How Do You Use Mutual Funds for Planning Your Child’s Education?

There are various ways one can save up for their child's educational expenses. Considering the rate of inflation, investing is an even better option than saving to accumulate a corpus as an educational fund. Mutual funds are one such investment instruments that can help you plan for your child’s education. Through mutual funds, you gain exposure to the equity market and simultaneously diversify the risks of investing in an individual stock.

There are two ways you can invest in a mutual fund: lumpsum and SIP (systematic investment plan). Provided the objective is educational purposes, SIP is the best way to go. 

For instance, if you invest Rs. 15,000 every month for a period of 10 years, you accumulate a corpus of Rs. 34,85,086, assuming the rate of return is 12% pa. 

Why mutual funds are an ideal investment choice for your child’s education:

• They are suitable for long-term investing. 
• Hold the potential for rewarding returns. 
• There is the aspect of professional fund management. 
• It carries flexibility and liquidity. 
• You can diversify your portfolio for maximum outcome and risk management. 
• It is a customizable investment option. 
• It also carried tax benefits. 
• You can choose either the SIP method or lumpsum investment. 

A child's higher education is one of the most primal factors of investment for any parent. The cost of high-quality education is also another factor that makes this financial goal a crucial aspect. Mutual funds are a good choice of investment for individuals to create wealth for this goal, allowing them to witness the equity market indirectly (provided equities are known to give the highest rates of return.)

Disclaimer

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.