'Add a Global Feeder Fund for your child's higher studies abroad'2 min read . Updated: 08 Nov 2020, 11:17 AM IST
What are the investment options for goals 17-18 years away?
I am 29 years old. My daughter is one year old. I want to invest for her future for at least 17-18 years. I want to invest for her higher studies. Please guide me which mutual funds will be best for her? I want to create ₹1 crore. I am completely new to mutual funds. Please help with good mutual funds. How much should I invest in them?
By Raghvendra Nath, MD, Ladderup Wealth Management
It is a wise decision to start investing this early as in the later years you will be able to reap the benefits of compounding.
Since your goals are very long term in nature, I would recommend you to park the money in equity-oriented mutual funds as they would ensure the capital appreciation going forward. To create a corpus of ₹1 crore, in 17 years you will have to do an SIP of ₹15,000 p.m. assuming that historically equity has given around 12 p.a. returns. SIP is a systematic investment plan where you would be investing the notified amount in each of these schemes. These can be broken down into four funds which will be investing across market cap categories. Each mutual fund is well diversified and would have exposure to 30-50 companies.
I would recommend you to make the investments in the following funds:
> ₹4,000 in Mirae Asset Large Cap Fund
> ₹4,000 in DSP Mid Cap Fund
> ₹4,000 in Kotak Emerging Equity Fund
> ₹3,000 in Nippon India Small Cap Fund
The above funds are diversified across market caps which will ensure that you will be well placed in the long run. If you are looking to send your daughter abroad for higher studies in that case it is recommended that you add a Global Feeder fund to the list as it would provide you a hedge against rupee depreciation. You can add PGIM India Global feeder fund by reducing the exposures to these funds proportionately. Please note that the ₹1 crore corpus might not be sufficient in the future as currently the expenditure for a higher education degree is in that range hence you might want to revisit it.
Another important part about long term investing is that you must keep updating your goals with your current corpus, In case the corpus can fulfil the goal earlier then in that case it is advisable to shift certain portion out of equity and allocate the same towards debt. In case the same falls short you must increase your investments accordingly.
(Views expressed by the investment expert are hos own.)