Managing Money with Moneycontrol: The right investment plan for your child's future

Have a right portfolio mix

It is important to assign 10-20% of your portfolio towards products which can offer you secure returns. Since you have a long-term horizon for your investments, having the combination of long-term growth schemes like equity and balanced mutual funds in your portfolio can help you beat inflation. However, investing in equity mutual fund includes volatility risk.

As and when you near your goal try and increase the debt exposure by shifting your wealth from equity mutual funds to debt instruments. By doing this, you will be able to secure your portfolio successfully towards the accomplishment of your financial goal.

On the other hand, these debt funds like short-term income plans will also provide you stable return throughout the remaining period.

How to invest

Starting early and staying invested are two important aspects of child’s education planning. Going through a systematic investment plan is always a preferred option which is not only a pocket-friendly strategy of investing money but also helps in rupee cost averaging. It also provides benefit of compounding through which you can create a huge corpus.

Let us take the example of a goal of creating a corpus of Rs 30 Lakh to meet your child’s higher education with a time horizon of 15 years. Assuming a 12 percent returns, you would be required to invest Rs 6,000 per month in a portfolio mix of equity and balanced fund. You should also try and back it up taking a child ULIP’s plan which can secure your investment throughout the goals target period.

However, not everyone can plan it on time so in such case, In case you are falling short of the required amount when your child’s course starts, one can take an education loan and avail tax saving benefit by declaring income under section 80EE of income tax act.

(You can send in your queries to moneycontrolpf@nw18.com)