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Invest INR 500 every month for child education

Invest INR 500 every month for child education

If you want to make the life of your child safe, secure, and rewarding, start investing INR 500 every month for the child as early as possible, say financial experts. Even a small amount of INR 500 will go a long way in creating a solid financial corpus if it is backed by good planning and a strong investment vehicle.  The right kind of investment is of utmost importance because it will safeguard the future interest of the child and lessen his financial burden. Best investment plan to invest INR 500 every month for the child Planning an investment of INR 500 every month for a child is a huge thing; hence investors need to consider many factors before finalizing the perfect investment vehicle.  1. Systematic Investment Plan or SIP Invest INR 500 every month for the child in mutual funds with the help of SIP, as the small amount will keep on adding and compounding to create a very large financial corpus. SIPs are one of the best vehicles because it encourages investing and saving consistently in a disciplined manner.  Start as early as possible because it will provide a large window for the fund to accumulate. For example, if the investment period is 20 years and the expected rate of return is 10% per annum, then a monthly sum of INR 500 can result in nearly INR 3,82,848.  Invest through the Edufund App, as it offers a choice from 4000+ direct mutual funds. It is easy to start and stop a SIP anytime you desire.  2. Direct Equity For investors who are not afraid to take high risks, the amount of INR 500 can be used to buy direct equity. Choose growth stocks as they will yield better returns (in the average range of 50%) than average equity, which is expected to yield a return between 13% - 15%. Remember, patience is the key to growth equity, and you have to remain invested for the long term to get solid returns.  3. Public Provident Fund (PPF) The PPF investments are for investors that do not want to take risks and are looking for safe investment vehicles. With a 7.1% interest rate, PPF is a long-term tax-saving investment scheme that can be opened in a bank or a post office.  4. Recurring Deposit Account The interest rate on recurring deposits is nearly 6.5% to 6.9% depending on the bank. The RD account can be opened in a bank or a post office where an investment of INR 500 will keep on accumulating and earning interest throughout the investment period. The RD account is for investors who want to keep their money in a safe environment and simultaneously earn some money. 5. Child Insurance Plans  Child Insurance Plans are some of the best vehicles to invest INR 500 every month for a child. There are child life insurance plans that can be paid on a monthly basis.  With an amount of INR 500, you can buy a term insurance plan that offers high death benefits.  Child investment plans are very advantageous because if in some cases the policyholder dies then the future premiums are waived. The insurance company then keeps on investing the premium amount on behalf of the policyholder, and the amount is given to the child as per the terms and conditions of the policy. Examples of child insurance policies with a premium under INR 500 per month are SBI Life’s Term Insurance Plan, where the minimum premium is only INR 365 per month, and the ABSLI DigiShield Plan, with a minimum premium of INR 477 per month.  If you have a girl child, then there are also several investment schemes just for the girl child. The government-backed scheme Sukanya Samriddhi Yojana was introduced specially to save the future of a girl child. You can invest INR 500 per month and the amount is payable after the maturity period of 21 years.  6. Stocks & ETFs Although stocks are considered risky, they have an advantage over some of the investment options, like recurring deposit accounts, because of high returns over a long period. ETFs are also high return cost-effective investment vehicles through which the investor can invest in entire sectors.  Conclusion Take a leap of faith and start the journey to invest INR 500 every month for the child because it will go a long way in creating a lump sum amount in later years.  Take the help of the investment experts on the Edufund app to create the best possible personalized financial plan for your child with an amount of INR 500. The strategies are backed by data, research, and appropriate tools like the investment calculator so that you will get better returns on your investment, and that too in a secure and transparent environment. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Ultimate Guide: SIP plans for child education in India

Ultimate Guide: SIP plans for child education in India

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

How to navigate finances as a married person?

