How will I fund my children's higher education?

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How will I fund my children’s higher education?
Saving for your children's higher education is high in your investment priority.
The easiest thing to do, and what most of you may end up doing is dig into
your retirement savings such as your Employee Provident Fund (EPF) to
pay for it. That is not a good idea. Saving for your golden years should remain
a top priority for you to lead a life of peace and dignity. What do you do?
First, save for your children’s education and your retirement concurrently.
You cannot fulfil one, and then move on to the other. It will be too late, and
too less a period for you to save sufficiently.
Second, clearly delineate your children’s education portfolio and yours, and
discipline yourself not to dig into your retirement portfolio when you are
tempted to.
Third, if you aspire big for your children, then you’ve got to go that extra
mile in terms of choosing smart asset classes. A deposit in your kid’s name,
or a Public Provident Fund (PPF), or if it is a girl child, the new-found
Sukanya Samriddhi - all these do not fit in as ‘smart products’.
If you do not have equities as a part of your children’s portfolio, you are
most likely going to land in trouble. Check out any Recurring Deposits (RD)
calculator. You will find that you will not get to your goal unless you save
large sums of money.
That means cutting down your retirement savings is an imprudent thing to
do. The more prudent thing would be to add equities as a part of your
children’s education portfolio.
Fourth, if you aspire big, start investing early. That will not only help you
compound your investment, but more importantly, it will give you sufficient
time to take risks, i.e., to invest in equities and benefit from it.
But what if you still fall short of funds for your children’s education? There
are enough loan options for higher education that your child can go for, and
repay without much trouble once he/she lands a job. Of course, one note of
caution: it would not be a good idea to take the loan on your name (while you
are probably in your late 40s or 50s) instead of your child's name.
It is fine to be attached to your children; however, it is prudent to detach
yourself a bit when it comes to their financial needs.
Vidya Bala
Head – Mutual Fund Research
FundsIndia.com
July 2015 I Volume 05 I 07
A month to remember
Greetings from
FundsIndia!
June was a good
month for
FundsIndia.com. We successfully
completed our third round of
funding by raising Rs. 70 crore, led
by Faering Capital, with
participation from Inventus and
Foundation Capital, our existing
investors.
We celebrated the sixth anniversary
of the launch of FundsIndia.com
with all our employees too! In
2009, we had held a press meet in
a small conference room in
Chennai, and we were able to
garner modest coverage of the
event. This year, on the same day,
we held a press conference in
Mumbai to announce our funding,
and our growth plans. It was
attended by leading journalists
from all national dailies, and the
news was carried in all major dailies
around the country and online.
To cap it off, towards the end of
the month, we received the
CNBC-UTI National Award for
Best Online Advisory for the
second year in a row. This is the
moment where we look back with
pride, and look forward with hope
and confidence. Thanks for being a
part of this wonderful journey.
Happy investing!
Srikanth Meenakshi
Co-Founder & COO
FundsIndia.com

2. The Equity Fund Playbook for Rookie Investors
It’s a ‘long-only’ game: While mutual funds are not just
about equity funds, you need equities to generate wealth
in the long term. If you decide to invest in equity funds,
long is the only way. Else, it is best to stay away. Every
time you feel confident that you can invest in mutual funds
for a year, think of a year such as 2008 when the markets
declined by much more than 50 per cent.
That means you would have lost half your money and not
recouped it at all (because you came in with a one-year
time frame). To add to it, you would probably shun this
efficient wealth-building product forever simply because
you had a wrong time frame for it. There are multiple fund
categories in debt to suit your short-term needs. Go for
them if you need money in the near term.
Stay invested: An elementary point, but not many seem
to get it, going by the investment behaviour of many
investors who do not hold their equity funds for even six
months. Believe me, you cannot exit a fund even for poor
performance in that short frame of time!
Added to it, the market fluctuations can easily force you
to exit your fund, or stop your Systematic Investment
Plans (SIPs), making you take decisions in fear. Avoid the
fear (when the equity market declines), or the temptation
(when the equity market rises) to exit unless you have use
for the money. The best you can do is not to watch your
fund’s movements daily. It is the biggest favour you can do
for your own self.
Often times, we are so obsessed with returns (and not the
actual value of money) that we lose sight of the wealth
we need to build. Suppose you had invested Rs. 1 lakh in
a fund, and it gave 60 per cent returns in a single year. Yes,
you have Rs. 1,60,000 and you might be tempted to exit.
