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I have two daughters (eight and 10 years old). I would like to invest for their education and wedding. I will need a combined corpus of 2 crore for their education in eight to 10 years and 1 crore for their wedding in another 15-18 years. I can invest up to 1 lakh every month. Please suggest mutual funds and other investment options. I don’t want to take high risk.

—Vinith Rao

If you invest 1 lakh per month for the next eight years, you will be able to accumulate a principal corpus of 96 lakh and at an average earning rate of 12%, the corpus will become 1.6 crore. If we consider 10 years as the period of savings, the principal becomes 1.20 crore with the total value as 2.3 crore at the same growth rate of 12%. This ensures your daughter’s education is well protected. However, this requires equity exposure as your investment horizon is long term. In case you don’t have the risk appetite to have an equity portfolio, you need to increase your savings rate as and when your income increases. So, if we assume an earnings rate at 8% and the investment period of eight years, the corpus becomes 1.34 crore. For the next block of five to eight years, assuming you continue to save at the same savings rate of 1 lakh per month for the next six years, the principal accumulation will be 72 lakh and at a growth rate of 10% (have reduced the earnings rate as the investment horizon has come down), the corpus becomes 99 lakh, again meeting your target. You also need to ensure you have adequate insurance cover and your family is well protected in case of any untoward incident.

You can invest your monthly savings in a combination of instruments. You can start a Public Provident Fund (PPF) in the name of your daughters along with starting a systematic investment plan (SIP) spread across debt category where you can invest in short-term debt mutual funds along with the equity schemes where a combination of large-cap and multi-cap can be good investment options for you.

Surya Bhatia is managing partner of Asset Managers. Queries and views at

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