deposits in India is taxable as per the income tax regulations. The interest is added to the depositor's total income and taxed at their applicable income tax slab rate. Unlike fixed deposits, there is no TDS (Tax Deducted at Source) on recurring deposits; however, the onus of reporting and paying the tax rests with the depositor. It's important for individuals to include the interest income from recurring deposits when filing their income tax returns and adhere to the tax obligations as per the prevailing tax laws.  TDS and its Applicability  As of January 2022, there were no TDS (Tax Deducted at Source) provisions for interest earned on recurring deposits in India. However, tax laws are subject to change, and it's crucial to verify the latest regulations.  As a general rule, TDS is not applicable to the interest earned from recurring deposits. Instead, the responsibility falls on the depositor to report the interest income and pay taxes accordingly during the income tax filing process. It's advisable to stay updated on any amendments to tax laws and consult with a tax professional for the most accurate and current information regarding TDS on recurring deposits. 
Is investing in mutual funds safe? Addressing all your concerns! 

Is investing in mutual funds safe? Addressing all your concerns! 

Inflation is snowballing. To cope with the growing cost of inflation, one needs to plan investment at an early stage. When we think about investment, we can choose from multiple options available in the financial market. Traditional tools provide a nominal return on your investment, while mutual funds offer varied products suitable for different needs with attractive return potentials.  What is a Mutual Fund?  A mutual fund is a pooled investment vehicle that collects the savings of several investors who share a common financial goal. It manages the investors' money by investing in securities to generate a return. It charges fees from that return generated, and the remaining return is passed on to the investors.  One of the main advantages of investing in mutual funds is that it provides investment diversification. This means that the money invested is spread across various companies and sectors, which reduces the risk of losing all the money in case of a market volatility downfall of one company or sector.  Concerns amongst investors are prevalent when they start investing money in any financial asset class as they put their hard-earned money into that investment.  Let us address and discuss the different concerns in detail for better understanding.  Risks and Disadvantages of Mutual Funds Market Risk - When we choose to invest in securities, there will always be a market risk i.e. the macro-economic risks all firms in the economy are exposed to. You can't control the market risk, but you can be prepared for it. Understanding the market risk and diversifying your investment can help you survive the market storm.  No Guarantee – Compared to other traditional tools available in the market, there is no guarantee that you would get a minimum of this much return or that your principal is protected. As we know, mutual fund returns are subject to market risk.   Management Risk: Mutual funds also include management risk, which means that the fund manager may not perform well and could not generate the requisite return. Sometimes, even experienced fund managers can get caught off guard by unexpected market events or make emotional decisions based on fear or greed.  High annual expense ratio: Mutual funds must disclose how much they charge their investors annually in percentage terms to compensate for the cost of running an investment business. The percentage of expense ratio reduces the mutual fund's gross return.  Mutual Fund Loads: Mutual funds may apply exit loads, which are one-time expenses levied when exiting a mutual fund scheme. The charges applicable here are as follows.   Exit Load: The exit load must be paid when an investor exists in the mutual fund scheme within a short span. This fee is levied to stop investors from opting out of the scheme.  Transaction Charges: An investor must pay a nominal amount as transaction fees. For example, if A wants to invest 10,000INR into a mutual fund and transaction charges are 100INR, then that investor will have 9,900INR in total to invest.  Other Costs - Investors incur indirect costs during the investment journey, including opening and maintaining a demat account, brokerage charges, etc. While buying and selling stocks, a security transaction tax is levied, which must be paid by investors.  As mentioned earlier, professionals manage mutual funds, making smart decisions for investors like you. This way, you can gain from the manager's knowledge and experience. Keep in mind that due to rules and regulations, many funds may dilute returns, which could limit potential returns.  Investing in mutual funds isn't risk-free, but risk can be minimized in an effective way to grow your wealth over the long term. By managing expectations, understanding risks, and choosing the right funds for your needs, you can turn this rollercoaster into a smooth and rewarding ride towards your financial goals. Remember, knowledge is power, and with a little research and guidance, you can navigate the world of mutual funds with confidence.  If you are still confused about your investment journey and need guidance, then book a meeting with our wealth advisor.  
Top Mutual Funds for your child's education in 2024 