Fine. But what next?
Instead, letting this money lie for say 10 years will have
fetched you over Rs. 4 lakh (assuming a 15 per cent annual
return). Staying invested will add ‘wealth’, and not just
‘returns’ to your portfolio.
Non-stop SIPs: You can stop your SIPs and move to
another scheme when a fund is not performing well.
Stopping SIPs before your intended tenure is the worst
you can do for your portfolio.
Let us take an example of say Franklin Prima. Had you
stopped SIPs by mid-2008 (started in mid 2007) but just
held the fund, your returns by December 2009 would have
been a measly 0.7 per cent annually. Had you continued
the SIPs into 2008 and 2009, then by December 2009,
your returns would have been 26 per cent annually.
This is because the best period to average at low cost was
the second half of 2008 and early 2009. By continuing
your SIPs, you gave the fund a chance to average at really
low market values.
But more than anything else, by stopping your SIPs, you
are stopping your investment/saving process for your
future, fearing near-term movements. Avoid that at all
cost. If you are really worried about your fund’s
performance, check with your advisor on whether you
should change the fund.
Risk = loss: Our advisors come across investors who say
they are ‘willing to take risk’. They mean that they are
willing to buy equity funds for a short period, or are fine
with taking risky bets such as a large exposure to mid-cap
funds or sector funds.
But what does risk mean to you? For most of you, it
www.fundsindia.com
Vidya Bala
If you are among the many FundsIndia investors who have started investing in mutual funds in
recent months, here’s a ‘Playbook’ for all of you.
It is simply about how we can, together, play the mutual fund game right! Playing the game this
way will make your investing life simpler and needless to say, richer.
The current non-system in international monetary policy is a source of substantial risk, both to
sustainable growth as well as to the financial sector. It is not an industrial country problem, nor an
emerging market problem, it is a problem of collective action.
Dr Raghuram Rajan, Governor, Reserve Bank of India

3. means more returns. Sorry, risk is simply first about losing
money – losing 50-60 per cent in a single year such as
2008, and then waiting for a good while to build wealth.
Your ability to take risk means your ability to lose money.
Most of us do not have that kind of risk appetite.
When you pick a ready-made portfolio from FundsIndia,
or our advisory team customises one for you, we ensure
that the risks are contained through the right category
allocation and asset allocation.
When you choose to go overboard with a few categories,
especially based on the lure of the past one-year returns,
you are entering the risk zone.
If it is short, it is slippery: This is true not only in terms
of time frame, but also for choosing funds based on
short-term performance. Many investors get enamoured
by short-term performance, especially when the returns
look spectacular. The question is whether such a repeat
performance is possible, more so, with sector funds. Take
a look at the table.
You will be surprised to know that the chart toppers in
2013, especially technology funds, were in the bottom
quartile of 2014’s performance chart.
Worse still, the international fund that was among the
toppers in 2013 delivered just 1.3 per cent in 2014, what
with the rupee appreciation also pulling down its returns.
2014 had all mid-cap funds hitting the roofs. But now in
2015, we know that they have already taken a bit of a
knock.
So, what are we trying to say here? Go by consistent
performers. How will you know a fund is consistent? They
would be consistent if they do not swing wildly – that is
if they don’t top charts in one year, and hit the dust the
next.
Of course, this is no easy task for you to decipher, which
is why we have our Select Funds list – researched and
handpicked after quantitative and qualitative filters.
This is your answer when you ask our advisors why we do
not have some ‘top’ fund in our list: They happen to be
top that year; that’s all. They are not consistent. They can
pull down your returns the next year.
Finally, the playbook essential: If you want to build a lot
of wealth, it is easy to do so in calculators by adjusting
the annual returns from 15 to 20 to 30, or even 40 per
cent. That’s a number game. If you want a lot of money,
you need to save a lot of money and for a long enough
period. Elementary, but hard to follow.
While equities certainly deliver superior returns, it is unfair
and unreasonable to expect the equity market to create
miracles. Instead of upping your return expectations, try
to up your savings. SIPs and step-up SIPs are a good way
to do this regularly.
While none of us can, nor will give you any guarantee on
how much funds will deliver, I can say for sure that by
playing by these rules, you will certainly have enough in
your pocket to play your life the way you’d like it.
Vidya Bala
Head – Mutual Fund Research
FundsIndia.com
www.fundsindia.com
What fools call wasting time is most of the time the best investment.