Goals that individuals plan for themselves before marriage can vary from person to person. Sometimes the goal is to have a fit body that looks amazing in a wedding dress and at other times, the goals are more long term like buying a house of their own or a car.  Marriage is a big event in anybody’s life and it is normal to divide your goals into pre and post-marriage. However, it is not enough to just have goals. You should plan out how you are going to lead your life post-wedding to achieve these goals. While money is not the only important factor in a marriage, setting concrete and judicious financial goals becomes crucial to leading a happy married life.  Below is a list of things that you can do as a married person to lead a better financial life after marriage. 1. Open a separate bank account You might already have a joint account with your spouse but that is not enough. It is always advisable to get another bank account that will be solely devoted to your monetary expenses as an individual. Having a bank account exclusively for this purpose serves many purposes other than keeping you from mixing up your finances.  It might bear witness to how independent and responsible you and your partner are. Offering each other time and space can be as important as contributing to your relationship, financial or otherwise. In the long run, it bears testimony to how invested you are in your marriage.  Moreover, being in a marriage does not have to mean that you don’t have any personal goals anymore. These individual goals can be for yourself, your parents, your child, and so on. Having a separate bank account will also prove how invested you are in yourself despite being married.  2. Talk about finances  It goes without saying that in any relationship, communication is key. In a marriage, too, it is important to keep your partner in the loop, as you have decided to live your life together. Among other things that partners should talk about, money is one of the most significant. Being actively involved in marriage also means that partners should stay aware of each other’s monetary difficulties like debts. If your partner is trying hard to pay off debts, home loans, education loans, and the like, it should be a priority to help them overcome it. Romantic gestures need not just be about taking your partner out on dates or handing them a bunch of flowers. Being the person they can depend on in times of adversity can strengthen your bond tenfold.  3. Make a priority list  One of the most important steps in navigating finances is to make lists that state your financial priorities in order. Sit down with your partner and discuss at length if rent should come first or debts, or retirement savings.  Financial planning takes into account things like emergency funds and the first step to start planning these is to place them on your priority list. Ideally, emergency funds should come before investment plans. You should also start clearing up your debts as soon as you can. This way your EMI money will be ready to be spent whenever you need it.  4. Get started with budgeting immediately  Budgeting is indispensable if you are looking to manage your finances effectively. In marriage, you need to go about every step of budgeting along with your partner as you are managing a household together. Budgeting includes your daily expenses and putting away a part of your income as savings every month.  Planning is key, be it for expected or unexpected expenses. Put aside money on regular intervals for expenses you are expecting - those can be a phone or car upgrades or even getting a new house. For unexpected expenses, save money every month as part of an emergency fund. Be in constant touch with your partner about their financial goals so that you can find out how to be compatible.    Surveys often indicate that couples might face stress in their married lives over their unregulated spending habits. Creating separate buckets of savings for different expenses is the healthiest and most systematic way of budgeting. It saves you and your partner the extra tension and ensures happy married life.  FAQs How finances are best handled in marriage? The best way to handle finances is to have an open discussion around money and expenses. Talk about the shared expenses and individual expenses. Whether you have dependents like children, siblings and parents? Try to have two separate accounts for personal expense and a joint account for shared expenses. Plan and save for major events like raising a child, their education, buying a house and trip. What is the best way to budget in a marriage? The right way to budget in a marriage is to discuss the income resources and expenses with each other. Divide the expenses, find out how much you and your partner can contribute and follow the 50-30- 20 rule. Herein you can dedicate 50% of your shared income towards household needs, 30% towards wants and 20% towards savings. Who should be in charge of the finances in a marriage? Both partners should be equally in-charge and responsible for finances in a marriage. Its important to budget, save and investment as partners and discuss the well of contribution towards shared expenses openly. Conclusion Managing finances together with your spouse might not always be easy because as individuals you might have different monetary goals and spending habits. Nevertheless, keeping judgments at bay and instead, helping each other overcome their unhealthy lifestyles and financial adversities can go a long way in securing your marriage.  You can start your investment journey right away with your partner by downloading the EduFund app. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Mystery solved: How to do Investing as a family?

Mystery solved: How to do Investing as a family?

To get started with family investments, you need to make a list of goals you want to invest towards. These will create different funds that can be utilized for your family's needs when those moments arrive. This might be your first time as an investor. Worry not for it is always a good time to start investing - be it as a collective unit or individually. However, if you are investing as a family, there will be some added responsibilities.  You can follow a few pro tips so as not to get confused when you have more than one investment to deal with.  Separate investments from savings  Investments are a lot like savings. We invest or save money for future use. But investments are a better method of securing your future because, unlike your savings, investments can generate more wealth by themselves. Thus, to enjoy the blessings of compounding, you are advised to separate your savings and investment. This means that you are required to not mix them up. It also means that you can have separate saving goals and investment goals. List down your saving goals and investment goals so that you do not lose sight of them. Keeping track of this will also help you decide how much money you can afford to invest depending on your income and expenditures.  Fixing your investment goals Once you can tell your investments apart from your savings, the next step is to compartmentalize your investments. Like savings, investments must also be divided according to different financial goals. That is to say, do not put all your money in one place with just one goal in mind. Divide your priorities and list them down. It is advisable to separate your personal financial goals from your family goals. Your investments can be directed towards creating funds for emergencies, healthcare, childcare, education, housing, retirement, and so on. These are the common needs of a family unit but you might have special requirements. Prepare your list of priorities accordingly.  Creating diverse investments  Simply compartmentalizing your investments is not enough; you are also required to diversify your investments. The trick is to invest in different places instead of investing in the same company stock or fund.  You must remember that, as a family, your investment goals can be quite distinct and miscellaneous. They vary not only in terms of the time you can give for the money to grow but also in terms of the amount you can invest in the first place. There are other factors like the level of risk involved and the percentage of returns you will enjoy in the long run. There are various kinds of mutual fund schemes you can opt for - large-cap equity funds, small-cap equity funds, mid-cap funds, debt funds, taxing saving schemes, and so on.  When you diversify investments, you play safe by ensuring that if you incur a loss on one investment, it will be balanced by the profits earned on another. Moreover, you can invest in International Equity funds to satiate goals like your child’s education abroad. This will ensure that you do not get affected by the market fluctuations of the Indian stock market. Also, your returns will have more value because a foreign currency like the US dollar is more stable. FAQs What should a family invest in? Investing as a family is important, from starting a PPF to SIP for mutual funds, you can explore a huge set of diverse options. Remember, investing is different from savings so make sure you do both as a family because there are many expenses to care for. What is the number 1 rule of investing? The number 1 rule of investing is to start early and never lose money. The power of compounding helps you save money and generate wealth for big goals like education, buying a house or starting a fund for travelling. What do 30 year olds invest in? There are many investment options for 30 year olds such as stocks, ETFs, mutual funds, etc. What are 3 good investments? Stocks, index funds, mutual funds and ETFs are 3 categories of investments that are considered good. Conclusion When you make investment decisions as a family, your kids learn from you. Thus, as a financial role model, your responsibility increases. As a married person, sharing investment goals with your partner as well as having separate individual funds is an example of healthy investing. This is the most organized way to make sure that one fund does not get compromised to fulfill a goal it was not originally meant for.  Similarly, try not to use up your life savings or retirement fund to send your kids abroad for a college education. Only prior well-planned investments can prevent such bewilderment from occurring. Investing systematically also means zero stress in your retirement life. Consult an expert advisor to get the right plan TALK TO AN EXPERT
Tax saving options for salaried individuals

