We have 4-year-old twin sons. We want to invest some amount through SIP for their higher education. Right now, I can start with Rs 5,000 per month for each of them. However, we don’t understand which is the best scheme to invest in. Please guide.
Vidya Bala, Co-Founder, PrimeInvestor.in replies: Since you are new to investing, you can start with SIPs in index funds such as UTI Nifty Index Fund and Motilal Oswal Nifty 500 for 70% of your planned investment. Use PPF or a corporate bond fund such as HDFC Corporate Bond for about 30% of allocation to debt. This will ensure that you don’t need to review or maintain your portfolio and get market-linked returns. You can add a mid-cap fund or a mid-cap index fund later, when you save more.
I am a 38-year-old woman. I can invest Rs 50,000 per annum for my 7-year-old daughter or 11-year-old son. Kindly suggest some good options.
Adhil Shetty CEO, BankBazaar replies: There are two things you need to keep in mind. First, education is not necessarily a linear process always. There might be several milestones along the way. So arrange your investments in such a way that you have liquidity at every significant point. Second, the inflation in education is almost twice as much as the general inflation of 7-8%. Going by this rule, you would need to consider a 10-15% year-on-year increase in education costs. If a certain course costs Rs 25 lakh currently and you expect your child to take up that course 15 years later, at a rate of inflation of 10-15% per year, the course would cost you Rs 1.5 crore or more. So calculate the potential corpus you would need to accumulate based on the current cost before you start investing. You can invest in a mix of equity and balanced funds such as Canara Robeco Equity Hybrid Fund, Mirae Asset Large Cap and Axis Bluechip Fund. Make sure you review your investments periodically.