My son is in 7th grade and I want to save 15 lakh when he completes his 12th grade for his higher education. Pls advise best investment options for this. How much should I save every month and in which funds.

Ans: Hi Value Investor. Thanks for discussing your requirements and future goals. For the goal of 7-8 Lakh., you can easily start sip in mf of around Rs.15000 in categories like large & midcap, Multicap , Mid cap and Balanced Advantage Funds etc. Starting with Rs.15000 on a monthly basis can help you achieve the Child Education goal.

Ans: It is difficult to give my opinion on this since I have no idea of what is the likely time horizon of your investment.

If you wish to send him within next 1-2 years, then probably a Recurring Deposit (RD) in a bank or a SIP in a debt fund is right way to invest. If the time horizon is longer, then SIP in a Debt fund, Hybrid Fund or an equity fund would be better, more tax efficient and more flexible. Please consult a financial advisor if you feel you need professional help for this.

Ans: planning for your child's education is a heartfelt commitment. Here’s a tailored strategy for you:

Investment Horizon: You have approximately 5 years to reach your goal. This is a medium-term horizon, and considering this, a balanced approach is advisable.
Monthly Savings: To accumulate 15 lakhs in 5 years, you would need to save around 25,000 per month, assuming an annual return of 10%. This is a ballpark figure and can vary based on market conditions and fund performance.
Investment Options:
Equity Mutual Funds: Given the 5-year horizon, equity funds can offer potentially higher returns. Opt for a mix of large-cap, mid-cap, and multi-cap funds to diversify and spread risk.
Debt Mutual Funds: To add stability to your portfolio, consider allocating a portion to debt funds or fixed-income instruments.
Tax Efficiency: Look for tax-saving mutual funds under Section 80C if you haven’t exhausted the limit. This can provide tax benefits and align with your investment goal.
Asset Allocation:
Equity: 60-70% for growth potential.
Debt: 30-40% for stability and capital preservation.
Review & Adjust: Periodically review your investments to ensure they are on track to meet your goal. If needed, adjust your investments based on performance and market conditions.
Education Inflation: Keep in mind the inflation rate for education expenses, which tends to be higher than general inflation. Adjust your savings goal periodically to account for this.
Emergency Fund: While saving for your child's education, ensure you have an emergency fund to cover unexpected expenses. This will prevent you from dipping into your education savings.
Remember, the key to achieving your goal is disciplined saving, informed investing, and regular monitoring. Your dedication to your son’s education is commendable, and with prudent planning, you can certainly realize this dream. Best wishes for your savings journey!

Ans: You want to secure your son's higher education.

A Rs. 1 lakh investment plan can help you achieve this goal.

Let's explore the best investment options.

Benefits of Mutual Funds
Mutual funds offer good returns over time.

They are managed by experts.

These funds can help you build wealth.

Choosing Actively Managed Funds
Actively managed funds have expert managers.

They aim for higher returns than index funds.

This can be beneficial for your long-term goal.

Regular Funds vs. Direct Funds
Regular funds have financial planners to guide you.

They provide professional advice.

Direct funds lack this personalized support.

Certified Financial Planners can help you make informed decisions.

Importance of SIPs
Systematic Investment Plans (SIPs) spread your investment over time.

This reduces risk and averages out the cost.

SIPs make investing easier and more disciplined.

Consider Child Education Plans
Child education plans are designed for education goals.

They provide tax benefits and assured returns.

These plans ensure funds are available when needed.

Reviewing Insurance Policies
If you hold LIC, ULIP, or investment cum insurance policies:

Consider surrendering them for better returns through mutual funds.

This can provide a higher corpus for education.

Diversifying Investments
Don't put all money in one place.

Diversifying reduces risk.

It ensures stable growth for your investment.

Final Insights
Investing Rs. 1 lakh wisely is crucial for your son's future.

Choose actively managed mutual funds and SIPs.

Consider regular funds for expert guidance.

Review and adjust your investment as needed.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner,

www.holisticinvestment.in