Tax saving options for salaried individuals

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

Does a SIP of INR 500 really help?

What can you do with Rs 500 today? Get an amazing lunch or dinner for two at a decent restaurant in town? Or get a Pizza for two? Or get a cool T-shirt from an online store? Alternatively, with Rs 500, you could have a large pot of money to send your child to their dream college and fulfil their aspirations. One can choose the route of saving Rs 500/ month through SIP plans with mutual funds and have a considerable sum of money by the end. What is a SIP? A Systematic Investment Plan or SIP is a way in which you can choose to invest a fixed amount with the mutual fund at regular intervals (say a month or a quarter). SIPs aid in creating financial discipline and saving towards a goal. They reduce the burden on the investor by allowing them to invest small sums instead of a large cash outflow or lumpsum amount at once and provide the investor with decent returns. To forgo lifestyle expenditure and to start investing would be difficult for early boomers in the starting stages of their careers. Once the investor opts for a SIP (or more SIPs), the amount as specified by the investor automatically gets debited from the bank account that is linked to the SIP. Hence, you are investing for your future automatically without you making any separate effort towards it. Can I save Rs 500 and have something tangible in the end? SIPs in India allow for investing with a minimum amount of Rs 500. Hence, as an investor, instead of ogling at the stock/trading screens and making desperate attempts to time the market and fanatically buying and selling stocks, you could simply invest in Mutual funds. Mutual funds take care of diversification (putting your eggs into different baskets), invest in the best stocks, and finally earn you a decent return. Let us consider some scenarios - Case 1 As a very young investor, a graduate who has earned his or her first paycheck, you could start saving Rs 500 into a SIP. Even if you maintain this as your amount and invest for 35 years, by the time you are 56, you will have Rs 1.76 Cr in your investment pot. Hence with an investment of Rs 2.1 lakhs, you would be creating a wealth of Rs 1.7 Cr. SIPAmount500Expected Return18%Number of years35At the end of the time periodInvested Amount2,10,000Wealth Created1,70,79,403Final Amount1,72,89,403 Case 2 Even if you do not have 35 years till your child starts to go to college, you can still create a large amount of wealth by having this discipline for 20 or 25 years. The results are as follows. SIPAmount500Expected Return18%Number of years20At the end of the time periodInvested Amount            1,20,000 Wealth Created          10,34,427 Final Amount          11,54,427  SIPAmount500Expected Return18%Number of years25At the end of the time periodInvested Amount            1,50,000 Wealth Created          27,18,627 Final Amount          28,68,627  In both cases, the wealth created is 9x or 18x times the amount invested by you. As one can see in the above charts that a small difference of 5 years creates a great compounding effect where Rs 500 amounts to Rs 28.6 lakhs when invested for 25 years and amounts to less than half the amount of Rs 11.54 lakhs when invested for 20 years. Hence, by being an early saver, one can create a tremendous amount of wealth with minimal effort. You can start your investment journey today with a SIP in the top mutual funds in the country with EduFund. FAQs Is SIP really beneficial? Yes, SIP is one of the best ways to start investing in mutual funds, index funds, or ETFs. It allows you to invest in a systematic way over a long period of time. Can I start a SIP of 500 per month? Yes, many mutual funds allow investors to invest a minimum of Rs. 500 every month. It helps in growing your wealth over a period of time. Which mutual fund is best for 500 per month? There are many mutual funds that offer Rs. 500 per month such as Axis Long-Term Equity FundAxis Bluechip FundSBI Equity Hybrid FundParag Parikh Flexi Cap FundSBI Focused Equity Fund Consult our expert advisor to get the right plan for you TALK TO AN EXPERT
SIP
How to become financially independent?

How to become financially independent?

