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In the previous article, the focus was on why do you need to look beyond traditional investment options for your child’s education?. In this article, we will discuss the time value of money. The idea of the time value of money tells us that money now is more valuable than money in the future because the money received now can be used for further investment, to obtain more returns.  Assume that you have lent Rs 2000 to your friend. Would you want him to pay you back today or tomorrow? The sensible answer is today because you'll be able to put that money to work, to earn your potential gains.  Furthermore, with future money, there is a danger that the money might never be received, for whatever reason possible. The net present value or NPV is another term used for money's time value.   The present value of future cash flow is calculated by dividing the future cash flow by a discount factor which incorporates the amount of time that will pass and the expected interest rate in the future.   The time value for money and purchasing power Inflation and buying power are two related concepts of the time value of money. Both these factors need to be considered, along with whatever rate of return might be obtained by investing the money.   While investing money, you must account for inflation and buying power because you need to subtract the inflation rate from the percentage gain you grow your investments with.  When you subtract the rate of inflation return percentage, you get the real rate of return. If the inflation rate is higher than your investment return, you are losing money in terms of purchasing power even though your investment shows a nominal positive return.   For example, if you earn 10% of your investments and the rate of inflation is 12%, then, in reality, you are losing money.   The time value of money formula  FV = PV × (1+i)^n     Where FV = Future value of money,   PV = Present value of money, n = number of periods, and I = interest rate per period.   So, if we have to calculate the PV, the formula becomes PV=FV/ (1+i) ^n   And the calculation of FV requires the following formula FV= PV (1+i) ^n.   Source: Pixabay Why does the time value of money matter?   Decision-makers can use the time value of money to assist them in choosing optimal alternatives because absolute rupee quantities across different periods have different values.  The time value of money equalizes options depending on timing. While comparing projects and businesses with different cash flows. The time value of money formula is frequently used.  Businesses can also utilize the time value of money to see if a project with an initial cash outlay and a later cash flow will be lucrative. Companies employ the time value for money for external reporting obligations.   Also, individual investors can better comprehend the actual value of their investments and liabilities over time by using the time value of money; the time value of money also helps to determine how much an investor will have in retirement.   It is important to note that the time value of money often ignores detrimental impacts to finance, such as negative interest rates or capital losses.   Negative growth rates that are unavoidable can be used in situations where losses are known.  Some important points The philosophy of the time value of money holds because money today can be invested and potentially grow into a more significant amount in the future.   A future cash flow's present value is estimated by dividing it by a discount factor that considers the period that will pass and the predicted interest rates.   Multiplying the quantity of cash by a function of the expected rate of return over the predicted period yields the future value of a sum of money today.   The time value of money is used to make long-term financial decisions like whether to invest in a project or with which cash flow sequence is more advantageous than the other.   The applications of the concept are far-fetched in today's financial world. Knowing it will be an excellent addition to your kitty of financial knowledge.  FAQs What are the three elements of the time value of money?   There are a few key components of the time value of money:  Interest rate  The present value of money  The future value of money  Time periods and   Installments   What will Rs.10000 be worth in 20 years?   The formula to calculate the future value of money:   Future amount = Present amount * (1+ inflation rate) ^ Number of years   Why is understanding the concept of the time value of money important?   The idea of the time value of money tells us that money one has now is more valuable than the money in the future because the money received now can be used for further investment to obtain more returns.   How do you explain the time value of money?   The sum of money that a person has now is worth more than the same amount of money in the future. If money doesn’t grow with time, its value will depreciate as time progresses.   Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT

Investing is no longer associated with wealth. To protect one's future it has become essential. In this blog, let's compare Public Provident Funds (PPF) and mutual funds to see which is a better option for you. What are public provident funds(PPF)? The Public Provident Fund, popularly abbreviated as PPF is used as a tax-free savings vehicle to save aside a portion of one’s annual income for the future. PPF investors may get tax-free interest income on their capital if the amount was received on maturity. PPF is a risk-averse person's saving tool that is supported by the government. What are Mutual funds? Mutual funds, a popular method of investing, pool client money to purchase a range of securities, such as stocks, bonds, and money market instruments.  Mutual funds are governed by the Securities Exchange and Board of India (SEBI). Through mutual funds, investors have access to professional fund management. The fund management staff carefully considers the fund's objective before making any investing decisions. Assets like bank savings accounts and fixed deposits perform better than more traditional ones, thanks to skillful management. Equity and debt mutual funds are the two main types of mutual funds. Equity mutual funds' primary investments are equity and equity-related goods. The many forms of equity funds include large-cap, mid-cap, small-cap, multi-cap, sectoral or thematic, tax-saving, etc.  Conversely, debt mutual funds make investments in corporate bonds, government securities, and other financial goods. There are many different types of debt mutual funds, including liquid funds, dynamic bond funds, and short- and ultra-short-term funds, among others. Mutual Funds Vs PPF (Public Provident Funds). PPFs and mutual funds, each have their own set of perks and drawbacks. Therefore, it is a good idea to take into account their distinctions before choosing one at random. ParametersMutual FundsPublic Provident Funds (PPF)Investment run byFunding institutions or asset management firmsBy The Government of IndiaRequirementsTo achieve short- or long-term objectivesTo amass a retirement fundReturn on investmentsThe performance of the underlying assets affects the returnsAnnual returns calculations are madeTax benefitsThe sort of mutual fund investment and the length of the investment are what define itUp to INR 1.5 lakh of PPF investments are tax-free under Section 80C of the Income Tax ActMaturity PeriodNo fixed tenure15 years, which may be extended in 5-year chunks.LiquidityA high degree of liquidityLow degree of liquidityRisk/safetyRiskier than PPFsPPF is a risk-free investmentLock-in periodNo concrete lock-in period15 yearsDiversificationYesFixedPremature withdrawalThere are certain mutual funds that have a lock-in period; in these instances, SIP payments can be stopped, but withdrawals are not allowed prior to the maturity date.Only after the end of six fiscal years is a partial withdrawal permitted. PPF vs Mutual fund - Which is better for you? The decision between a PPF and a mutual fund relies on the objectives or aims of the investor. The latter operates more like a savings plan whereas, the first is a market-linked program.  While PPF delivers predictable returns and is most suitable for investors who are risk-averse. Conversely, mutual fund companies invest in a variety of securities, including government bonds, debt, and shares. As a result, it offers the potential for bigger profits, but because it is market-linked, the risk is also higher. FAQs Is PPF still a wise choice for investments? One of the most popular long-term and tax-saving programs for depositors is the PPF program since it offers a variety of benefits. If a person can make consistent investments for 15 to 25 years, compound interest might help them amass a sizeable wealth of about Rs 1 crore. The PPF interest rate is modified every three months. Which is preferable, PPF or SIP? SIP and PPF are both long-term investing strategies. They vary, nevertheless, in terms of maturity and lock-in time. A PPF has a tenor of 15 years and a 7-year lock-in period, whereas SIPs can be stopped and redeemed at any time. You can then take out a portion of the money after that. Which investment is good for a child's future? It is a great idea to start investing in equity mutual funds when your child is still young and you have at least 15 to 20 years before retirement. This makes it possible for you to resist shocks like volatility and stock market crashes. When developing investment plans, each person has their own way of thinking and attitude. While some people want larger profits, others want financial security. It's critical to assess your financial status before making any form of investment, including those in mutual funds or Public Provident Funds (PPF). Consult an expert advisor to get the right plan TALK TO AN EXPERT

