My daughter is 15 and should get married in 10-12 years. I wish to start investing for this purpose. I can invest up to ₹30,000 every month. How much will I be able to gather for her wedding? Please suggest a few schemes to invest.
As you plan to save for the next 10-12 years (assuming 12 years for calculations) at ₹30,000 per month, the principal accumulation comes to ₹43.20 lakh. The growth rate of the investments will depend on your risk profile, i.e., higher the risk you take in investments (read equity exposure), the probability of getting higher returns also improves.
At the same time, there is no guarantee or assurance that you will get higher returns but the longer investment horizon improves the probability of higher returns. In your case, you do have a long-term investment horizon.
Assuming you have high risk appetite, the targeted returns can be 12-15%. So at 12% earnings rate, the corpus will accumulate to ₹96.6 lakh and at 15%, it becomes ₹1.21 crore. And if you go this path, then as you come close to your goal, you can gradually start to switch the corpus from equity to safer (read debt) investments to ensure there is no erosion in growth of capital. For reference, at 8% earnings growth rate, the corpus becomes ₹72.6 lakh.
The investments can be made via SIPs in mutual funds. If you are considering equity as an asset class, then the investments can be spread across large-cap, multi-cap and mid-cap schemes. Also, funds like Axis Bluechip in large-cap category, Mirae Asset Emerging Bluechip in the large-and-mid-cap category, UTI Equity fund or Mirae Asset India Equity fund in the multi-cap category, Franklin India Prima fund in the mid-cap category and HDFC Small cap fund in the small-cap category can be good options.
Surya Bhatia is managing partner of Asset Managers. Queries and views at firstname.lastname@example.org