Becoming financially independent is one of the ultimate goals behind pursuing any profession of your choice. Of course, everybody needs to work to earn money. But will earning money alone ensure your financial independence? We’ll discuss the possible ways to become financially independent in this blog. What financial independence means? Everyone defines financial independence in their own terms and goals. For most people, it usually means having financial freedom and not having to worry about finances and money-related issues. Financial independence comes when you intelligently invest and can afford a certain lifestyle of your choice. It also means you retire without worry or have the freedom to pursue your passion without second thoughts. 1. Set life goals A mere desire to achieve financial independence won’t help you reach your goal. If you wish to be financially independent as soon as possible, you should set realistic and ambitious goals. Setting life goals, big or small, would help you create a blueprint for achieving those goals. Be focused and specific about your goal and make timelines accordingly. This will not only help you meet your goal’s deadlines on time but also increase your chances of achieving your goal. 2. Make a monthly budget Making a monthly household budget is one of the best ways to control your spending and track your bills. Sticking to your budget is a great way to ensure that bills are paid and savings are on track. It also acts as a regular routine that reinforces your goals. 3. Start investing now In the midst of rising debt, financial emergencies, medical expenses, and excessive spending, achieving financial independence can be quite challenging. However, it is attainable with discipline and careful planning. Bad stock markets and low returns can make people question their wisdom in investing and whether they should keep investing their hard-earned money. But there is no better way to grow your money than investing. Investing is basically making your money work for more money rather than you working for the money. The magic of compound interest, dividends, growth in the share market, increments in shares you have invested in, etc., will grow your money exponentially. But you need a lot of time and patience to achieve this meaningful financial independence. Investing in the right tools at the right time with expert advice can help you reach your goal. Remember that not everyone is a professional investor from the beginning, so it would be a mistake to attempt the kind of stock-pinning and risky investments made famous by billionaires like Warren Buffett. Instead, start simply by opening an online brokerage account that will help you learn how to invest, create a manageable portfolio, and make weekly or monthly contributions to it automatically.  Track your investments on a regular basis and keep learning more about investments and better opportunities to invest in. More importantly, consult financial experts while investing your savings. 4. Avoid loans and debts and pay off your credit cards in full One of the vital hacks for becoming financially independent is to avoid loans, credits, debts, etc. You need to be smart when it comes to money and financial freedom. It might seem easy to pay back loans, but in reality, there are many challenges. When loans are being taken, they should be intelligently calculated and only be taken when necessary. Credit cards and other high-interest consumer loans may be hurdles to wealth-building. Make sure to settle the entire balance every month. Paying off mortgages, student loans, and other loans with comparable terms often have significantly lower interest rates, so doing so is not urgent. Even yet, timely repayment of these loans with lower interest rates is crucial. On-time payment of these loans would not only help you get financially independent early but also help you build a good credit score which is very beneficial. 5. Watch your credit score The credit score is a very important number for you as it determines the basis on which interest rate will be offered to you when you decide to take loans for any personal reasons like renovating your house or buying a new car, or taking any loans for any purpose. Credit score also plays an important role in determining the premium rate you will have to pay for any kind of insurance you take. Since someone with careless financial habits is thought to be irresponsible in other areas of life, credit scores are given a lot of importance. This is why it's crucial to obtain credit information on a regular basis to ensure that no incorrect defaults are harming your reputation. Stay educated on financial issues. 6. Create automatic savings Automatic saving basically means setting money aside the day you get paid so that it never reaches you. You can also call it paying yourselves to be ready for retirement. To be financially independent, it’s very important to enroll in an employer’s retirement plans and make full use of any matching contribution benefits, which are essentially free money. Having an emergency fund that may be accessed for unforeseen needs is a good idea as well. 7. Do not stop having fun And last, ensure your life does not seem too boring because you do not let yourself have a little fun and relax. Join parties, travel from time to time, and do not forget that you need to strike a reasonable balance between achieving financial independence and your everyday life as a young and happy person. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT
What will be the value of 1 crore after 20 years?

What will be the value of 1 crore after 20 years?

