How good are the child education plans of mutual fund companies? | Value Research Dhirendra Kumar suggests how to use mutual funds for your child’s education corpus
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How good are the child education plans of mutual fund companies?

Dhirendra Kumar suggests how to use mutual funds for your child's education corpus

Where should one invest for a child's education? Are child education plans by mutual fund companies good?
- Astha

I would say, don't get carried away by the nomenclature. If you are investing for your child, any investment made, if you don't fiddle with it and are not undisciplined to put your hands on that, then any such investment is your child's fund.

Now what kind of investment will be the appropriate one for your child? If you have a young child, then have as much into an equity fund. If you're an experienced investor, take as aggressive an exposure as possible. Once you have accumulated the money for 10-12 years and your child is likely to get into college soon, you need to prepare for that maybe three-four years in advance. Take out the required money in the first year of college three-four years ahead of time, then the second year's money a year later and so on. This way, you will not be dependent on the state of the market when you need it. This is a broad principle that one should follow.

The child education plans by mutual fund companies don't make sense because they have unnecessary constraints. They fulfil the need of a naive investor because many people think that it makes sense if it's a child fund and I'm investing for the child. But if you are capable of choosing a good fund and are disciplined enough, then there is absolutely no disadvantage, and any fund can be a child fund. Just like any fund could well be a retirement fund.


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