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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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