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Saving for Child’s Education

The present cost of education is bound to rise over the years, factor inflation when calculating for future needs...

My son is two-years old. I would like to create a corpus of Rs 15 lakh for his higher education when he attains the age of 18 years. Please suggest a fund scheme that can yield good returns to reach the goal. I would like to go for a SIP. How much should I invest in through SIP and what is the procedure?
-Rajan CRP

Your child’s education is a non-negotiable goal to be fulfilled after a predictable time. You can accumulate a sum of Rs 15 lakh over 16 years, however, we think it may not be enough to fund your child’s education at that time.

Considering current inflation rates, you must assume at least 8 per cent annual rise in this cost. If Rs 15 lakh is the present cost of education, then at 8 per cent inflation rate, you would need to accumulate around Rs 50 lakh for the goal.

We recommend an aggressive portfolio as you have ample time to accumulate the required amount. You should invest at least 90 per cent of your savings in equity funds.

Select a large & mid cap fund and a mid & small cap fund through the Fund Selector tool on our website.

The table below shows the monthly investment that you need to make for next 16 years to accumulate Rs 50 lakh.


You should transfer your equity investments to debt in order to lock-in the returns as you near your goal. This will protect your investments from eroding due to short-term volatility in equity markets.

You can start an SIP either through a broker or invest directly through the AMC. If you are confident about the choice of your funds and don’t need assistance you should consider investing directly through the AMC. Direct plans of fund schemes charge marginally lower expense ratio, compared to regular plans in which investments are made through agents. The marginal difference in expenses will give you meaningful returns over long term as a larger part of your investments will be a part of the fund



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