Make money for your children's education! Top 5 mutual fund plans to empower kids
Investment for children's education is one of the most important decisions that an earning individual takes.
Investment for child education is one of the most important decisions that an earning individual takes. When a new member arrives, parents become more active in regard to financial planning in order to invest for them. This becomes a new addition in one's investment goals. According to investment experts, new parents need to keep a few things in their mind while taking any decision in regard to the investment for children and the percentage weight it has to be given in the investment portfolio.
How to invest for children: A brief guide
Speaking on investment for child education, Raj Khosla, Founder & CEO at MyMoneyMantra.com said, "Investment for child education is an important part of one's financial planning. To make any final decision in this regard one needs to keep these five factors in mind — child age, time horizon for investment, child education cost, rise in inflation during the investment period and monthly savings that one can do."
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Khosla said that for primary education of the child, investment for child education has to be for 3-5 years, for higher education, investment for the child has to be for 10-15 years. So, it's important for an earning individual to first look at the family's financial planning even before one's family planning.
Suggesting mutual funds via Systematic Investment Plan (SIP) mode, Khosla said that for 3-5 years one can invest in debt funds while for long-term of 10-15 years, one can invest in mid-cap equity mutual funds and small-cap mutual funds. He advised investors to continue investing even if the market is volatile because in long-term mutual funds SIPs help an investor to get the compounding benefits at the time of maturity.
On how to address the inflation monster during the time horizon of investment Khosla advised investors to keep increasing one's SIP by 5-10 per cent annually.
Asked about the top 5 mutual fund plans that are better suited for this purpose, Khosla listed out the following mutual fund plans — Axis Blue Chip Fund, DSP Mid Cap Fund, HDFC Small Cap Fund, Kotak Standard Multi Cap Fund and DSP Equity Fund.
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