A crucial first step to achieving financial security is to set short-term, mid-term, and long-term financial objectives. But what do these goals stand for? What are the differences between short-term and long-term goals? Keep reading to find the answer. What are short-term goals? Anything that can be accomplished in less than two years is considered to be a short-term goal. Although this is a useful generalization, where to draw the line between short-term and long-term objectives is ultimately fairly arbitrary. A goal accomplished in one and a half years and one accomplished in two years and a month have no discernible differences.For instance, a short-term goal for your child’s education needs can be a laptop or a phone. You can select the best funds and a time horizon to save up for the cost and accomplish your goal easily. This is a short-term goal which means you plan to accomplish it in the next 1 or 2 years. Click here to start a short-term goal for your child’s education dreams. What are long-term goals? In contrast, anything that takes more than five years is considered a long-term goal. Long-term objectives include things like paying off a mortgage and saving for retirement. The terms "short term" and "long term," nevertheless, aren't always sufficient. Some people favor including medium-term objectives as well. These objectives usually take two to five years to complete. Despite their apparent opposition, the two temporal periods complement one another. Long-term goals shape your short-term goals. For instance, a long-term goal can be your child’s dream college. Long-term goals generally require a long-term horizon. If you are planning to save for your child’s college then starting 10-15 years in advance is the right way to go. This gives you enough time to save up and make the right corrections over the years to get the right amount by the time they go off to college. Use the college cost calculator on the EduFund App and start saving for your child’s long-term goals! Key short-term goals Your more pressing expenses are those for short-term aims. These are the things you'll often spend money on within a few months or years, though timing varies. The following are some top key short-term goals: 1. Establish a Budget By reading through your bank statements and bills from the previous few months and classifying each item with a spreadsheet or on paper, you may make a budget the old-fashioned way. You can decide better where you want your money to go in the future when you can see how you are spending your money and are directed by that information. You can try to find methods to eat out less frequently or save money by following certain practices etc. 2. Build an emergency fund The cornerstone of creating financial goals is an emergency reserve. If something unforeseen occurs, it's what keeps the rest of your strategy from falling apart. Without an emergency fund, one unforeseen expenditure, such as a busted water heater, medical expenses, auto repairs, or a job loss, might cause all of your other objectives to fall through the cracks. Your emergency fund has to be sufficient to pay for three to six months' worth of costs. You may wish to save even more if you are paid on commission or have a fluctuating income. Make a budget and, if necessary, cut spending so that you can afford to set aside some of your money. 3. Open a life insurance policy By purchasing life insurance, you guarantee that your loved ones will be compensated in the event that you die away and are unable to support them. A cash lump amount is often used for this, serving as a safety net to replace your income. Life insurance coverage is crucial for defending yourself and others who depend on you, much like an emergency fund. Even though nobody likes to consider the worst-case scenarios, anything may happen tomorrow. Key long-term goals It can take years or perhaps decades to accomplish these aims. Long-term objectives often require more resources and ongoing care than short-term objectives. The following are some top key long-term goals: 1. Consider your dreams Long-term objectives might also include objectives like purchasing a primary residence or, eventually, a vacation property. Maybe you already own a home and want to give it a considerable upgrade, or maybe you want to start saving for a bigger house. Other examples of long-term objectives include saving for college for your kids or grandkids, or even for when you do have kids. Once you've chosen one or more of these objectives, start estimating how much money you'll need to put aside to make progress toward achieving them. 2. Plan for retirement Retirement savings goals are among the most long-term-oriented in terms of planning. Finding out how much money you need and how close you are to that objective is the first step in this process. Then, you may reach your destination through a variety of retirement plans, which is a perfect illustration of how long-term goals ultimately need to be divided into more manageable goals. How to prioritize your goals? You'll probably need to strike a balance between a number of short-term and long-term ambitions. Plan your objectives around your regular spending, putting necessities like food and shelter first. Contributing to emergency and retirement accounts is a top priority; after paying off debt, do so. After that, you may choose how to divide the remaining funds between your demands and other savings objectives. The most essential thing is to stay consistent. Don't be upset with yourself if you have to withdraw money out of your emergency fund one month because you have an unanticipated auto repair or medical cost; that's why the fund is there. Just get back on track as soon as possible.

What are Hybrid Mutual Funds? Hybrid mutual funds are the kind of mutual funds that invest in a combination of equity and debt instruments. It follows a balanced approach to investing that offers investors diversification across asset classes.   Hybrid mutual funds are unique because they offer growth and income. The two asset classes that provide this balance are equity and debt. Equity has the potential for generating good returns and creating wealth but carries risk. Debt as an asset class includes interest-bearing instruments that generate regular income.   The proportion of equity and debt investments in a hybrid fund varies depending on its specific objectives. Some funds might have a higher allocation to equity for greater growth potential, while others might focus more on debt for a steadier income stream. Here are some features of hybrid mutual funds that stand out:  Multiple Asset Classes: Hybrid funds invest in a mix of equity and debt instruments, providing broader diversification and reducing overall risk.     Reduced Volatility: The combination of equity and debt can help offset the volatility of equity markets.  Balanced Returns: With balanced exposure to debt and equity, investors can get balanced returns from their hybrid mutual funds.   Risk-Return Balance: Hybrid funds allow investors to adjust their risk exposure based on their tolerance and investment objectives.     Professional Managed: Fund managers actively monitor market conditions and make adjustments to the fund's portfolio to manage risk.  Easy Investment: Hybrid funds offer liquidity, allowing investors to buy or sell units at net asset value.  Medium-Term Goal: Investors looking to stay invested for 3-5 years with medium volatility should go for hybrid funds.  Wide Availability: Hybrid funds are easily available offered by all top AMC houses, making them accessible to a broad range of investors.  Affordable: Investing in hybrid mutual funds starts at ₹500-₹1000 for hybrid mutual funds.   Investing Options: Investors have the freedom to choose to start an SIP or do a lumpsum investment in hybrid mutual funds.   Let’s take a look at the demerits of investing in hybrid mutual funds so you have all the information before starting your investment journey.  How to Intelligently Invest in Hybrid Mutual Funds? If you are looking to invest in hybrid mutual funds, then all you need is the EduFund app to get started.   Download the App, set up your investment account and complete your KYC process in minutes.   Head over to the mutual fund tab under investments and choose the category for hybrid mutual funds and select the fund that aligns with your goal and needs.   Choose your preferred investment mode (SIP or lumpsum), your preferred amount, and complete the verification process.    Read the terms and conditions before depositing your money.  Start your investment journey in under 10 mins!  With the EduFund app, you do not have to pay extra charges to invest in corporate fixed deposits. You can easily monitor your investment progress, withdraw at your convenience, and ensure your family's financial future is secure!  Types of Hybrid Mutual Funds Hybrid funds come in various types based on their asset allocation: Equity-oriented Hybrid Funds: These allocate 65% or more to equity and the rest to debt and money market instruments. Debt-oriented Hybrid Funds: They invest at least 60% in fixed-income securities and the remainder in equity. Balanced Funds: With a minimum of 65% in equity and the rest in debt, they offer tax benefits on long-term capital gains. Monthly Income Plans: These primarily invest in fixed income, with a small portion in equity, providing regular income to investors. Arbitrage Funds: These seek arbitrage opportunities by buying low and selling high, switching to debt when opportunities are scarce. They have a tax treatment similar to equity funds. Each type serves different investment goals, offering a range of risk and return profiles. Benefits of hybrid funds Hybrid funds offer several advantages: Simplified Diversification: They provide access to multiple asset categories within a single fund, reducing the need for multiple investments. Active Risk Management: Hybrid funds actively manage risk through diversification and asset allocation, investing in non-correlated assets like equity and debt. Enhanced Diversification: They diversify across various asset classes and sub-classes, such as different stock types and growth/value stocks, boosting portfolio diversification. Risk Catering: Hybrid funds cater to various risk profiles, accommodating conservative, moderate, and aggressive investors. Multi-Asset Class Exposure: Hybrid funds provide multi-asset allocation to the portfolio by investing in equity, debt, and other asset classes. Actively Managed: All the hybrid funds are actively managed by professional fund managers. So, as per the market condition, the fund manager has the flexibility to change the fund’s allocation. Taxation Rules for Hybrid Mutual Fund Taxation implications for investing in hybrid mutual funds are explained below:  Equity-oriented hybrid funds and arbitrage funds are classified as equity-oriented funds for tax purposes.   