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    Right mutual funds to invest for my son's education


    If you have any mutual fund queries, message ET Mutual Funds on Facebook. We will get it answered by our panel of experts.


    I am 33 years old and I want to save up for my four-year-old son’s education. Please suggest me the right mutual funds to to invest for this long-term goal. I am ready to invest Rs 10,000 per month and can stretch if needed.
    -Srujan Tunikipati

    You have identified the goal. The next step is to put a number to your goal. This will help you to calculate your target corpus.

    Do you want to take of your son's higher education cost in India or abroad. Based on the answer, you should try to find out the current cost of the education. Next, you should try to find out how much it would cost when your son is ready for the admission. You can find this out by providing for annual inflation. Once you know your target, you can put together an investment plan to achieve this.

    For example, let us assume that the current cost of the course fee is Rs 10 lakh. At an annual inflation of 8%, the same course would cost Rs 31.72 lakh after 15 years. That means, your need to build a corpus of Rs 31.72 lakh in 15 years. Assuming an annual return of 12%, you need to invest Rs 6,286 every month to create a corpus of Rs 31.72 lakh 15 years.

    It is always better to invest for a target corpus, rather than focusing on how much you want or can invest. This will help you to achieve your goal without any difficulty. Most investors realise on the eve of their goal that their corpus is not enough to take care of it. This happens often because most investors fail to provide for inflation while calculating the corpus for their goals.

    You should always choose your mutual funds based on your goal, horizon, and risk profile. Since you have not shared your risk profile, it is not possible to suggest the suitable mutual fund category to you. If you are an investor with a conservative risk appetite, you can choose large cap mutual funds. If you have a moderate risk appetite, you may choose multi cap mutual funds.

    Best large cap mutual funds

    Best multi cap mutual funds

    (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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    2 Comments on this Story

    Randhir Singh50 days ago
    MFs never give linear return every year... sometimes returns are to the extent of 50 percent or more in a year to catch the deficit of previous years. This inconsistency of returns is the prime feature that an investor need to know before investing in it. Its better to track at regular interval and decide what you want to do with it.
    Vinay Kumar51 days ago
    Don't fall on this mutual fund trap over long term. For things where you definitely need the money after certain years, go for PPF or any other safe instrument. The market people will suck the money out from market at regular short term intervals and leave the long term investers high and dry. Tell me, which mutual fund has given 12% return per year over long term, as assumed by this author?
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