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

Methods of saving money

Saving money is tough and overwhelming. With the internet filled with different methods of saving money, it can get difficult to pick which is the best choice for you!  In this article, let’s find out what are the varied methods of saving money and where you should park your money for the best returns. Methods of saving money  Here are some methods of saving money that can help you achieve your long-term and short-term financial goals 1. Invest and Save  Investing and saving are one of the most crucial methods of saving money. It is also the most underrated method. Most Indians do not invest in the stock market or take benefit of its varied opportunities. If you want to invest and save then here are some investment options to explore 2. Direct mutual funds Direct mutual funds are a good way to start investing and saving. As there is no middleman in between, there is no extra cost.  Regular mutual funds are another type of mutual fund. These charge more in terms of expense ratio but are professionally managed and maintained by an experienced fund. This is a great investment for investors who are new to investing and need a helping hand to make the most of their investments. 3. Digital Gold Digital gold, gold bonds, or gold ETFs are also a way. There are alternatives for physical gold but it is a way of investing. You can do all of this online; there is no need to go to a jewelry store. It’s the more suitable way of buying gold. Investors who want to sell or buy gold can do it without any problems with one click in an app. The minimum cost of buying or selling gold can be as low as Rs 1. 4. US Stocks US Stocks are another method of saving money! That’s right. Suppose you plan to send your child abroad to study in USA or Canada. The currency difference between USA and India will make the education cost higher for you. Imagine if you start investing that money regularly in US dollars so that by the time your child is off to the USA, you will be able to fund his/her dream without any loss!   Real estate investment involves buying, managing, and selling a property. It’s a type of investment and has different parts. 5. ETFs ETFs (Exchange-Traded Fund) are somehow similar to mutual funds. It’s a type of pooled investment security. It can be sold and bought much like other stocks.  Daily savings and budgeting  Many people ignore saving and budgeting as a method of saving money. It can help you cut costs and recognize areas where you may be losing money.  Create a budget for the month. When there’s a fixed budget for the month, you tend to spend less. Settle everything under your budget.  Don’t just save your money, think about your future too. Set aside some money for an emergency fund. So that you are prepared for any emergency like job loss.  Start saving for your life after retirement. Make sure you have a retirement plan or fund in place way before time. This will help you amass more money over a long period of time. In fact, the sooner you think about your retirement, the more money you are likely to save up!  Save and invest your bonuses or tax refunds. Put them into your savings account and consult your financial advisor on how to make the most of it.   Manage your debts before making creating any extra costs like starting a new EMI.  Save electricity. It will also save you money. By not using unnecessary fans, lights can cost you more than you can think.  Cancel your automatic transactions, and memberships, and unsubscribe from unnecessary emails because by seeing offers you tend to make unnecessary purchases.  Decrease your mobile bills. Cut off unnecessary plans from your bill. Use free Wi-Fi instead of buying extra data plans.  Banking saving tips  Use your credit less. Pay your credit card bills timely to have less burden on your shoulder later.   Use only your ATMs or debit cards because every time you use your ATMs or debit cards, you are not charged any withdrawal charges.   Keep your monthly bills on automatic. It will free you from hassles and also pay your bills on time.  Entertaining saving If you love reading and like to have physical books then use your nearby libraries.  Watch films at home instead of going outside and spending more there. Going to a theatre means buying popcorn, seats, transportation, etc. but when you watch films at home you don’t spend extra.  Reduce your trips to coffee shops. It doesn’t cost you $2 - $3(Rs 200 - Rs 400), but it costs you more than that in long term.   Instead of eating out regularly, cook your own food at home.  Cut off your grocery expenses. Don’t shop extra from that grocery store. It helps you in saving extra money here and there. Make a budget for that too and stick to it.   Consult an expert advisor to get the right plan TALK TO AN EXPERT FAQ Are ETFs a good investment?  ETFs are actually low-risk investments because they are low-cost and hold a bag of stocks. What are the 2 methods of saving?  Cutting off extra expenses and investing money in mutual funds, digital gold, etc. Helps in saving money. How much should I save every month?  Saving 10% - 20% every month should be the goal so that in long run you will be saving more. Is investing money a good way to save more?  Investing money is a good way to save more but it’s an individual’s own choice to invest or not. But now, it’s a proven method to save money by investment.
What is financial planning and why is it important?

What is financial planning and why is it important?

What is financial planning? Financial planning refers to acquiring information about your financial needs and then making a comprehensive plan to reach your financial goals with as much certainty as possible.   Financial planning considers the following factors: your current financial situation, what you wish to do with the money you will acquire, and how you are willing to invest your money to achieve your goal.   Thus, to define it in a sentence, we can say: Financial planning is a means to achieve your future goals through proper development and implementation in accordance with some general guidelines.  Financial planning includes applying globally accepted management principles like planning, directing, organizing, and procurement of funds to invest and generate the maximum possible returns.   It helps you prioritize your investment decisions based on the urgency of your goals. People have both short-term and long-term goals.   For example, a short-term goal like buying a car in two years requires a much different planning approach than a long-term goal like buying a house in 10 years.   Both these aims have entirely different capital, returns, and financing requirements.  We can say that financial planning will lead to asset management and not the other way around. Once a plan is laid out, the implementation requires proper management of the available assets to generate maximum returns to fulfill your goals. Source: pexels Importance of financial planning  A significant advantage of a financial plan is that it helps you build financial security for yourself and your family as well can grow your assets and prepare for financial emergencies.   It helps you fulfill your dreams. Some reasons why you should consider building a financial plan:  1. Give a perspective on your financial goals Once you have a clear goal in mind, you will be able to employ financial literacy in a well-defined direction to achieve your goals.   With a plan, you also employ popular money-management techniques like the 50/30/20 rule (See here: Tips to follow for 50/30/20 Money Management Rule) and the (15-15-15 rule of investing), according to your needs.  2. Income management Through financial planning, you can prioritize monitoring a fixed budget for your expenses and moving towards investing a chunk of your income.  3. Growth of assets The ultimate purpose of a financial plan is to increase your asset base. By investing intelligently (with proper diversification and allocation), you will earn high returns and preserve your wealth, thus extending your investments and increasing your net worth.  Start your financial planning journey now so that you don't miss your goals by the margin.  Steps to follow when creating a financial plan 1. Create an emergency fund The first and foremost step towards saving is to create an emergency fund so that you do not want to disturb your financial routine if any emergency arises. There are many formulas to create an emergency fund. One way is to create an emergency fund for six months of your expenses. So, in situations like job loss, your emergency fund can take care of your expenses until you find another job. You can park your emergency fund in liquid funds to maintain liquidity.  2. Make a monthly budget Making a monthly budget will help you save money better, as you will be able to identify and analyze your income and expenses better. In this step, identify all your income first and then expenses, where you spend most of your money. Making a monthly budget will assist you in segregating income and expenses into different categories. To create a proper budget, you can follow the 50-30-20 rule. It says that 50% of your income should go towards your needs, 30% toward wants, and 20% for saving and investing. By following this rule, you can manage your monthly budget.  3. Spend wisely Spending wisely is as critical as making a budget. After making a budget, you can evaluate where to cut down your unnecessary expenses. And where you do not need to spend your hard-earned money. For example, you may have bought a monthly subscription to some adventure park, but you may not be utilizing it. So, you can cancel your subscription and save a lot of bucks. Also, don’t take quick decisions in buying things. Evaluate its cost and usage, then make a thoughtful decision. If you spend wisely, you can make a huge difference in future savings.  4. Set goals The next step is to set your short-term and long-term goals. Categorize your short-term and long-term goals based on their priority. And start saving for them. For example, sending your child for higher education after ten years is an example of a long-term goal, but paying for the school fees in the next 11 months is an example of a short-term goal. Identifying and prioritizing your goals is very crucial. Some parents could have a short-term goal to pay for a child’s higher education. So, it is essential to prioritize your goals based on time availability to achieve them.   5. Create a savings plan After deciding on your goals, create a savings plan for each goal. Try to save a fixed amount for each specific goal. Evaluate the cost of your goals; save and invest some money to quickly achieve your target. For example, if you want to send your child for higher education in the future, and the cost of IIM Ahmedabad in 2030 may cost Rs 60 lakhs, to save Rs 60 lakhs in the next eight years, you need to save and invest Rs 34000 every month in a such asset class which can generate 14% annualized returns over the period. So, creating a savings plan for each of your targets is vital, such that you know how much you need to save and for how long. Before investing your money in any of the asset classes, please do thorough research on it.  6. Review the plan After creating the savings plan, try to review the same yearly and see whether the savings and investment are on track. If they are not aligned with your goals, review your savings plan and make the changes accordingly. FAQs What is the meaning of financial planning? Financial planning refers to acquiring information about your financial needs and then making a comprehensive plan to reach your financial goals with as much certainty as possible.   What is financial planning and why? Financial planning is a means to achieve your future goals through proper development and implementation in accordance with some general guidelines.  What is financial planning and its types? Financial planning is a means to achieve your future goals through proper development and implementation in accordance with some general guidelines. There are three types of financial planning - cash flow planning, investment and insurance planning. What are the steps in the financial planning process? Here are the steps in the financial planning process: Give a perspective on your financial goals Income management Growth of assets What is the main benefit of financial planning? The main benefit of financial planning is the ability to meet your short-term and long-term goals while building wealth for your future retirement. A good financial plan helps you achieve your goals with ease and gives you financial stability for the future. Consult an expert advisor to get the right plan for you TALK TO AN EXPERT
Best investment plans in India for one year