Long-Term Capital Gains: If equity mutual funds are held for more than a year, they qualify for long-term capital gains tax of 10 percent. Gains of up to ₹1 lakh in a financial year are tax-free.  Short-Term Capital Gains: If these schemes are held for less than a year, gains are treated as short-term capital gains and are taxed at 15 percent.  For other mutual fund schemes:  Long-Term Capital Gains: Long-Term gains on units held for more than 36 months are taxed at the rate of 20 percent after providing for indexation.  Short-Term Capital Gains: Mutual fund schemes excluding equity mutual funds that are held for less than three years are treated as short-term capital gains and will be added to the income and taxed as per the income tax slab applicable to the investor.  Top 6 hybrid funds S.No.Fund Name3-Yr Annualized Performance1Quant Absolute Fund Growth Option Direct Plan28.29 %2Bank of India Mid & Small Cap Equity & Debt Fund Direct-Growth25.71 %3Edelweiss Balanced Advantage Fund Direct Plan-Growth16.37 %4Baroda BNP Paribas Balanced Advantage Fund Direct-Growth16.05 %5Bank of India Conservative Hybrid Fund Direct-Growth14.74 %6Kotak Debt Hybrid Direct Growth12.17 %Note: Data as of July 25, 2022Source: Morningstar 1. Quant Mutual Fund Fund analysis: The fund has the flexibility to invest 65-80% in equity & equity-related instruments and 20-35% in debt instruments. The risk grade is above average, and the returns grade is high. The fund has given consistent performance over different trailing period returns. The fund has outperformed the category average over the period. It has invested in equity and debt securities. ProsConsFund has outperformed the category average with good margins. Attractive risk-to-reward ratio.Low Assets Under Management. Start Investing 2. Bank of India Mutual Fund Fund analysis: The fund's objective is to provide capital appreciation and income distribution to investors from a portfolio constituting mid and small-cap equity and equity-related securities as well as fixed-income securities. The fund holds major holdings in mid-cap companies and the cyclical sector holds 62.84% weightage followed by sensitive 20.52% and defensive 16.64%. The risk grade is high, and the returns grade is also high. ProsConsHigh growth potential. Invested in AAA quality bonds.High expense ratio. Start Investing 3. Edelweiss Mutual Fund Fund analysis: The fund’s objective is to generate capital appreciation with relatively lower volatility over a longer tenure of time. The Scheme will accordingly invest in equities, arbitrage opportunities, derivative strategies on the one hand, and debt and money market. instruments on the other. The Scheme may also invest in Infrastructure Investment Trusts and Real Estate Investment Trusts. The fund has outperformed the category average over the long-term period. The fund has a well-diversified portfolio of 113 equity holdings and 14 bond holdings. The risk grade is average and the returns grade is high. The fund has the flexibility to invest 0-100% in equity instruments and 0-100% in debt instruments. ProsConsFund has outperformed the category average with good margins. Fund has invested in both value & growth stocks along with AAA-rated bonds in the debt category.Fund has underperformed the category average over 3-Months & 6-Months trailing returns. Start Investing 4. Baroda BNP Paribas Mutual Fund Fund analysis: The fund has the flexibility to invest 0-100% in equity instruments and 0-100% in debt instruments. The risk grade is average, and the returns grade is high. The fund has a well-diversified portfolio of value & growth stocks and has invested across sectors. In the debt market, the fund has invested majorly in aaa-rated bonds and money market instruments. ProsCons5-star rated by Morningstar. The risk grade is average, and the returns grade is high.Fund has underperformed the category average over 3-Months & 6-Months trailing returns. Start Investing 5. Bank of India Mutual Fund Fund analysis: The fund can invest 10-25% in equity & equity-related instruments and 75-90% in debt instruments. The risk grade is high, and the returns grade is also high. The fund has a blended style of investing, indicating both value & growth stocks. The fund has invested across sectors and AAA-rated bonds. The fund has 23.99% in equity, 50.20% in bonds, and 25.81% in cash & money market instruments. ProsConsFund has outperformed the category average over different trailing period returns. The fund has captured the market well when it was falling & rising, better than the category average.High expense ratio. Start Investing 6. Kotak Mutual Fund Fund analysis: The fund’s focus is to provide regular income by investing in debt instruments, along with some exposure to equity & equity-related instruments to enhance returns. The fund may also invest in derivatives to hedge the position. The risk grade is average and the returns grade is high. The has given a consistent performance over the period and has also outperformed the category average by good margins. The fund has invested 24.88% in equity, 66.94% in bonds, and 8.18% in cash & money market instruments. ProsConsConsistent performance. The fund captured the market well when it was falling & rising, better than the category average.Fund has underperformed the category average over 6-Months trailing returns. Start Investing How do hybrid funds work?  Hybrid funds invest in both equity and debt. While equity has the potential to generate high returns, it comes with high risk. On the other hand, debt is a fixed-income instrument with low risk and returns. So, in hybrid, you can see a fund with moderate risk and return due to the availability of both asset classes. A hybrid fund gives you both asset classes in a single product. Equity provides long-term gain, whereas debt provides short-term stability or regular income.  Boost Your Financial Liquidity: Dive into the Top 6 Liquid Mutual Funds Read More Who should invest in hybrid funds? A hybrid fund is perfect for: First-time investors - Investors are looking for stability like fixed deposits and fear the risk of volatility over the short term. Hybrid funds give a good entry point to the equity market.  Investors with a 3-5 years horizon - For any medium-term goal like buying a car, school fees, etc., hybrid funds can be a good option as returns generated are relatively less volatile. Retired Investors: Investors who have retired can look to generate regular income with the help of hybrid funds and their unique asset allocation. Short-term investors - Arbitrage funds provide a good option for investors looking to park money in volatile market conditions. Conclusion: hybrid mutual funds are a great balance between equity mutual funds and debt mutual funds. They help you diversify your portfolio without raising your risk and can offer valuable returns. If you are looking to stay invested for 3-5 years, then this might be the answer. Explore the top hybrid mutual funds available on the EduFund app.  Talk To An Expert FAQs Is it good to invest in hybrid funds? Hybrid mutual funds are the type of mutual fund scheme that invests in two or more asset classes, i.e., equity, debt, and other asset class, depending upon the fund’s objective. This helps the fund manager to diversify the portfolio not only among the sectors but also among different asset classes. What is a hybrid fund example? Some hybrid fund examples are: Quant Absolute Fund Growth Option Direct PlanBank of India Mid & Small Cap Equity & Debt Fund Direct-GrowthEdelweiss Balanced Advantage Fund Direct Plan-Growth Is a hybrid fund better than equity? Hybrid funds are the best of both worlds - equity and debt funds! Investors who are willing to take moderate risks and gain high returns can consider this type of fund after consulting an investment advisor. Are hybrid mutual funds safe? Hybrid funds are safer than equity funds and less risky. Disclaimer:This is not recommendation advice, use it for educational purposes only. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market including fluctuations in the interest rates. The past performance of the mutual funds is not necessarily indicative of the future performance of the schemes

What is AUM in mutual funds? What does it stand for or how is it calculate? Let's answer what does it mean when investors talk about AUM in mutual funds! The aggregate market value of the investments held by a mutual fund is known as its Assets Under Management (AUM). On behalf of the investors, the fund manager handles these assets and makes all investment-related decisions. AUM is a measure of a fund house's size and performance. The assets managed by a fund can be easily compared with other similar funds' performance over time.  The returns a mutual fund receives are also factored into the AUM value. This can be used to purchase securities, hold them as specified by the investing mandate, or distribute dividends to investors.  Things to consider in AUM before investing?  Investors in mutual funds frequently evaluate the fund's AUM and are impressed if it is on the higher side. People assume that a fund must be good if so many investors have previously contributed to it. However, there are a lot of reasons why this number shouldn't matter when selecting a fund.  Some of the most crucial elements to consider are the expense ratio, the fund manager's reputation, and compliance with the investing mandate. Let's examine the significance of AUM in relation to various fund types.  1. Large-cap funds  Let's examine an example of how AUM affects large-cap mutual funds. Two large-cap equities funds are HDFC Top 200 and Mirae Asset India Opportunities. The former's AUM is Rs.14,655 crore compared to the latter’s just Rs.4,738 crore. Most investors may choose to invest in HDFC Top 200 for this reason. However, the Mirae has historically earned higher returns over various periods.  2. Small-cap funds  Small-cap funds typically limit the inflow of cash after a specific threshold. A well-known case of this is the DSP BlackRock Micro Cap Fund. This typically happens when a mutual fund's assets exceed a certain threshold. When the market fluctuates, the fund might not be able to quickly trade its shares if it becomes a major stakeholder in a company. Due to this, small-cap funds frequently stay away from lump-sum investments and instead opt for SIPs.  3. Debt funds  If you’re considering investing in debt funds, AUM is an important factor to consider. The fixed fund costs might be split among more investors in a debt fund with higher capital. This can lower the cost per individual and hence boost fund returns. Additionally, more assets under management assist the fund organization in securing fair interest rates from debt issuers.  