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I am 40 and am looking to build a child education corpus with a lump sum of 13 lakh received on maturity of a fixed deposit. What mutual funds should I invest the sum in full or in part to generate a decent corpus in eight years?

—Kirtivardhan Deshpande

 

If invested right, and if the market cooperates during the next eight years, you can more than double your money in this period (assuming a 10-12% annualized returns). There are two keys to doing this right —one is where to invest, and the other is how.

In terms of where to invest, we first decide on an asset allocation ratio for your portfolio. Given the eight-year time frame, a 80:20 equity-to-debt allocation would be a good fit. As you near the goal, say in another five years, you would need to book your returns from the equity portion of the portfolio to secure it.

Regarding how to invest, you can invest the debt portion right away.

However, for equity, invest over 12 to 18 months to avoid market timing risk.

Srikanth Meenakshi is founder, Primeinvestor.in.

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