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ELSS funds to create education corpus for children

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Last Updated: Oct 16, 2019, 03.58 PM IST
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I am a 38-year-old corporate lawyer. I have two sons: seven and three years old. I have invested a lumpsum in the following mutual funds:
Mirae Asset Tax Saver Fund: Rs 25,000
Franklin India Low Duration Fund: Rs 1 lakh

I have a Max Life term plan of Rs 1.5 crore, LIC policies of Rs 10 lakh and Rs 1.5 lakh in PPF.

I also have a housing loan of Rs 15 lakh. I want to invest around Rs 5,000 per month in tax saving mutual funds for the education of my children.

Which mutual funds should I choose?
--Pravesh Biswas

Vishal Dhawan, Founder, Plan Ahead Wealth Advisors, responds:

Your PPF, EPF, LIC premiums and home loan principal repayment are likely to exceed the maximum tax deduction of Rs 1.5 lakh available under Section 80C. If there is still a shortfall, you may consider investing in Mirae Asset Tax Saver Fund.

However, I would ask you to invest in open-ended schemes like multi cap or index funds for your children’s education. Open-ended funds provide more flexibility than ELSS or tax saving mutual funds.

You may also consider investing in NPS for additional deduction of Rs 50,000 to save for your retirement. The only limitation in NPS is that you can withdraw your investments only after retirement at 60, through a lumpsum or annuities.
(If you have any mutual fund queries, message us on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.)

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