Investing your legacy money

Summary: Prakash has Rs 10,000 a month left after funding every financial goal. He knows he'll never spend it himself. Invested in mutual funds, it grows to Rs 2.76 crore and leaves behind a Rs 32 lakh tax bill for his son. The same money, in a different account, passes entirely tax-free.

Summary: Prakash has Rs 10,000 a month left after funding every financial goal. He knows he'll never spend it himself. Invested in mutual funds, it grows to Rs 2.76 crore and leaves behind a Rs 32 lakh tax bill for his son. The same money, in a different account, passes entirely tax-free. Prakash Rao is 45. His retirement is on track with a Rs 40,000 monthly SIP, a growing EPF balance and a paid-off home in Hyderabad. His 14-year-old son Aarav’s education is also taken care of through a separate Rs 15,000 monthly SIP. But one question remains. After funding every financial goal, Prakash still has Rs 10,000 left every month. He has mentally earmarked this money for Aarav and does not expect to spend it himself. Should he simply invest it in another equity fund, or is there a better home for money meant for the next generation? There is. But first, the question needs a different way of thinking. One tool, two different jobs Prakash is not making a mistake by investing in mutual funds. In fact, mutual funds remain the best home for most of his money. The problem is treating every investment the same. Money you expect to spend during your lifetime and money you plan to leave to your family are two different things. The tax rules are different too. India has no inheritance tax. So when Aarav inherits his father’s mutual fund units, there is no tax at that point. But the tax has not disappeared. When Aarav eventually sells those

This article was originally published on July 20, 2026.