Wish To Accumulate Rs. 50 Lakh For Your Child's Education: Here's Financial Plan

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    If you are busy scouting out for a financial planner such that you can devise an almost close or accurate plan to arrive at some pre-planned amount for your child's higher education at the age of 18 years. You need to start early as well as consider investment in the right investment product mix i.e. debt and equity.

    Wish To Save Rs. 50 Lakh For Your Child's Education: Here's Financial Plan
     

    Here's a monthly investment plan at different ages of your child: It is to be noted that the below plan arrives at a Rs. 50 lakh corpus considering 12% return from equity, 8% from debt and 10% from equity and debt mix.

    If you start early i.e. just at child's birth :

    You have a longer horizon of total 18 years, ideal portfolio will comprise allocation into 90% equity and the remaining in debt

    Instruments or assets

    Equity portfolio can include large and mid cap funds or equity multi-cap fund
    Debt-PPF a/c and in case of girls Sukanya Samriddhi A/c

    Amount wise monthly with tenure of some 18 years
    If you invest in equity- Rs. 6550 per month
    Debt-equity mix- Rs. 8300 per month
    Only debt- Rs. 10,400 per month

    If your child has attained 3 years of age: Now if you intend to begin financial planning for your child such that you can accumulate good enough funds that can suffice to meet higher education you need to have below mentioned plan. Asset allocation mix should comprise 80% funds deployed to equity while the remaining 20% to debt.

    Different investment assets:

    Equity: Equity Aggressive Hybrid fund, Ulip
    Debt: PPF

    Monthly investment for 15 years

    Rs 10,000: If you invest only in equity
    Rs 12,000: If you invest in a mix of equity & debt
    Rs 14,400: If you invest only in debt

    When the child is 6 years old: If you are still late and have lesser tenure of say 12 years as for higher education, you would in a general case need funds at the age of 18 years. 30% of the funds should be invested in debt and remaining corpus in equity.

    Instruments

     

    Equity: Equity Aggressive Hybrid fund, ELSS fund, Ulip
    Debt: Sovereign Gold Bond

    Monthly investment for 12 years

    Rs 15,600: If you invest only in equity
    Rs 18,000: If you invest in a mix of equity & debt
    Rs 20,700: If you invest only in debt

    When the child is 9 years old: Here in you are left with still lesser years and to let your corpus grow while still ensuring that the capital erosion does not occur you can invest 50% each in debt and equity. Here in the asset class in case of debt instrument be SGBs while in the case of equity investors can look at Equity Balanced Hybrid fund

    Monthly investment for 9 years

    Rs 25,700: If you invest only in equity
    Rs 28,500: If you invest in a mix of equity & debt
    Rs 31,600: If you invest only in debt

    When the child is 12 years old: Here in the portfolio can be 70% into debt and 30% in equity. Equity: As part of Hybrid Conservative Debt fund
    Debt: Hybrid Conservative Debt fund, Fixed Deposit

    Monthly investment for 6 years
    Rs 47,400: If you invest only in equity
    Rs 50,600: If you invest in a mix of equity & debt
    Rs 54,000: If you invest only in debt

    When the child is 15 years old: You have to be more safe as the tenure matures and now 90% of the funds need to be transferred to debt class and just 10% to equity.

    Instruments
    Equity: As part of Hybrid Conservative Debt fund
    Debt: Fixed Deposit, Recurring Deposit or Short-term Debt fund

    Monthly investment for 3 years

    Rs 1.15 lakh: If you invest only in equity
    Rs 1.19 lakh: If you invest in a mix of equity & debt
    Rs 1.23 lakh: If you invest only i .. If you invest only in debt

    Goodreturns.in

    Story first published: Tuesday, November 20, 2018, 10:14 [IST]
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