Best investment plans in India for one year

Earlier, we saw some of the best investment plans in India for five years. In this article, we will learn about some of the best investment plans in India for one year.   The investment options for periods as small as 1 year are largely restricted, mainly because the equity exposure has to be reduced considerably because of the volatility factor.   Given the short duration, choosing an investment with no risk is preferable. Here are some options to invest in. Best investment plans in India for one year 1. Debt funds  A debt fund is a mutual fund, an exchange-traded fund (ETF), or any other pooled investment product with fixed-income securities as the majority of the underlying investments.   Because debt funds have lower managing costs, their fees are lower than equity funds. Debt fund investors have the option to choose between passive and active products.   Debt funds are often known as credit funds or fixed-income funds. Investors seeking to conserve their capital and achieve low-risk income frequently invest in these funds.   Debt funds invest in a wide range of securities, each with its own set of risks the safest is the debt of the United States. Companies with a steady outlook and high credit quality issue investment-grade debt. High-yield debt, which lowers credit-quality enterprises mainly issues with good growth prospects, delivers higher returns but also carries a higher risk profile.   Debt funds are appropriate for people with short to medium-term investment horizons, where “short-term” refers to a period of 3 months to one year (this is the period we are talking about in this article) and “medium-term” refers to a period of 3 to 5 years.  2. Short-term funds   These are open-ended mutual funds with a maturity duration of 15 to 91 days depending upon the underlying instruments’ maturity period. These funds primarily invest in high-quality, low-risk assets. Liquid funds are an amazing choice for risk-averse investors and a great way to park your surplus money.   If you have a longer time horizon, say 2 to 4 months, you can invest in ultra-short-term funds. Short-term funds give higher returns than bank deposits, along with the provision of liquidity. Returns on these funds have historically ranged between 6 to 8%.  3. Low-risk funds  Low-risk mutual funds are those funds that have a small number of risk elements. These funds have a greater return guarantee since they primarily invest in government bonds for infrastructure, real estate, and other uses.   The low-risk investment portfolios of these funds ensure that the inflation rate is taken care of. The investment horizon is short because these funds invest many of their assets in debt securities.   Investors wishing to put their money in tax-efficient schemes other than fixed deposits can choose low-risk mutual funds.  4. Money market instruments  For the short term, money market instruments are great investment options. The main features of these kinds of securities are that they can be converted to cash with ease, thereby preserving the cash requirements of an investor.   Trading of money market instruments is through certified brokers or a money market mutual fund. Some funds aim to keep their portfolio as diverse as possible via a good combination of various money market products to maximize the yield.   Some money market instruments are treasury bills, certificates of deposit, commercial paper, and banker’s acceptance. Source: Pexels Some funds available in India  1. ICICI Prudential Medium Term Bond Fund - Direct Plan The plan aims to maximize income while preserving the best possible return of yield, safety, and liquidity by investing in various debt and money market securities with varying maturities.  2. Nippon India Short-Term Fund - Direct Plan The fund invests in debt and money market instruments to shell out reliable returns for clients with a short investment horizon.   3. Aditya Birla Sun Life Low Duration Fund - Direct Plan Seeks to invest in high credit quality debt and money market instruments of short maturities.  4. Tata Money Market Fund - Direct Plan Investors looking for a safer alternative to liquid funds can invest in this fund. It has a moderate risk profile and invests in short-term money market instruments.  5. Aditya Birla Sun Life Corporate Bond Fund - Direct Plan The scheme’s investment goal is to create optimal returns while maintaining high liquidity by actively managing the portfolio and investing in high-quality debt and money market instruments.  6. ICICI Prudential All Seasons Bond Fund - Direct Plan Invests in various debt and money market securities with different maturities to achieve a balance of return and safety. FAQs Which SIP is best for 1 year? Debt funds Short-term funds Low-risk funds How can I grow my money in one year? There are many ways to grow and invest your money for one year. You can consider the following types of investments: Debt funds Short-term funds Low-risk funds Money market instruments Can I withdraw SIP anytime? Yes, investors can withdraw the amount or stop their SIP whenever they want. Does SIP have risk? Yes, investing in mutual funds via SIP does involve some level of market risk. Risk differs based on the type of investment. Connect with an expert advisor to get the right plan for you  TALK TO AN EXPERT
Importance of saving money. Reasons to save money