4. Equity funds  Here, stability in returns and commitment to the investing mandate by the fund company is more important than AUM. By stability, we mean surpassing the benchmark during both the highs and lows of the market. As a result, rather than popularity or size, an equity fund depends on the asset manager's ability to produce strong returns consistently.  How to calculate AUM in mutual funds?  Fund houses use different techniques to determine assets under management. When a fund continuously generates positive returns, its total investment value will increase. Growth in AUM might result from the attraction of new assets and investors due to strong performance.  Similarly, assets may drop if the market value or investment performance declines. The same applies to sudden fund closures and share redemptions by investors. Capital that has been invested in the firm's goods is included in its assets under management, which also includes the stock of the company's executives.  Formula to calculate AUM: "AUM = Net Asset Value (NAV) * Total number of units.”  AUM's impact on the expense ratio or fee  Every fund house charges a fee called a management fee that is based on the size of the fund. Investors are charged based on the number of units they own at a single cost for the entire fund. The fees are unaffected by the performance of the fund. It just pays for administrative costs and establishes the asset manager's pay for his work. The annual costs to run a mutual fund are measured by the total expense ratio (TER). According to SEBI, the AUM must always be more than the TER.  source: pixabay High AUM's effects on mutual funds  AUM growth can occasionally hurt an equity fund's performance. However, there is hardly any data to suggest that a bigger AUM either helps or hurts the fund's performance. The fund manager is the one who should seize market opportunities and buy or sell a stock at the appropriate moment. Larger assets under management have frequently made it more difficult for the manager to make rapid judgments regarding investments. Before investing, evaluate the fund's performance in relation to the benchmark and its rivals. Higher AUM means the manager needs to be on point and well-experienced. Check the experience of the manager in handling high assets before investing in such funds.   AUM and market fluctuations  Market movements have a significant impact on the assets managed. The assets of the fund will increase when it generates returns and decrease when it suffers losses. This impacts the mutual fund fee as well. Lower expenses typically equate to lower value. For instance, imagine that a mutual fund that has produced 10% returns has received a total investment of Rs. 10,000 from 100 investors. If so, Rs. 11,000 would be the fund's AUM. After all, businesses determine the worth of their assets under management using a variety of techniques.  AUM is a great way to evaluate a fund's popularity and performance. However, it should not influence your decision to invest in that fund. Should you consider AUM before investing? AUM is an essential factor that helps you in shortlisting the funds. The higher the AUM, the more stable the fund could be. Often you will see Analysts mentioning AUM > Rs 1000 crore is a good benchmark as it defines the fund's stability.  Also, the expense incurred to manage the fund gets spread, and the expense ratio reduces with rising AUM. Let us see the impact of AUM on equity funds and debt funds -  1. Equity funds In equity funds, consistency and sustenance of returns are more critical than AUM. Thus, the investment process and philosophy should be given more importance.  2. Debt funds In debt funds where the investment is in different fixed-income instruments, it is critical to consider AUM. While benefits such as expense ratio and reputation are one thing, the essential thing in debt funds is getting reasonable rates with debt issuers. With higher AUM, the fund manager tends to get better rates which add to the performance. Also, higher AUM in debt funds for retail investors adds to the fund's stability. Impact of high AUM in mutual funds While a high AUM is good for the stability of the fund but huge AUM often impacts your performance. For example - in the case of Large Cap Equity funds, if a fund reaches are very high AUM, the performance is likely to get impacted as the universe of stocks in which the money can be deployed is minimal and beyond a point outperforming the benchmark in large-cap space (where information inefficiency is negligible) is often tricky.  Thus, while AUM is necessary for the stability of a fund, it is not the only and single most critical factor on which the decision to buy or sell a fund should be dependent. FAQs What is a good AUM in mutual fund? AUM is a measure of a fund house's size and performance. AUM size only matters in certain funds. What is AUM vs NAV? NAV refers to the prices of shares in a fund while AUM refers to the value of assets managed by the advisor. How is AUM calculated? Here is the formula to calculate AUM: "AUM = Net Asset Value (NAV) * Total number of units.”  Consult an expert advisor to get the right plan for you TALK TO AN EXPERT

Even if studying abroad is pricey, there are still ways to get a top education from foreign universities for a lot less money. In this blog, we have discussed the cheapest cities in the world that are great for studying abroad. Need help funding for dreams? Connect with our loan experts! Cheapest cities in the world Following are the top cheapest cities in the world. 1. Kuala Lumpur Malaysia's capital and largest city, Kuala Lumpur, is ranked second in the world for affordability for the second year in a row. International students will pay an average of just USD 2,500 per year in tuition at one of Kuala Lumpur's five top-ranked colleges, placing the city in equal 29th place overall among the world's best student cities this year according to QS rankings 2022. A one-bedroom apartment in the city center will typically cost US$568 a month for those looking to reside there (according to Numbeo). According to the Mercer Cost of Living Survey, Kuala Lumpur ranks 141st out of 209 nations for affordability. 2. Hsinchu Hsinchu, the second city to call itself "The Windy City," can astound those of you looking for an excellent spot to study abroad (the first, of course, being Chicago). Hsinchu is a great choice for students who want to study in Taiwan but don't want to deal with the commotion of a large city, ranking 10th for affordability this year and joint 68th overall in the QS Best Student Cities rankings. With a population of 435,000, Hsinchu is one of Taiwan's lesser-known, smaller cities (as opposed to its capital, Taipei, which has over 8.6 million inhabitants). Tuition costs for international students are equal US$2,900 annually. National Tsing Hua University and National Chiao Tung University are two highly regarded universities in Hsinchu that are both listed in the top 250 of the QS World University Rankings 2022. 3. Johannesburg, South Africa South Africa's largest city, Johannesburg, also serves as the nation's financial and commercial hub. There are 11 official languages in the nation, and English is typically used to teach university courses. Johannesburg is home to two of the top universities in the nation, each of which is ranked among the top 450 worldwide. The average annual cost of tuition is $4,200 USD. A student only needs about USD 664 per month for living expenses, plus USD 465 for rent in the city center. With an annual average temperature of 21C, Johannesburg experiences warm weather all year long. There is a lot to see and do in the city, including festivals and concerts, markets for shopping, galleries, and museums to explore. Beautiful natural areas, such as Lion Park, are close to the city. 4. Budapest The capital of Hungary, with three of the world's top institutions and a population of over three million, tops the list for affordability. Budapest also ranks 43rd overall in the QS Best Student cities 2O22. Budapest will have an average annual tuition cost for out-of-country students of US$1400 (much lower than many other study destinations). In the Mercer Cost of Living Survey, the city comes in at 164th place out of 209 nations.  5. St. Petersburg There are more than five million people living in St. Petersburg, which is the second-largest city in Russia (after Moscow, of course). The city, which in 2019 was ranked 66th overall, has moved up four spots in the affordability indicator to tie for fourth place, with an average annual tuition of US$2,600 at its three top universities. According to Numbeo, this amazing city's cost of living is 28.2 percent less expensive than Moscow, the capital of Russia, which will excite students wishing to study there. Even though St. Petersburg's affordability receives the highest overall rating, the student view indicator, which shows how well-liked it is among students, has seen the most improvement this year, climbing 16 spots. Cheapest universities in the world  Following is the list of the cheapest universities in the world for international students: University of Wuerzburg Brigham Young University Florida State University University of Central Arkansas Brandon University Bucks New University Bucks New University Osaka University FAQ Can underprivileged students travel and study abroad? You can always apply for international scholarships if money is tight. Additionally, you want to submit applications to several economically sound or cost-effective nations, including Germany and Canada, which feature colleges with cheaper tuition rates. What nation offers free education? Many nations, including Denmark, Iceland, Finland, Norway, and Sweden, have possibilities for a free or discounted education Is college in the USA affordable? The United States has long been regarded as one of the most expensive places for overseas students to pursue higher education. However, students can locate colleges that provide high-quality instruction at reasonable costs. We hope that this blog gave you some insight into the most affordable cities in the world for foreign students.