Nicholas Nassim Taleb
2013 2014
ICICI Prudential Technology SBI Small & Mid Cap
Franklin Infotech Sundaram SMILE
Birla Sun Life New Millennium UTI Transportation and Logistics
ICICI Prudential US Bluechip Equity DSP BlackRock Micro Cap
ICICI Prudential Exports & Other Services Birla Sun Life Pure Value
DSP BlackRock Technology.com Reliance Small Cap
Birla Sun Life International Equity - Plan A Canara Robeco Emerging Equities
SBI Pharma Franklin Build India
Chart Toppers

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5. www.fundsindia.com
FundsIndia Features: Group to grow
There is no great earnings visibility for the next two quarters. We are possibly undergoing a mix of
price and time correction, which may well get worse before it gets better. The learning for us is to
hang in there; for investors it should be that they increase investment to generate wealth.
Lalit Nambiar, Head – Research, UTI Mutual Fund
News flash: Your fund manager isn’t the only person
responsible for the profitability of your investments. You
are responsible too.
Yes, instead of just logging in to your FundsIndia account
and looking at your Dashboard to see how much returns
you’ve earned over the past 24 hours, it’s time you increase
the profitability of your investments by doing something
simple. It’s time you group to grow.
Remember the first rule of successful investing? It is to set
a goal. Now, once you know why exactly you’re investing,
several aspects fall into place.
Time frame: When do you want to achieve your goal?
Are you investing for the long-term or the short-term?
These questions will help you determine your choice of
investments.
Risk: Usually, when saving for short-term goals, it is best
to avoid risky investment options such as equity mutual
funds. You could go for safer options such as short-term
debt funds.
Amount: You need to have a target number in mind for
your goal. This number should be practically set. Also, do
make sure you account for inflation when you set a target.
The funds: Once you put all the above points together,
you’ll be able to identify the type of funds you can invest
in, and the number of funds that you require in order to
accomplish your goal within the stipulated time period.
Now is the time for you to group to grow.
In order to ensure you successfully invest for your goal,
you must do the following:
Create a portfolio: You can maintain as many portfolios
as you want depending on the number of goals you want
to achieve. It is highly recommended that you build and
manage one portfolio per goal, as it will ensure ease in
investing, maintaining and tracking. To create a portfolio,
you just have to login to your FundsIndia account. In the
Dashboard page, you’ll find the button – ‘New Portfolio’
on the right side of the page.
Describe your goal: On clicking the ‘New Portfolio’
button, you’ll be taken to a page where you can enter the
name of your new portfolio, and a short description for
the same. You can use the description field to enter your
target amount, or / and any other information pertaining
to your goal and portfolio. After entering this information,
click ‘Submit’.
Invest for your goal: To do this, you’ll have to add
investments to your portfolio. When you select any mutual
fund for investment, either through the lump sum or
Systematic Investment Plan (SIP) route, you can select the
portfolio for which you’re investing from a drop-down
menu. Voilà! Your investment will be added to it.
Monitor and maintain – FundsIndia.com gives you
unprecedented power in monitoring the performance of
your portfolio to make sure you efficiently manage your
investments. We’ll tell you more about the powerful
portfolio tools that come with your FundsIndia account in
the posts to come.
It’s time you get responsible for the performance of your
investments. Set goals, and group your investments for
them in portfolios, and watch them grow. After all,
successful investing is just simple investing.
Noorain Mohammed Nadim
Head - Corporate Communications
FundsIndia.com
This article is a part of our new series – ‘FundsIndia Features’, an initiative to educate our customers on how
best they can take advantage of their FundsIndia account to build superior investment habits.
In this post, we discuss ‘Portfolios’ with FundsIndia, and why building a portfolio is crucial to achieve goals.
Noorain Mohammed

6. www.fundsindia.com
I also feel that apart from financial inclusion to individuals, there is a large mass of small businesses
out there, who deserve to be touched by inclusion. They need access to credit at better rates and
cannot necessarily be backed by credit ratings
T T Srinivasaraghavan, Managing Director, Sundaram Finance
MF investing vveerrssuuss Stock investing
Profit booking: When a stock price touches crazy levels
and the value it will deliver for that price is likely to be
lower, you may consider selling it partially or completely
if you hold it in your portfolio.
You need to actively monitor your stock portfolio and
vary its exposure to stocks and sectors. These actions are
vital for securing your returns on your stock portfolio. Can
you follow a similar approach for mutual fund investing?
