How can I accumulate Rs 60 lakhs for my son's higher education? He is currently five-year-old and would probably need the money on turning 18. I'm 42 now.
This estimate of Rs 60 lakh could be a very vital thing because one may require Rs 20 lakh or even Rs 20 crore for such a goal. However, given the 13-year time frame, you have all the time. Follow the principle - invest in equity and invest as much as you can. I would suggest you investing both for your retirement and your child's education.
I really don't have a prescription in terms of how exactly the cost and inflation aspects will change. This is because even the coming 10-15 years are going to be a very different phase for education costs, inflation and further return expectations. So far, Indian investors are spoiled since they have been getting 18-20 per cent return from equity. In this context, a return of 12 per cent actually looks bad. But, given the current inflation phase, a return of 12 per cent may be very decent.
Further, the kind of education inflation that we have seen in the last 15-20 years may not be there in the future. High-quality education in India is still available at a very reasonable cost. So, I'll reiterate that invest as much as you can and be into equity. Make sure that you move a part of your money towards fixed-income investments two-three years before the completion of your goal so that it doesn't remain dependent on the state of the market.