UTI Asset Management Company (AMC) UTI is one of the pioneers of the Indian Mutual Fund Industry. With over Rs 2.4 lakh crore, the AMC is one of the most trusted names in the mutual fund space. The AMF offers products across asset classes. Let us talk about its flagship product – UTI Master share Unit Scheme  About Fund  1. Investment objective The fund seeks to generate long-term capital appreciation for investors by investing in equity and related securities of large-cap companies. It is India’s first equity-oriented fund launched in October 1986.   2. Investment process   The Fund takes a top-down view of the sector and then takes a bottom-up approach to select the stocks within the sectors. The fund is a well-diversified portfolio and avoids sector as well as stock concentration.  3. Portfolio Composition  The portfolio holds the major exposure in large-cap stocks at 87% and sectorally major exposure is towards financial services which account for roughly one-third of the portfolio. The top 5 sectors hold nearly 63% of the portfolio.   Note: Data as of 30th Sep 2022. Source: UTIMF  Top 5 Holdings  Name Sector Weightage % ICICI Bank Financial Services 9.52 Infosys Information Technology 7.12 HDFC Financial Services 6.12 Bharti Airtel Telecom 4.52 Reliance Oil and Gas 3.93 Note: Data as of 30th Sep 2022. Source: UTIMF  Fund performance over 35 years  If you would have invested 10 lakhs at the inception of the fund, it would be now valued at Rs 18.20 crore whereas the benchmark (S&P BSE 100) would have fetched you Rs 11.88 Crore.  Note: Performance of the fund since launch; Inception Date – October 15, 1986. Source: utimf.com  The fund has given consistent returns and has outperformed the benchmark over the period of 35 years by generating a CAGR (Compounded Annual Growth Rate) of 15.56%.  Now, let’s look at the fall of the fund during market corrections. Source: utimf.com The above table explains that the fund has seen less fall/correction compared to the market correction. While corrections are painful for the short-term investor, at the same time, it is an opportunity to make higher returns for the long-term investors.  Fund manager  The fund is managed by Swati Kulkarni and Karthikraj Lakshmanan. Swati has over 36 years of experience and has been managing the fund since December 2006. Karthikraj has over 17 years of experience and is a new entrant in this fund management.  Who should invest in UTI Mastershare unit scheme?  Investors looking to  Own large-cap businesses with sound management, steady cash flow, and earnings growth  Build core equity portfolio for long-term wealth creation with steady growth  Why invest in the UTI Mastershare unit scheme?  India’s first equity-oriented fund with a proven track record of over 35 years and over Rs 10,000 crore in Assets Under Management currently.  Strong stock selection approach with a diversified portfolio reducing concentration risk  Horizon  One should look at investing for a minimum of 5 years or more  A systematic investment Plan (SIP) is an ideal way to take exposure as it helps tackle market volatility  Conclusion  The fund is the oldest fund with a proven track record of 35 years and has delivered 15.56% CAGR consistently. Thus, suitable for even first-time equity investors who are looking to take a little higher risk DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only.

UTI Asset Management Company (AMC) UTI is one of the pioneers of the Indian Mutual Fund Industry. With over Rs 2.4 lakh crore, the AMC is one of the most trusted names in the mutual fund space. The AMF offers products across asset classes.  Let us talk about its flagship product – UTI Flexicap Fund.   About Fund  1. Investment Objective The fund seeks to generate long-term capital appreciation by investing predominantly in equity and related securities of companies in a flexible manner across the market capitalization spectrum.  2. Investment Process   The Fund follows a bottom-up stock selection method with well-defined metrics of free cash flows, capital efficiency, and ability to compound earnings. The fund has a well-diversified portfolio and avoids sector as well as stock concentration.  3. Portfolio Composition  The portfolio holds the major exposure in large-cap stocks at 77% and sectorally major exposure is to financial services that account for roughly one-fourth of the portfolio. The top 5 sectors hold nearly 70% of the portfolio.   Note: Data as of 30th Sep 2022. Source: UTIMF Top 5 holdings Name Sector Weightage % Bajaj Finance Financial Services 6.06 ICICI Bank Financial Services 5.59 HDFC Bank Financial Services 4.26 Infosys Information Technology 4.09 Kotak Mahindra Bank Financial Services 3.92 Note: Data as of 30th Sep 2022. Source: UTIMF  Fund performance over 30 years If you would have invested 10,000 at the inception of the fund, it would be now valued at Rs 3.64 lakhs whereas the benchmark (Nifty 500 TRI) would have fetched you Rs 2.91 Lakhs.  Note: Performance of the fund since launch; Inception Date – May 18, 1992 Source: utimf.com  The fund has given consistent returns and has outperformed the benchmark over the period of 30 years by generating a CAGR (Compounded Annual Growth Rate) of 12.56%. Fund Manager  The fund is managed by Ajay Tyagi. Mr. Tyagi has over 20 years of experience and has been managing the fund since January 2016. Mr. Ajay Tyagi, CFA is a Senior Executive Vice President and Head – Equity at UTI AMC. In addition to managing a few domestic mutual fund schemes, he is also an investment advisor to a few India-dedicated offshore funds. He is a CFA Charter holder from The CFA Institute, USA, and also holds a Master’s degree in Finance from Delhi University.   Who should Invest?  Investors looking to  Build their core equity portfolio by investing in quality businesses across all sizes  Invest in a fund with a disciplined approach to portfolio construction.  Why invest?  The fund shall comprise high-quality businesses that have the ability to show strong growth for a long period of time  Quality companies perform across the market cycle.  Horizon  One should look at investing for a minimum of 5 years or more.  A systematic investment Plan (SIP) is an ideal way to take exposure as it helps tackle market volatility  Conclusion  The fund is the oldest fund with a proven track record of 30 years and has delivered 12.56% CAGR consistently. Thus, suitable for even first-time equity investors who have a moderately high-risk appetite and can remain invested for a long period.  DisclaimerThis is not recommendation advice. All information in this blog is for educational purposes only

Short-term goals are specific and measurable goals that are easy to accomplish. The benefits of short-term goals are that it helps to bridge the gap between the present and where you want to be in the immediate future. What are short-term goals? Short-term goals are doable plans that are comparatively easy to achieve. These are realistic by nature as people can easily focus on them and are time-bound so that desired targets can be achieved in a shorter duration.  Short-term goals are short-period goals that can last for a few months and a maximum of one-year duration but not more than that.  Individuals can set short-term goals both in their personal and professional life. Some examples are learning a new skill, keeping a diary, building an emergency fund, saving for your child’s upcoming school trips, or saving money to pay quarterly school bus fees. Benefits of Short-term Goals 1. Provides clarity to the overall plan The short-term goals give a clear understanding of what the ultimate objective is and how to reach it in the best possible manner. It provides clarity to the overall plan because there is a definite plan of action with shorter and more manageable steps. Parents who are interested in creating an education corpus for their children should segregate the goal into small manageable steps. For example, think about the immediate future and invest in small-term schemes like 6-month FDs or school fees goals on the EduFund app to save for annual school trips or quarterly school fees. 2. Gives direction and maintains focus The benefits of setting up short-term goals are that it gives direction to your thoughts and helps to maintain focus. Once the goal is set, the path becomes clearer because you have a plan of action that simply needs to be followed. 3. Helps to prioritize Daily, weekly and monthly planning helps people to prioritize things based on their importance and decide what, how, and when they need to accomplish the targets. Prioritizing filters out the unimportant things that do not matter at present and are simply distracting you from the main goals. 4. Prevents a feeling of anxiety Setting up short-term goals reduces the to-do list considerably and stops an individual from being overwhelmed with work.  When you know that things are manageable, it will automatically reduce stress, and the feeling of anxiety will also minimize. Such goals keep people on the set path so that they are not burdened by things. When an individual invests in short-term schemes, they can easily meet an immediate or sudden financial requirement which is not possible if the amount is invested only in savings plans that are most suited for long-term financial requirements. This will help to relieve any anxiety caused by sudden expenses. 5. Time management Setting short-term goals are beneficial as it encourages time management, like investing to pay a credit card debt. Individuals already have a target and a plan to accomplish set goals within the time frame. 