The answer is no. Mutual fund investing is much simpler
than stock investing. First, the fund manager is doing the
process of watching over-valued stocks and changing
holdings accordingly.
To do fund changes on top of it would not only be
unnecessary, but it would leave you with avoidable exit
loads and taxes. Chasing stocks and sectors, and changing
schemes would be futile when you hold a fund portfolio.
What you could do, of course, is look at changing funds
if its strategy changes, or if it has been a long
underperformer. You can then use a market upswing to
exit it. If you wish to do periodic rebalancing, then look
at market levels and book profits from equities and deploy
them in debt, when equity markets become overheated.
NAV is not the same as stock price: While investing in
a stock, the current market price of the stock is the
important information both technically, and while
fundamentally analysing stocks.
Based on the current price, the historical price movement
of the stock, as well as its intrinsic value (using
fundamental valuations), one can decide whether it is a
good time to buy a stock.
With mutual funds, many investors like a Rs 10-Net Asset
Value (NAV) New Fund Offer (NFO) because they think
it is ‘cheap’. How can it be cheap when at the time of the
NFO, the portfolio of stocks is not even built? Others
consider a fund with an NAV of Rs. 25 cheaper than the
one with a Rs. 100 NAV. Whether it is an NAV of Rs.
1,000, or Rs. 10, it does not matter.
The NAV is only a representation of the value of 1 unit
of your portfolio. That value includes the money you put
in and the gains the fund delivered. For instance, let us
assume a 20 year old fund’s NAV is Rs. 700. A 2-year-old
fund’s NAV is Rs. 14. Both have the same portfolio.
You may think that the Rs. 14 NAV is cheaper and it could
give quicker returns. But in reality, if the underlying
portfolio appreciates by 10 per cent, the NAV of Rs. 700
will increase to Rs. 770, and the NAV of Rs. 14 will
increase to Rs. 15.4. Growth prospect of the underlying
portfolio is more important than the fund’s NAV.
Stock performance versus Mutual fund performance:
The future performance of a stock depends upon the
company’s fundamentals such as revenue and profit
growth, management credibility, market share, and so on.
So, it is possible both fundamentally and technically to
forecast a stock’s performance based on its business plans,
its current financial status, and so on.
But the future performance of the fund depends upon
the fund objective, fund management capability and fund
house process, to name a few. This is because the basket
of stocks that a fund holds is subject to change constantly.
A few stocks may be replaced with new ones.
N Sathyamoorthy
Analyst, Mutual Fund Research
FundsIndia.com
Why is stock investing different from mutual fund investing and what should be your approach
while investing in mutual funds? Read on.
“Price is what you pay, value is what you get,” - Warren Buffett.
N Sathyamoorthy

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8. www.fundsindia.com
Tata Motors
The stock is trading in a consolidation band of Rs. 420 to
Rs. 450. The short-term trend of the stock looks bearish.
It has a strong support at Rs. 420 and Rs. 400. Its
resistance is placed at Rs. 470 and Rs. 495. The stock will
turn bullish above Rs. 470 levels. Its short-term trend line
is at Rs. 460, while the 50-day simple moving average is at
Rs. 485. Its long-term target is at Rs. 545, while its stop
loss is at Rs. 385.
This column is targeted at investors who are registered customers of
FundsIndia for trading and investing in equity as well as prospective
investors who wish to open an equity account with FundsIndia.
It was a volatile month with a positive bias for the Nifty.
It continues to remain strong after it managed to rebound
from the low of 7,940.3. The upward trend remains intact
as long as the index trades above 8,270. Its strong support
is at 8,270 and 8,160, while its immediate resistance is at
8,490 and 8,720. The latest 200-day simple moving
average is at 8,370. At current levels, the possibility of a
correction remains low. A close below 8,270 will lead to
further weakness to test 8,160.
Perumal Raja
Technical Analyst (Equity Research Desk)
FundsIndia.com
ICICI Bank
Since early 2015, ICICI Bank has remained volatile with
a negative bias. The stock has strong support at Rs. 280,
while its resistance is placed at Rs. 325 and Rs. 345. A
continuation pattern indicates that a long-term upward
trend will emerge. Its 50-day simple moving average is at
Rs. 310. A breakout above Rs. 325 will lead to a
medium-term upward trend, with the target at Rs. 365.
Stop loss is at Rs. 270.
