Managing children's education

Praveen (38) is a software professional and takes home Rs 1.8 lakh per month. His family comprises of his wife (35), mother (65) and 18-month-old twins. The family's monthly expenditure is Rs 80,000. Praveen invests the balance in various equity mutual funds through SIPs. This has helped Praveen accumulate a mutual fund corpus of Rs 19.50 lakh. He also owns two houses. Praveen wants us to analyse whether he is on the right track to achieving his goals. He also wants some guidance on how he should manage the regular school fees of his children. Emergency fund Praveen has an emergency corpus of Rs 7 lakh. It is in a combination of fixed deposits (Rs 4 lakh) and an aggressive hybrid fund (Rs 3 lakh). Aggressive hybrid funds invest 65-80 per cent in equity, which makes them highly volatile and risky for short-term investment. Hence, they are not appropriate for an emergency fund. An emergency fund should be parked in non-risky investment products which can be easily liquidated. It can be maintained in a combination of a fixed deposit and short-duration debt funds. Short-duration debt funds also generate better returns than a savings account. Action: Move your emergency corpus from the aggressive hybrid fund to a short-duration fund. Health insurance Praveen depends solely on the health cover provided by his employer. Employer-provided health insurance is good only as long as you are assoc

This article was originally published on September 08, 2021.