Importance of saving money. Reasons to save money

Business Insider reports that “Indian household savings fell to the lowest level in 5 years. With inflation eroding the purchasing power, individuals tap their savings for survival after the pandemic.” Furthermore, "gross financial savings in FY22 stood at 10.8% compared to 15.9% in FY21." It demonstrates a clear saving pattern during the pandemic and erodes it soon after the ban lift. The importance of saving money aligns with the lifestyle and the goals you want to achieve within the decided time frame. 6 reasons to save money wisely From blowing off emergency cash requirements to ensuring financial freedom, there are plenty of reasons to save money. 1. Live a debt-free lifestyle Business Insider news says, “ An average Indian spends ₹14,500 a month on average on credit cards."  As per Statista, “In June 2022, nearly 121 million points of sale transactions were made via credit card in India.” It was pretty low in 2019-2020, owing to pandemic blues. Relying on credit cards for every big and small purchase may impact your savings. A credit card is a high-interest debt that one must pay monthly. Instead, save a portion of your income to savings. It will help meet discretionary expenses. 2. Budgeting for retirement As per the Financial Express report, “A survey by PGIM Mutual Fund and Nielson reveals more than 51% of the Indians participants have not planned retirement savings yet. “  Shockingly, children’s spousal security and lifestyle emerged as primary concerns than retirement.  The allocation of household income fell from 34% to 30% over the past two years. It impacted the saving corpus and budgeting. Around 89% of respondents living in Joint families find themselves more financially secure than nuclear families in India.  The report reveals that 42% of Indians lack any secondary income source or have any thoughts about it. One must consider inflation and market conditions before choosing a retirement saving plan to counter this. Employers must work towards awakening employees on saving more towards PF or separate retirement accounts. The key aim here is to push the employees towards ensuring financial freedom. 3. Paying effortlessly toward a child’s education dreams As per Economic Times, “the average yearly fee for middle school is around ₹1.6 lakhs to ₹1.8 lakh/year. It totals up to ₹9.5 lakh to 12 lakh for Higher Secondary Education.” Parents must ensure nearly 10 lakhs for legal education in India.   Parents pay ₹25000/year towards sports, extracurriculars, and school transport alone. The education expenditure graph goes up to ₹20 lakhs after including general education for up to college years. EduFund lets parents plan and saves for their child’s education with the help of financial experts. 4. Attending Medical Emergencies However, there are other emergencies too, like - urgent cash needs, cash to suffice sudden job loss and fulfill a time-sensitive requirement, and medical tops them all.   It is the worst situation to encounter when one goes cashless in medical emergencies. Illness does not wait. Thus, it is ideal to invest at least 30% of your income in medical insurance and savings. However, the statistics are good regarding health insurance coverage awareness. The Times of India says, “Every 3 in 5 Indians saw their health insurance premiums shoot by 25% or more in 2022.” It impacts savings and discourages one from taking life for granted. 5. Leaving behind a legacy Financial freedom must travel from generation to generation. “Around 72% of Indians do not know the potential ways to save and invest money.” They encounter confusion while walking up to the aim of financial freedom. If you are a first-time investor, you can begin by investing in low-risk instruments. Dedicate only a small and comfortable income portion to long-term investments. Go for fixed-income generating opportunities that reduce the risk of losing your wealth. It will help you analyze the importance of saving money as a source of multiplying wealth sources. 6. Purchasing big-ticket items and investments Big-Ticket items or lifestyle-enhancing instruments like- car and home investments require significant savings. Buying a home is one of the common dreams that Indians share. As per Indian Housing Report, “Only 69% of urban households have their own home. Rest are migrants.” It is far lower than in rural areas (95%). The reason is – Affordability. For a mortgage, you must ensure at least a 20% deposit. For that, you must save. If you could provide a 20% deposit for the mortgage, you could fetch affordable interest rates and use the rest of the savings for renovation or cover moving costs. Conclusion Saving is crucial for every life goal. EduFund is an ideal platform to save for your child and family’s future: Financial planning and goal management assistance College Cost Calculator to find future costs Variety of savings plans - mutual funds, US ETFs, and digital gold Educational counseling and financial guidance Consult an expert advisor to get the right plan TALK TO AN EXPERT
The best investment plans in India for the next five years