6. Achieve measurable progress Short-term goals are measurable goals with a clear path and an end destination in sight, for example, investing to buy a laptop. It becomes easy to set deadlines, track work, see the gains made and achieve measurable progress daily. 7. Inspires to move forward When a person has a proper plan in place, it helps to maintain focus and walk on the path diligently. You can look back and measure your growth and improvement from the onset to where you are currently standing. When people see progress, it inspires them to move forward with more grit and determination. 8. Build momentum When the goals are short-term, individuals tend to be full of energy as they want to take action immediately. It is possible to see the daily progress being made and keep track of how close you are to accomplishing the desired goals. The excitement and energy to move forward act as a motivational tool and builds momentum. 9. Overcome procrastination Procrastination is a serious threat to goals. The best thing about short-term goals is that people do not have the time for procrastination. The goals have a set deadline which does not allow a person to waste time as they have a path to follow where every step is already defined, like saving INR 3,000 every month for eight months to buy a laptop for higher studies.   10. Increases self-confidence Short-term goals are clear and specific by nature that will result in measurable outcomes. Individuals are fully engaged in their tasks and are also motivated to achieve them at any cost. Daily progress and goal achievement boost self-esteem and increase self-confidence of a person. 11. Increases the chance of long-term success Short-term goals give quick results and keep the motivation level high. People generally divide their goals into short, mid, and long-term goals like investing in FDs, mutual funds, ETFs, etc. The reason is that they do not want to lose focus or direction midway. The short-term goals serve as appropriate building blocks for greater dreams. When you have achieved several such goals, then the chance of long-term success automatically increases.  Conclusion The benefit of short-term goals is that it motivates individuals to persist in their efforts and move forward. The chance of success is much higher as people do not lose their direction or focus. In simple terms, short-term goals promote progress and growth in both personal and professional lives. Consult an expert advisor to get the right plan TALK TO AN EXPERT

A beginner's guide to education inflation is a stepping stone in saving and investing for your child's education. With children come specific and inescapable responsibilities. It starts with providing your child with a safe home, loving and nurturing space, and quality education to help them grow and become their better selves. Yet all these needs come at a high cost.  The average inflation rate across sectors is rocketing beyond belief and has bypassed the rate of household inflation. From basic needs to luxury, the average cost of different items has increased manifold.   College is a lifetime experience; it offers quality education, changes one’s mindset, and opens up a vast network of opportunities. Generally, the chance to better oneself is why Indian parents and students work hard to get into some of the world's most significant educational institutions, not just India. Yet, this access to quality education comes at a great price. Consider the example of IITs in India; despite the devastating pandemic, the tuition fees for undergraduate courses jumped from Rs. 90,000 to 2 lakhs! Similarly, top universities in the USA in 2022, announced tuition fee hikes while Canada increased its international tuition fees by nearly 5% annually across all provinces.  The increase in tuition fees and other consequential education expenses results from inflation; Education inflation is a real threat to your savings. The hard truth is that it will rise even higher in the years to come.  It has become imperative for parents to understand how Education inflation can affect their savings. And why it is essential to protect their savings via investment.  Before we talk more about why parents should be protecting their savings from Education Inflation, let us look at some of the factors responsible for the rise in education costs.  https://www.youtube.com/watch?v=F9WG4-C_1Jk YouTube: EduFund Factors responsible for the rise 1. The rising cost of amenities The tuition fees don’t comprise the entire cost of education. It is also the amenities that come along with it. Food, accommodation, extracurricular, commutation, and other living expenses contribute significantly to the cost of education.  2. The rise in the number of educators With more universities and the expansion of different courses, the demand for educators has increased as well. And this contributes notably to the overall cost of education.  3. Increased demand for higher education Higher education has upgraded to be a necessity from the space of mere desire. A University degree is a means to financial success and prestige in the modern world.  4. Lower public funding The public sector's investment in the field of higher education is much lower than the other segments. Universities rely on tuition fees as their primary source of income which means that the burden of the cost falls on the shoulders of parents and guardians. While you cannot control this financial phenomenon, you can strive to understand why you need to protect your savings from it.  https://www.youtube.com/shorts/jPHG8h87Dzo YouTube: EduFund Why do parents need to protect their savings from Education inflation? 1. Preserve your purchasing power The value of money depreciates with time. Even though you might earn some extra currency over time, the real value matters the value of the Indian rupee depreciating against the dollar and pound over the years. And you need to check whether you’ll be able to retain your present purchasing power after a certain number of years.  Consider ensuring that your return on savings is higher than the rate at which the value of money depreciates. The consistently soaring education Inflation is one of the significant factors affecting such depreciation. 2. Shield your child’s future  With a world full of information and opportunities, your child should be free to dream about their future. And to make this happen, it is essential to shield their future against all the odds. With proper planning and strategic allocation of your funds, it is possible to compete with the rising cost of education.  3. Maintain your standard of living  To lead a happy and healthy life, look at the practical aspects of things. Your savings must consider your living standard. Your funds should be able to balance between needs and wants.  4. Make harmony with your retirement plans You are to retire and there is no denying that. Are you willing to work this hard all your life? or, would you like to grow old sipping your coffee and relaxing while watching the rain? Life has its phases and you need to enjoy them the way they are meant to be enjoyed.  While taking the cost of your child’s higher education into account, it is so important to take your retirement into consideration. 5. Take your health into account Physical and mental health are pertinent to your well-being and your family’s bright future. A financially secure plan can protect you from avoidable stress, and various lifestyle diseases and prepare you for certain unavoidable medical expenses.  Only when you are healthy will you be able to enjoy the money you are saving. Thus, your health is another reason to protect your savings from Education inflation.  Education inflation is rising at 10-12% in India which makes protecting your savings essential to retain your purchasing power in the future. Give your child the future they deserve by keeping up with the times and saving in advance. How to build an education corpus?   1. Calculate the total cost  Plan the total cost to get an approximate amount that you need to save. Setting the target will create a goal and make the journey easy. The education cost varies from course to course so take the help of professional experts to chart an education corpus plan.    A unique college cost calculator can do wonders for parents. The College Cost Calculator on the Edufund app takes into account various factors and calculates the future cost of college, which makes it easy for parents to set a goal.   2. Start investing as early as possible  Parents who can start saving and investing early manage to create a substantial amount of education corpus. The longer time you have in your hands, the more interest you can accumulate.   3. Choose the right investment tools Know your investment options and invest in the right funds to get maximum returns. The financial plan must include the right methods and investment vehicles to accumulate funds. Savings accounts with 3% to 4% per year and FDs with 5% to 7% per year are safe and secure ways to save. Traditional life insurance policies offer 5% – 6% interest per year.    Invest in equities at the beginning as they yield inflation-beating returns in the long run. Investors prefer SIPs in mutual funds for wealth creation. Scroll through the Edufund app to know your savings option as it provides access to 4000+ direct mutual funds, SIPs as low as INR 100, US stocks and ETFs, ELSS funds, and digital gold.   4. Protect your investment Aggressive investments will accumulate the desired funds, but it is vital to protect the investment from eroding because of adverse market conditions.   