My daughter has turned 2 and my husband and I are thinking of investing about ₹ 60,000-65,000 per month for her education. Currently, my husband is the sole earning member. I have heard about the current market rally and am not sure if mutual funds are a good investment currently. I know SIP helps in reducing the impact as compared to a lump sum investment but I need guidance on whether it is worthwhile. Please suggest funds. Is buying real estate a better option?
Investing in a mutual fund portfolio that is well-diversified across asset classes has a better chance of giving a higher return than other investment options such as real estate, gold or fixed deposits. This has been proven over the years, especially in recent years. Additionally, MF investing is more amenable to periodic investing (SIP) and is more liquid (money is readily accessible when you need it). So, I think you should invest regularly in a MF portfolio for your daughter’s education. The current market conditions should not have any bearing on this choice since you are investing systematically and for the long term—both of which lower the risk that you are taking. For your investments, you can go with a simple 4-5-fund portfolio—equal amounts in Franklin India Bluechip fund, Aditya Birla Frontline Equity fund, Mirae Asset Emerging Bluechip fund, PPFAS Long term Equity fund and HDFC Small cap fund would make a solid set of funds to go with.
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Srikanth Meenakshi is co-founder and COO, FundsIndia.com. Queries and views at firstname.lastname@example.org