Technical View Nifty
Disclaimer: Mutual fund investments are subject to market risks. Please read the scheme information and other related documents before
investing. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund,
or designing a portfolio that suits your needs. Wealth India Financial Services Pvt. Ltd. (with ARN code 69583) makes no warranties or
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Think FundsIndia, a monthly publication of Wealth India Financial Services Pvt. Ltd., is for information purposes only. Think FundsIndia
is not, and should not, be construed as a prospectus, scheme information document, offer document or recommendation. Information in
this document has been obtained from sources that are credible and reliable in the opinion of the Editor.
Publisher: Wealth India Financial Services Pvt Ltd. Editor: Srikanth Meenakshi
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Q: I want to invest Rs. 10,000 per month in an Equity Linked Savings Scheme (ELSS) fund. Please let me know how
many funds should I choose and how it can be diversified.
I am tracking a few ELSS funds from February 2015. I see that the Net Asset Value (NAV) increases when the share
market goes up, and it declines when the market goes down.
Over the past three years, the markets did well. Suppose the markets decline after three years, will I face a loss?
A: As ELSS funds invest in equity markets, they will, naturally, decline and grow with the market. You should not be
put down by short-term declines. Over a long term period of 5-10 years, the chances of negative returns (historically)
in the market have so far been nil (unless something was terribly wrong with the economy).
ELSS funds too need a long time frame of investment. You can expect good fund managers, who actively manage
portfolios, to contain declines in falls, and outperform in rallies, ultimately delivering some higher returns than the
market.
The lock-in period for ELSS may be three years, but like any other equity fund, you should consider at least a five-year
holding to play out volatility.
Besides, the fact that you will invest through a Systematic Investment Plan (SIP) will give you an edge in terms of
helping you average costs – that is buying more in market dips and less during rallies.
For the amount mentioned by you, two funds should do. Ensure that you are not too stressed with day-to-day volatility.
Consider this as a long-term investment, with tax benefits being only an add-on.
Vidya Bala, Head
Mutual Fund Research
FundsIndia.com
Q & A

10. 1 What is the name of the central bank of the United
States of America?
2 Which was the first dedicated mid-cap fund in India?
3 What is the name of the business newspaper owned
by the The Hindustan Times group?
4 Who is the author of ‘The Great Crash 1929’?
5 Name the person in the image. He
has been at the helm of one of the
most regarded asset management
companies in India.
Answers may be sent to quiz@fundsindia.com.
Answers for June 2015 Investment Quiz: 1 Parag Parikh 2
Kothari Pioneer Taxshield (now Franklin Taxshield) 3
Atul Gawande 4 Dhirendra Kumar 5 Nirmala
Seetharaman
Winner for June 2015 Investment Quiz: Narayan Rao
www.fundsindia.com
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Equity (High risk)
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Franklin Prima Reliance Equity
Franklin Smaller Companies Religare Mid & Small
HDFC Mid-Cap SBI Magnum Mid Cap
ICICI Pru Value Discovery UTI Mid Cap
Please click here for a complete listing of our preferred
funds.
Savings, Investments and Insurance – Three Different Animals - Does the title surprise you?
Then it’s mainly because you have been using these three terms interchangeable, without knowing
the actual difference between them.
Read more at Marketplace, the official blog of FundsIndia.com
Recommended Book
About us: FundsIndia.com is India's leading online investment platform. It offers a wide range of investment options
such as mutual funds, equities, corporate deposits, bonds, loans, insurance and 24 Karat gold, to name a few, in one
convenient online location. FundsIndia.com also offers a host of value-added services such as free investment advisory
services, different types of Systematic Investment Plans (SIPs), trigger-based investing, Smart Solutions for important
life goals, an Android App, and more that further enrich your investment experience.
Equity Performance Snapshot
Index 1 Year 5 Years 10 Years
CNX Nifty 10.7 9.6 14.3
S&P BSE Sensex 10.1 9.5 14.5
CNX Mid-Cap 18.4 9.7 15.4
CNX Small-Cap -0.5 7.4 12.7
CNX 100 12.3 9.9 14.5
CNX 500 12.5 9.3 13.7
CNX Bank 21.6 14.2 17.7
CNX Energy -9.6 -1.6 8.7
CNX FMCG 14.3 19.1 19.3
CNX Infrastructure -1.4 -0.8 8.5
CNX IT 13.3 13.4 13.9
MSCI Emerging Markets -8.4 1.1 5.5
MSCI World Index -0.3 10.8 4.4
Returns (in per cent as of June 29, 2015) for less than one year is on an absolute
basis, and for more than one year on a compounded annual basis.