Top Mutual Funds for your child's education in 2024 

In the pursuit of providing an exceptional education experience for their children—be it during the formative years, primary schooling, or higher education—every parent shares a singular concern: financing this educational journey. With the education costs skyrocketing, every single moment becomes crucial because time is money. As the adage goes, "The early bird catches the worm.", delving into preparations for your child's future sooner rather than later is akin to higher corpus maturing over time. Thereby, ensuring a more robust foundation for their educational endeavours.   To help you better understand the situation, consider two friends, Ram and Lakhan. They both decided to invest for their child’s future a sum of Rs. 10,000/Month SIP in a fund that gave 12% annualized returns. The only difference is Ram started investing when he was 24 years old and Lakhan started investing when he had his first child at age 30. At the age of 40 Ram would have had Rs. 58.13 Lakhs whereas Lakhan would have had just Rs. 23.23 Lakhs, loss of almost Rs. 35 Lakhs because of delaying the investments. Therefore, the earlier you start, the better it is.  But how to find a good investment? How to know if a scheme is good for you as there are “n” number of things that hover around.  Perplexed yet? Don’t worry, we’ve got you.  To simplify this vast world of mutual funds for you, we have prepared a list of the important factors one should consider while investing in Mutual Funds.  Time Horizon - How much time do you have in hand determines your risk-taking ability. The higher the time horizon, higher the risk you can take and vice versa.  Risk Appetite - Determine how much risk you can take. This will depend on various factors such as time horizon, certainty of cashflows, amount of investment, etc.  As a general rule of thumb:  Equity funds are suitable for individuals with high-risk appetite and longer time horizon (5 - 10 years or even more).  Hybrid Funds are suitable for individuals with low to moderate risk appetite and having medium term time horizons (3-5 years).  Debt Funds are suitable for low-risk appetite investors for short term time horizon.  Investment Strategy – The investment strategy adopted by the fund plays a crucial role to determine if it is suitable for you. A high risk investment strategy might    Fund Details - See who is managing the fund and for how much time, where it invests, how much are its assets (higher the better), what is the expense ratio (lower the better).  Past Performance - How the fund has performed in the past, whether it has outperformed in the bull markets and protected your capital in the bear markets, etc. will give you an idea whether the fund manager has managed the fund appropriately.  Note: this is not an all-inclusive list.  Top Mutual Funds for Parents Still worried? Below is a list of top mutual funds parents can consider for their child’s education planning.   Sr. No. Scheme Name Category Sub-Category Inception Date AUM Expense Ratio 1Y Return 3Y Return 5Y Return 1. Nippon India Small Cap Fund Equity Small Cap 1/1/2013 43,816 0.67% 59.3% 42.60% 31.57% 2. HDFC Mid-Cap Opportunities Fund Equity Mid Cap 1/1/2013 56,033 0.80% 53.99% 33.89% 25.41% 3. SBI Contra Fund Equity Contra 1/1/2013 21,482 0.69% 45.69% 33.46% 26.70% 4. HDFC Balanced Advantage Fund Hybrid Dynamic Asset Allocation 1/1/2013 73,349 0.80% 38.43% 27.55% 19.72% 5. DSP Nifty 50 Equal Weight Index Fund Equity Index (Large) 10/27/2017 1,004 0.40% 33.31% 23.64% 18.89%  Note: All are Direct plan and growth option; AUM and Expense ratios are as on December 31, 2023; 3Y/5Y returns are annualized and as on January 30, 2024.   Source: Value Research  Fund Details:  Nippon India Small Cap Fund:  This fund is being managed by Mr. Samir Rachh (Since January 2017) and Mr. Tejas Sheth (Since February 2023) who is an assistant fund manager.  The fund has provided 27.07% of return since inception and it has outperformed the category over the last 1/3/5/7/10 years.  It has delivered the highest returns in the category over the last 7 and 10 years and has been in the top 3 over the 3 and 5-year period.  The fund has delivered the best risk-adjusted returns over the last three years, depicted by the highest Sharpe ratio.   HDFC Mid Cap Opportunities Fund:  This fund is being managed by Mr. Chirag Setalvad who has been the head of equities since June 25, 2007, and Mr. Dhruv Muchhal who is an Equity Analyst and Fund manager for Overseas investment.  HDFC Mid Cap Opportunities Fund is the largest fund in the mid-cap space with an AUM of Rs. 56,033 crores and is the only fund in the category to have an AUM of more than Rs. 50,000 crores.   The fund has provided a 21.76% return since inception and has outperformed its category and the mid-cap index in all the time horizons of 1/3/5/7/10 years.  The fund has delivered better returns per unit of risk depicted by the lower standard deviation and the beta compared with the category average.   SBI Contra Fund:  The fund has been in existence for approximately 25 years and has been managed by Mr. Dinesh Balachandran since May 2018 who has 17 years of rich experience in this field.  This fund has provided a whooping return of 19.59% since its inception date and has outperformed its benchmark S&P BSE 500 TRI in all the time horizon.   The fund follows a contrarian strategy while investing in equity and provides exposure to companies of all sizes.   The fund has delivered the best risk-adjusted returns in the category, as depicted by the highest Mean Return, Sharpe Ratio, Sortino Ratio and Alpha.   HDFC Balanced Advantage Fund:  HDFC Balanced Advantage Fund is one of the oldest funds in India and is the largest fund in the balanced advantage category, with an AUM of Rs. 73,349 crores.  The fund has been the top performer in the category for over 1/3/5 years and has delivered an impressive return of 16.04% since inception.   Although the fund has been volatile more than the category, it has delivered a significantly higher alpha of 10.34% compared to the category average of 1.35% over three years.   This fund has been managed by Mr. Srinivasan Ramamurthy, Mr. Gopal Agarwal, Mr. Anil Bamboli, Mr. Arun Agarwal, and Mr. Nirman Morakhia.  DSP Nifty 50 Equal Weight Index Fund:  This fund is being managed by Mr. Anil Ghelani (since July 2019) and Mr. Dipesh Shah (since November 2020).  This fund tracks the Nifty 50 Equal Weight TRI, allowing us to have exposure to large-cap equities where the probability for alpha generation is very low.   Compared with Nifty 50 TRI, Nifty 50 Equal Weight Index TRI has delivered better returns with lower volatility over a long-term period from June 2000 to April 2023.   The fund delivered an alpha of 3.75% whereas the other funds in the category struggled to outperform the benchmark over the last three years.    Above all the funds have given stellar returns and fare better amongst peer schemes. Parents can consider a fund that is appropriate based on their financial goal, risk tolerance and time horizon. Before embarking on any investment decision, consult a financial advisor for guidance. Their expertise not only enriches your understanding but also strengthens your strategy, ensuring a secure and informed financial journey.  Disclaimer - Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The past performance of the mutual funds is not necessarily indicative of the future performance of the schemes. The mutual fund schemes mentioned are only for educational and informational purposes, and no investment is recommended.     Start Investing!
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