I have been investing Rs 10,000 per month each in HDFC Midcap and HDFC Equity. The current value of the accumulated corpus is around Rs 4.5 lakh. I would need Rs 7-8 lakh next year for my kid's higher education. Should I increase the SIP by Rs 20,000 in the same funds or open a recurring deposit to meet the deficit?
- Anil
You should first plan and assess your exact requirement. You mentioned that you will need around Rs 8 lakh for your kid's higher education next year. Assess whether you need the whole amount in the very first year altogether, or the requirement is spread over a period of 3-4 years. If it is spread over a period of 3-4 years and you need only Rs 2 lakh in the first year, then you should prepare only for Rs 2 lakh and not Rs 8 lakh. Consider withdrawing this Rs 2 lakh from your investment over the period of 12 months.
And, as you said, if you can manage an additional saving of Rs 2 lakh in the coming year, accumulate it in a recurring deposit or a debt fund. So, if you potentially save Rs 2 lakh in an year's time which matches your expense requirement, then there is no need to use your current investment. It can be saved which can turn into a huge corpus later.
This article was originally published on August 27, 2018.
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