How to fund your twins' education with mutual funds

Summary: With 18 years to plan, mutual funds can help you build a corpus for your twins’ higher education. This story shows how a phased investment strategy, starting with just a Rs 10,000 monthly SIP, can grow your savings to over Rs 2 crore.

A user recently wrote, “I want to create a mutual fund portfolio for my twin baby boys (current age: 7 months) to cover their college education. I can invest up to Rs 1 lakh per child in lumpsum and start SIPs up to Rs 10,000 per child. Kindly advise”

Raising twins means double the giggles and double the bills.

When it comes to college, that’s double the blow. Both tuition deadlines will likely land at the same time, turning one financial goal into a two-seat premium.

But here’s the good news. With 18 years on your side, you’re not behind. You’re right on schedule. Let’s break down how much you might need to fund this twin-ticket journey, and how to get there without breaking a sweat.

How big will the bill be?

Trying to pin down the exact cost of your child’s future education is like guessing their career dreams before they’ve even said their first words. Will it be engineering, medicine or management? And will it be a private college or a government one? Remember Viru Sahastrabuddhe (or Virus) from 3 Idiots?

The range is massive. An MBA degree from a reputed government-run business school (around Rs 2.5 lakh) might cost less than a foreign trip, while a similar degree from a top B-school can run up a tab of over Rs 40 lakh.

So, clearly, while we may not be able to predict the exact figure, we can make an informed estimate. Below is a rough projection of education fees 18 years from now, assuming a 5 per cent annual education inflation rate (based on data from the Ministry of Statistics and Programme Implementation) over the past few years.

A little daunting, isn’t it? An education that costs Rs 30 lakh today could swell to a staggering Rs 72 lakh in 18 years. Even a relatively modest expense of Rs 10 lakh today is likely to multiply nearly three-fold over the same period. In short, preparing for your child’s education means planning for a truly big-ticket expense.

Up next, let’s explore how mutual funds can help you get there.

Start early, go equity, step up: The holy trinity of planning

With 18 years to go, this is a textbook long-term goal. And equity is the best bet for that. It may wobble in the short term, but over time, it compounds like magic and beats not just regular inflation, but the monster called inflation.

The reader’s already off to a good start, Rs 1 lakh lump sum and Rs 10,000 SIP per child, totalling Rs 2 lakh upfront and Rs 20,000 monthly. So, what can this become in 18 years?

Let’s assume the SIPs go into equity funds for the first 15 years, where the expected return is around 12 per cent, and then shift to safer debt funds (ideally through a systematic withdrawal plan) for the final three years, earning a more modest 6-7 per cent, to avoid any last-minute market shocks. Following this glide path, here’s what the college fund could look like by the time the kids are ready to fly the nest.

Without stepping up the SIP, the corpus builds up to around Rs 65.5 lakh per child (enough to cover education costs in ranges 1 and 2).

But increase your annual SIP by 10 per cent, and it jumps to about Rs 1.07 crore, a significant boost. That should comfortably cover education costs in Ranges 3 and 4. However, for Range 5, where expenses are much steeper, you may still need to aim higher.

For this, you may need to aim for better returns. So far, we assumed a 12 per cent return. Let’s now see how varying return assumptions (with all other assumptions remaining the same) impact the outcome, and which fund categories can potentially deliver them.

Sure, mid-cap and small-cap funds offer higher return potential and can help build a larger corpus—as shown in the table above—enough to nearly meet the projected expenses in the range 5 from the earlier table. But given their higher volatility, staying invested in them throughout the entire 18-year period isn’t advisable. A more disciplined, phased approach works better. Let’s look at what that path could be in this case.

Your three-phase portfolio plan

To strike the right balance between growth and safety, following this simple glide path is more prudent:

• Years 1 to 12: Chase growth
  Allocate primarily to mid- and small-cap funds. This is your wealth-building phase. Volatility works in your favour if you stay invested.
• Years 12 to 15: Dial down risk
  Gradually shift towards large-cap or diversified equity funds (like flexi-cap or multi-cap). This helps stabilise returns as you approach the goal. If possible, stagger redemptions across financial years for tax efficiency.
• Years 15 to 18: Lock in gains
  Move systematically into short-duration debt funds or conservative hybrid options. This shields your corpus from any last-minute equity market shocks just before college expenses begin.

Don’t forget the contingencies

While investments are important, a solid education plan also needs safety nets:

• Get term insurance: Both parents should have adequate term cover to ensure the education goal remains achievable even in the worst-case scenario.
• Build an emergency fund: Maintain 6-12 months’ worth of expenses in a liquid and accessible form to prevent SIPs from getting disrupted during income shocks or unforeseen events.
• Plan with flexibility: Don’t assume both children will take the same route or need funds at the same time. Instead, treat the education corpus as a shared pool that can be allocated as per their evolving needs.

Final thoughts: Two kids, one plan, zero panic

Education planning for twins may appear daunting—but at its core, it’s simply a matter of compounding, discipline and adaptability. Start early, step up your SIPs regularly, reduce risk as the goal approaches and protect the plan with adequate insurance and flexibility.

By breaking the problem into manageable parts and sticking to a structured approach, you not only make the journey less stressful but also empower your children. The goal is to give them the freedom to pursue their dreams, without forcing you to choose between their ambitions and your financial peace of mind.

Build your children’s education plan with confidence

Need help picking the right mutual funds and constructing a long-term, inflation-beating portfolio? Value Research Fund Advisor can help you build, monitor and adjust a goal-oriented plan that works for your family—and grows with your income.

Explore Fund Advisor Today

Also read: How to manage the unpredictable costs of your child's education?

This article was originally published on August 05, 2025.