Remember the reason why you need an education corpus and shift the corpus to debt instruments as the goal nears to keep it safe and secure.    Start withdrawing two to three years before you will need the money and then shift it to bank fixed deposits or debt funds, as it will give fixed and safe returns.   5. Track your investment   Keep track of the investments regularly and finetune them based on the need of the hour. Creating a plan is easy but sticking to it is a bit difficult. Don’t divert funds for non-essential needs, as building an education corpus is vital for the child’s future.   Education inflation over the years and in the future Here is a look at the cost of popular courses in the past and the expected costs of the courses in the future. These costs are for one year of college.  Course Cost in 2015 2020 Expected cost in 2025 Expected cost in 2030 Engineering 145000 171374 202545 239386 Hotel Management 77000 98200 128205 159636 MBBS 800000 1000000 1250000 1562500 MBA 1140000 1586000 2206126 3068721  FAQs Why education is becoming expensive:   There are many factors responsible for the rising cost of education. A few factors could be- the rising cost of amenities, the rise in the number of educators, the increased demand for higher education and lower public funding.   How do you calculate the future cost of education?   There is a formula to calculate the future cost of education. It is calculated with the formula Future value = Present value (Expected returns + Rate of interest)  What is the rate of inflation for college?   The cost of education has been increasing by 10% every year in India. Between 2012 and 2020, the cost of education rose in the range of 10- 12% every year.   How does inflation affect students?   As education costs go up, it becomes increasingly tough for students to get into their dream universities. This further affects their employment prospect.   TALK TO AN EXPERT

The benefits of long-term goals are that it helps individuals to realize their dreams over time. Sometimes you need to prioritize and work things out. Setting long-term goals gives people the opportunity to achieve desired results eventually. What are long term goals? Long-term goals are the desires, visions, or ambitions that people know will take some time to achieve. These goals are generally accomplished in the future. The timeline varies from a few years to several years as the long-term goals cannot be achieved in a day, month, or even one year.  Long-term goals can be professional or personal goals like a young man of 20 wanting to become a manager at the age of 30, marrying and settling down by the age of 35, taking a break and traveling for six months by the age of 40, setting up an education corpus for a child or planning the retirement fund. Benefits of long term goals 1. Gives direction Without long-term goals, individuals will only think about the present and not think about the future, which as everyone knows is quite unpredictable. Suppose an individual is earning INR 40,000 per month and does not have any long-term goals. He will then spend most of his salary without worrying about future consequences. What happens if he suddenly falls ill or he requires a lump sum amount in the future? Long-term goals give direction, help people to think ahead, and make provisions accordingly hence they are beneficial in both personal and professional life.  2. Key to changing your life Long-term goals act as a key to changing your life. Every person has a vision for a bright future. The benefit of long-term goals is that it works as the inspiration behind the goals that motivate and urge to make dreams a reality. Once the goals are set people often are encouraged to reach the end of the road by any means. They are no longer afraid of the difficulties in their path instead are driven to reach their goals.  3. Motivational tools  A long-term goal is an important motivational tool that gives the individual a focus point. When you have set a long-term goal then you have a target to achieve and it becomes easy to work for and towards it with complete dedication and determination.  4. Increases self-confidence Long-term goals inspire a better future and help you to see what you want and what you can achieve in the long run. Measurable and specific long-term goals encourage a positive mindset, help to avoid procrastination, and increase productivity. All these factors at the end of the day boost the self-confidence of a person.  5. Gives purpose to everyday actions Setting up goals is not an easy task nor is moving towards it with complete dedication but once you set up long-term goals they can persuade a person towards his end goal. Long-term goals give purpose to everyday actions and urge an individual to move forward even if the daily activities seem boring.  6. Encourages organized behavior Breaking your goals into medium, short and long-term goals encourages organized behavior. It shows that the individual is capable of handling complex processes and prioritizing his objectives. Long-term goals look scary at the beginning but with time it has the power to transform your way of thinking. Individuals who set up long-term goals are seen to be more organized in their behavior and actions than people without any goals in their lives.  7. Take advantage of the full potential Setting goals requires proper planning and when a person tries to set long-term goals he has to utilize his full potential. He will have to find out his actual objective and research the best available means to reach the desired goals.  8. Helps in self-improvement One of the important benefits of long-term goals is that it helps in self-improvement. People who set up these goals have to maintain their focus if they want to achieve such goals. Long-term goals shape the direction of the thinking process and encourage people to move toward it diligently. It keeps on reminding you that you have done the hard work and only a little work remains. The scope for self-improvement is immense as you have to improve your habits and move towards the goal somehow or the other to achieve them at any cost.  9. Achieve success Long-term goals give people the time to align the necessary resources with the objectives in an effective manner. It keeps you accountable, ensures better handling, and ultimately increases the chances of success.  INVEST NOW Conclusion The benefits of long-term goals are that it gives individuals the time to get a grasp on things and achieve them at a steady pace. There is no need to overwork yourself instead people have the time to set a comfortable pace that is also achievable. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Which is the better investment option for a daughter -  MFs or girl-child schemes?  Indian parents are often on the lookout for the right kind of investment schemes that will lessen the financial burden of education and marriage expenses of their girl child. They want to safeguard their child’s future and hence try to create a financial corpus as security for the days to come.  Before entering into a discussion about MF vs Girl Child Schemes, let us know about each of them in brief. What is Mutual Fund or MF? Mutual Fund refers to investment vehicles that accumulate money from several investors for buying a portfolio of various securities. The portfolio includes several options like real estate, bonds, stocks, or a combination of different investments.  Investing in mutual funds is considered beneficial in recent times because of the high returns on investment. The most common drawback of a mutual fund is the high fees of the investor but this can be mitigated by choosing the right investor.  You can take the help of the EduFund App to reduce excessive charges with the help of saving experts.  What are Girl Child Schemes? Girl child schemes are investment plans that offer benefits to the girl child. These are divided into two categories: State Government Schemes and Central Government Schemes. Some of the highly popular ones are Sukanya Samriddhi Yojana, West Bengal Kanyashree Prakalpa, and Dhanlalakshmi Scheme.   The girl-child investment plans help parents to accumulate money so that it can later meet the financial requirements of the girl child. Mutual fund vs Girl child schemes Both Mutual funds and Girl Child Schemes serve the same purpose and that is to act as investment vehicles. Parents often take the help of either of these or both to create an appropriate portfolio that will be able to meet the desired needs of their girl child.  Let us make comparisons and also see the difference between the two based on certain parameters. 1. Interest rates Both schemes offer higher interest rates that lead to more savings. Girl child schemes generally offer a return of 7% to 8.6% whereas mutual funds offer returns of 12% to 14% easily in the long run.  2. Saving on taxes Gains on equity funds, LTCG, ELSS, and dividends received on mutual funds can be claimed as tax-exempt as mutual fund investments up to INR1.5 lakh per annum are under tax deduction. All the girl child schemes are exempted from tax to benefit the girl child. 3. Low minimum investment  Both schemes have the option of low minimum investment. Some investors have waived the minimums and individuals can now invest as low as $1 or INR 100. There is already a fixed minimum value for a girl child scheme be it INR 200 0r INR 500 or INR 1000 and investors have to start with that amount only.  