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Understanding ETFs Uses, Returns and Comparison with Mutual Funds and Stocks

 Exchange-Traded Funds (ETFs) have gained popularity among investors for their unique features and benefits. In this blog, we'll explore the uses of ETFs, their potential returns, how they differ from mutual funds and stock investments, and their safety profile. What is an ETF? An ETF is a type of investment fund that trades on stock exchanges, much like individual stocks. It holds a collection of assets, such as stocks, bonds, or commodities, and aims to track the performance of a specific index, sector, or asset class. Uses of ETFs Diversification : ETFs allow investors to gain exposure to a wide range of assets without having to purchase each individually. For instance, an ETF tracking the S&P 500 gives you exposure to 500 different stocks, reducing the risk associated with individual stock investments. Cost Efficiency : ETFs often have lower expense ratios compared to mutual funds. They typically pass on lower management costs to investors since they are often passively man
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Quick Refernce Guide for CAIIB-Retail Banking Part 4 of 5

    10.   Future Value of Money

FV = PV (1+r)n

FV = Future Value, PV = Present Value
n – Period,     r – Rate of Interest

ex. If Rs 10000 will be invested for 5 years at interest rate 8% p.a find the future value.

FV = PV (1+r)n
     = 10000(1+8/100)5
= 10000(1+0.08)5
=14693

·         Same value can be calculated using Future Value Table.
FV = PV * Future Value Factor

11.   Future Value of Ordinary Annuity – When payments are made/ received at the end of each period.
                F = A [(1+i)n -1/ i]
      Where F = Future Value
                A = Annuity
                i – Interest rate
                n - Term


12.   Future Value of Annuity Due – Payment are made/ received at the beginning of each period.
                F = A[(1+i)n – 1/ i](1+r)
       Where F = Future Value
                A = Annuity
                i – Interest rate
                n – Term
·         Same value can be calculated using annuity table
  Future Value of Annuity = Annuity * CV Factor

     13.   Present Value

PV = FV / (1+r)n

Using Present Value Factor PV = FV * Present Value Factor



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