The best investment plans in India for the next five years

We already saw some of the best investment plans in India for one year. Here, we’ll get to know some of the best investment plans in India for five years. There are many investment options available, majorly in the equity and debt funds segment. Investment plans in India for five years.  a) Equity funds and Hybrid funds  Equity mutual funds are investment instruments that primarily invest in stocks of various companies across different sectors. Equity mutual funds are the riskiest category of mutual funds because of the high exposure (at least 65%, according to the rules laid down by the Security and Exchange Board of India) to equity markets.  On the other hand, Hybrid funds are less risky than equity funds because they are a mix of equity and debt funds; also, hybrid funds are less liquid than equity funds. Both hybrid and equity funds are for investors with a time frame of 5-7 years.  b) Above-average to high-risk funds  If you search for more than the market returns, you should bear more than the usual risk. The best option, in this case, are equity mutual funds because of their very high exposure to the equity markets.  Within equity funds, small-cap and mid-cap funds are riskier. However, these funds provide the chance to make unusually high gains.  c) Long-term funds  When your investment horizon is long, say ten years. Your best road is to have equity in the highest proportion in your portfolio because, in the long run, the share markets outperform nearly every other standard asset class.  The best options for this type of investment are either purely equity-based funds or hybrid funds with very high exposure to equity (and a small investment in debt).  d) Other funds  Regarding the instruments mentioned above, there are other options as well.  1. Index funds  Track particular indices in the market and invest in the movement of the index.  2. Flexi-cap funds  These funds diversify the investment because they invest in a mix of large-cap, small-cap and mid-cap companies for greater exposure to the entire market.   Another less discussed investment option is the Dynamic Asset allocation fund – these funds are a type of hybrid fund, and, as the name suggests, the funds are invested and dispersed across stocks, bonds, real estate, etc.   Balanced funds that invest primarily in equities with some exposure to FD-like securities are known as aggressive hybrid funds; because of the diversification of investments, these funds are less risky than pure equity while providing nearly identical long-term returns. Source: Pexels Which funds are available in India?   Some available funds are:  1. Axis Midcap Fund  This scheme aims to achieve long-term capital appreciation by investing primarily in Mid Cap stocks and equity-related assets.  2. DSP Midcap Fund  It primarily aspires to achieve long-term appreciation by investments in midcap firms and other equity-related assets.  3. Tata Index Nifty Fund  The Tata index super funds strategy generates medium to long-term financial returns by investing in equity shares of just those firms' part of the Nifty 50 index, in the same proportion index.  4. Navi Nifty Index Fund  The investment objective is to produce a return comparable to the Nifty 50 index by investing in stocks of companies that make up the index, subject to tracking error.  5. Parag Parikh Flexi Cap Fund  The fund’s aim is to achieve long-term capital growth from an actively managed portfolio comprising majority equity investments.  6. DSP Dynamic Asset Allocation Fund  This hybrid, dynamic asset allocation fund considers the CRISIL Hybrid 50+50 Moderate index as the benchmark. Investment in this fund carries a moderately high level of risk.  7. Tata Balanced Advantage Fund  Investment is in a mix of equity, arbitrage, and debt portfolios to maximize capital appreciation and income distribution. The scheme tries to follow the market trend with a good balance of debt and equity.  FAQs What is the best investment in India 2022? Some of the best investment options in India in 2022 are: Public Provident Fund (PPF)National Savings Certificate (NSC)Post Office Monthly Income Scheme.Government BondsNational Pension Scheme (NPS)Sovereign Gold Bonds (SGBs)Equity Mutual Funds.Unit-linked Insurance Plans (ULIPs) What is best investment for future in India? The best investment for future in India are mutual funds, stocks, bonds, index funds, ULIPs. Investment options are determined by your time horizon, risk tolerance and financial goal. Which SIP is best for 5 years in India? Some of the best funds that offer SIP are: Axis Midcap Fund DSP Midcap Fund Tata Index Nifty Fund Navi Nifty Index Fund Parag Parikh Flexi Cap Fund DSP Dynamic Asset Allocation Fund Tata Balanced Advantage Fund This is not an investment advice. Please consult your financial advisor before investing. Which investment is best for 5 years? Public Provident Fund (PPF)National Savings Certificate (NSC)Post Office Monthly Income Scheme.Government BondsNational Pension Scheme (NPS)Sovereign Gold Bonds (SGBs)Equity Mutual Funds.Unit-linked Insurance Plans (ULIPs) Consult an expert advisor to get the right plan for you TALK TO AN EXPERT
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