The Edufund App gives its investors the option of starting mutual fund schemes or SIP at INR 100 only.  4. Terms and conditions The terms and conditions of the girl child schemes are straightforward with no room for any assumption. Mutual fund schemes are subject to market change and should be read properly by investors.  5. Limitation of amount The minimum and maximum amount of investment in girl child schemes are pre-decided and you cannot go above or below the said amount. Mutual funds on the other hand give the option of deciding the minimum and maximum amount by yourself as per your ability.  6. Flexibility Girl child schemes do not offer any flexibility whereas investors can choose from a broad spectrum of mutual funds schemes.  7. Premium In several girl-child schemes, the premium is waived off in case the policyholder dies prematurely, whereas that is not the case with a mutual fund. 8. Safe and secure Although mutual funds are considered safe investments with greater returns, in the long run, girl-child schemes are a better option for conservative investors who are more concerned with the safety of their investments than high returns.  9. Partial Withdrawals Several girl child schemes allow investors to withdraw partially after a specific period but mutual funds schemes have a specific lock-in period and cannot be withdrawn partially.  Conclusion In the discussion between MF vs Girl Child Schemes, both the schemes are meant to benefit the investor at the end of the day. If the investor is ready to take a certain amount of risk with their investment then they can create a financial corpus of a good amount through mutual funds. But, if they are looking for a safe investment vehicle then girl-child schemes are the best option. Consult an expert advisor to get the right plan TALK TO AN EXPERT

Beginners are often torn between Direct vs. regular Mutual Funds. Every mutual fund is available to investors in two versions – Direct and Regular. Regular plans involve an intermediary who manages the investments on behalf of the investor, whereas, in the direct plan, the investor directly deals with the AMC (as shown in the figure). These versions are only the options available to the investor in the market that are offered by the same fund. The invested amount from both options is managed by the same fund manager and has the same allocation of the assets in the fund’s portfolio Only the road taken by the flow of money from an investor to the AMC is a different one. Direct mutual funds vs Regular mutual funds Here are the main differences between direct vs regular mutual funds 1. Direct Mutual Fund Direct Plan is directly offered into the market by the AMC (Asset Management Company) or the fund house. The investor can perform his/her own research based on their risk appetite, time horizon, and goals and then make a choice based on these parameters. There is no distributor or intermediary involved, hence reducing the expense ratio (management fees charged by the fund house to the investors). These plans can be easily identified as they are prefixed with the word “Direct” as a part of their name. The investors can choose an offline or an online mode to buy units of the fund. Investors who can perform their research, and who also have the time and capability to manage their portfolio, prefer these plans. 2. Regular mutual fund Regular Plans involve an intermediary and the investors invest through these distributors into the fund offered by the AMC. The intermediaries charge a commission or fee for their services to the fund house. This fee is charged to the investor as a part of the expense ratio, hence the net fee when compared to direct mutual funds. Due to the higher expense ratio, the returns tend to be lower than the direct plan counterparts. These plans provide convenience and are preferred by investors who have less knowledge about the markets. Parameter of differenceDirect Mutual Fund PlanRegular Mutual Fund Plan Expense RatioLowerHigherNAVHigher than RegularLowerReturnsHigherLowerIntermediaryAbsentPresentFinancial/Investment AdviceNoneAvailable and provided by the advisorResearch on where to investSelf – To be done by the investorProvided by advisor Why are Direct plans better? 1. Lower expense ratio  Did you know that you pay for the financial advice that the distributor gives you? The intermediaries charge it to the fund house as a commission. However, this commission paid to the advisor is charged as a part of the expense ratio to the investor. Hence, the investor indirectly pays the intermediary. The fee which is deducted for the advisor varies from 0.5% to 1%. In the case of a direct mutual fund, there is no intermediary, hence there are no distribution charges or commissions to be paid, resulting in a lower expense ratio. Over a longer horizon, the small % of fees paid out of your pocket makes a large difference to the final corpus that is accumulated.  Consider the Axis Bluechip fund which has earned the following returns over the last 5 years and has beaten its benchmark (Nifty 50 TRI). Consider two scenarios where the investor invests Rs 10 lakh into this fund through a Direct plan in one case and in a regular plan in the other. However, the small difference of 1.44% leads to a large change of Rs 1.36 lakhs to the final wealth that is accumulated. (Data of returns are from AMFI website) ParametersDirectRegularDifference5-year returns18%16.56%1.44%Initial Invested Amount10,00,00010,00,0000Final Corpus accumulated  22,87,758   21,51,531     1,36,226  2. Higher Returns The returns from a direct plan are always higher than the returns from the regular plan, owing to the higher expense ratio. Returns being one of the most important factors for cherry-picking the fund of your choice, this difference should be taken into consideration. Some of the examples of the funds are as follows: (Data of returns are from AMFI website) 5-year returnsDirectRegularAxis Bluechip Fund18%16.56%Aditya Birla Sun Life Mid Cap Fund 12.56%11.53%Axis Small Cap Fund19.70%18.17% 3. Higher NAV Net Asset Value or NAV = Assets of the fund - Liabilities of the fund / Number of units of the fund The assets owned by the fund include equity or stocks invested by the fund, debt instruments such as debentures or government securities, and cash. The liabilities of the fund include money owed to banks, fees to distributors or other associated entities, etc. In the case of the direct plan, due to the absence of the fees, the Net Assets (Assets – Liabilities) are higher resulting in a higher NAV. Whereas in the regular plan, the fees/commission to the distributor or intermediary forms a part of the liabilities, reducing the NAV. A higher NAV would imply a higher investment value. Differences between Direct and Regular Plans  The key difference between direct and regular mutual funds:  Net Asset Value (NAV): The key difference between direct and regular mutual funds is NAV. The NAV of a direct plan is higher than the regular plans. This means that the value of your investment is more in a direct plan than in a regular plan. Returns: Returns are likely to be higher in direct plans over regular plans. This is because regular plans charge a fee for the advisory role and that can affect your overall investment value.   Role of financial advisor: Direct plans do not offer financial advisory services or expertise. You are required to research by yourself, determine the best fund, and time the market to understand the best time of investment and exit. All these decisions and market research is taken care of by professionals with regular funds. These are regularly monitored and adjusted to help fetch the best returns in the market.   Direct Plan – Mutual Fund Regular Plan – Mutual Fund Higher Returns Low Returns Low expense ratio High expense ratio NAV- High NAV - Low Self-Researched & Monitored Researched & Monitored by Advisor Advice is not provided Advisory services provided by experts SIP/Lumpsum available SIP/Lumpsum available   FAQs Which is better direct or regular mutual fund? Direct mutual funds offer higher returns in the long run to investors. However, investing in mutual funds requires market research and financial expertise which is offered by a regular plan. Both are good investments and benefits are likely to vary based on the investor and their choices. What is the difference between direct and regular mutual funds? In regular mutual funds, AMCs are required to pay a commission to the brokerage. This is not the case under a direct mutual fund. Direct funds have lesser costs involved, a higher NAV, and are do-it-yourself funds where the investor must make investment decisions on their own. Why Invest in a Regular Plan of a Mutual Fund? The biggest benefit of a regular plan in mutual funds is the financial advice offered by the Fund house. This can have a huge impact on your returns and you can get closer to your financial goals more efficiently. Conclusion In conclusion, apart from the above benefits, one is always in control of their investments and is also well informed about the turbulences in their portfolios and aids in taking an active approach towards the financial goals. A tiny % of difference can multiply into a larger difference in the final returns from your portfolio. One can learn about the AMC, the mutual fund options available that suit your risk profile from the services offered by wealth management sites such as EduFund, with a minimal fee, when compared to the expense ratios of a regular plan. The next time that you plan on investing in a mutual fund, go for a direct plan. It will surely involve some initial research and some preliminary work, but you will be able to reap long-term benefits from making this wise choice.