Best Mutual Funds to Invest in India for Child Education

Best Mutual Funds to invest for child education in 2019Best Mutual Funds to Invest in India for Child Education


Many times I see that financial advisors recommending mutual funds and saying these can be invested by any one, any time and for any purpose. If you are investing in similar mutual fund scheme portfolio for child education, retirement corpus, emergency money, etc., then you are making a big blunder mistake in your financial planning. If you can invest in mutual funds for child education with some planning, you can achieve this goal without hurdles. Which are the best mutual funds to invest in 2019 for child education? Which are the Top Mutual Fund to invest that can help your child education go smoother?

Also Read: Best High Return Mutual Fund Schemes to invest in 2019

Why a special mutual fund portfolio required for child education?


Let me first talk about why you need to plan for your child education here. You might be young parent planning for children. You might be parent having a kid who is yet to go to school. You might be parent where the child is going to school for the past few years. The stage could be anything, but parents always dream that they want to give quality education to their children. While school fees is sky rocketing year on year, parents are able to plan based on their current income. However, it would be really difficult when such child passes 10th or 12th class standard and joins specialized courses like engineering or medicine or foreign education. The education expenses at such stage can cross Rs 10 Lakhs or Rs 50 Lakhs or Rs 1 Crore depending on what course your child is going to choose.

Second part is that you need to assess how much money you may require for your child education. You can take current educational expenses, add inflation of say 10% per annum (too low, then go ahead and increase it) and keep some buffer of another 10% to 20% on overall value. E.g. If current cost of education is Rs 10 Lakhs, you want to assess what would be the value after 5 years, it could be Rs 10 Lakhs x 10% increase year on year + Rs 2 Lakhs as buffer. You may adopt any other approach if you feel there is better one. This is only a sample one.

Third part is to invest based on tenure. You should check by when you would need money.

How we filtered Best Mutual Funds to Invest in India for Child Education for 2019?


We have picked-up top large cap, midcap/smallcap and low risk high return balanced funds.

We have picked-up mutual fund schemes that performed well in medium to long term in 5-10 years time frame.

Filtered Mutual Fund schemes that have good rating from VRO and Crisil.

Mutual Funds have been chosen based on the tenure. Since parents may need child education expenses at various phases, these funds are bifurcated based on various tenures of investment.

Some of the funds would be a repetition from my earlier recommendations.

1) Best Mutual Funds to Invest in India for Child Education when Child age is 0-5 years


What describes you?

a) You are married couple and planning to have a child in the next few months or in a year or

b) Your child is just born or

c) Your child is less than 5 years old.

What is your goal?

You are planning for his educational expenses that may arise after 12th class or at the appropriate time. Means you would need this money at 17 years of age of your child. You want to achieve a financial goal of X amount that would help for your child education without any major hurdle.

For how long you need to invest?

a) If your child is 0 years, you can invest for 17 years time frame.

b) If your child is 5 years, you can invest for 12 years time frame.

Means you can happily invest for 12-17 years time frame. Since this is a good long term tenure, you can select large cap, midcap/small cap, diversified and balanced mutual funds for your portfolio.

How much you can make?

This is a tricky question. Returns from mutual fund schemes are not guaranteed. However, if you can plan for say over 8 years, you can expect good returns between 12% to 15% depending on the market conditions.

a) If you invest Rs 5,000 per month through SIP in this portfolio for 12 years, you can create a wealth of Rs 16 Lakhs to Rs 20 Lakhs (12% to 15% returns).

b) If you invest Rs 5,000 per month through Systematic Investment Plan (SIP) in this portfolio for 17 years, you can create a wealth of Rs 33 Lakhs to Rs 47 Lakhs. (12% to 15% returns).

What is the recommended Mutual Fund Portfolio for child education here?

Here we are recommending 5 best mutual funds to invest that are spanning across large cap, midcap/small cap, diversified and balanced funds. One can invest them equally among these funds.

Best Mutual Funds to invest for child education in 2019 - Age group 0-5 years

2) Best Mutual Funds to Invest in India for Child Education when Child age is 6-10 years


What describes you?

a) Your child has started going to school in the last couple of years or

b) Your child is studying between 1st to 5th

What is your goal?

You are planning for his educational expenses that may arise after 12th class or at the appropriate time. Means you would need this money at 17 years of age of your child. You want to achieve a financial goal of X amount that would help for your child education without any major hurdle.

For how long you need to invest?

a) If your child is 6 years, you can invest for 11 years time frame.

b) If your child is 10 years, you can invest for 7 years time frame.

Means you can invest for 7-11 years time frame. Since this is a medium to  long term tenure, you can select large cap, diversified and balanced mutual funds for your portfolio. You can avoid midcap/small cap as the tenure could be even for 7 years also where it would be high risk. If your investment tenure is 11 years, you can add one such fund.

How much you can make?

Returns from mutual fund schemes are not guaranteed. However, if you can plan for say over 8 years, you can expect good returns between 12% to 15% depending on the market conditions.

a) If you invest Rs 10,000 per month through SIP in this portfolio for 7 years, you can create a wealth of Rs 13 Lakhs to Rs 15 Lakhs (12% to 15% returns).

b) If you invest Rs 10,000 per month through SIP in this portfolio for 11 years, you can create a wealth of Rs 27.5 Lakhs to Rs 33.6 Lakhs. (12% to 15% returns).

What is the recommended Mutual Fund Portfolio for child education here?

Here too we are recommending 5 best mutual funds to invest that are spanning across large cap, diversified and balanced funds. One can invest them equally among these funds. This includes some of the Top Largecap Mutual Funds which we recommended earlier in other articles. 

Best Mutual Funds to invest for child education in 2019 - Age group 6-10 years

3) Best Mutual Funds to Invest in India for Child Education when Child age is 11-15 years


What describes you?

a) Your child is studying in high school.

b) Your child would complete his schooling in next 1-2 years

What is your goal?

You are planning for his educational expenses that may arise after 12th class or at the appropriate time. Means you would need this money at 17 years of age of your child. You want to achieve a financial goal of X amount that would help for your child education without any major hurdle.

For how long you need to invest?

a) If your child is 11 years, you can invest for 6 years time frame.

b) If your child is 15 years, you can invest for 2 years time frame.

Means you can invest for 2-6 years time frame. Since this short term to medium term, you can select balanced mutual funds and debt funds for your portfolio. You can avoid other equity mutual funds as your investment objective is not for the long term.  

How much you can make?

Returns from mutual fund schemes are not guaranteed. Also, you are investing for short term to medium term of 2-6 years, which cannot fetch you very high returns. You need to compromise for moderate returns of 8% to 12% per annum.

a) If you invest Rs 50,000 per month through SIP in this portfolio for 2 years, you can create a wealth of Rs 13 Lakhs to Rs 13.6 Lakhs (8% to 12% returns). Since you are investing only for 2 years, SIP value should be higher to achieve your child education goal.

b) If you invest Rs 25,000 per month through SIP in this portfolio for 6 years, you can create a wealth of Rs 23 Lakhs to Rs 26 Lakhs. (8% to 12% returns).

Also Read: Top 10 Best Mutual Funds Portfolio to invest in India for 2019

What is the recommended Mutual Fund Portfolio for child education here?

Here too we are recommending 6 best mutual funds to invest that are spanning across balanced funds and debt funds. One can invest them equally among these funds.

Best Mutual Funds to invest for child education in 2019 - Age group 11-15 years

Readers, what is your opinion about these best mutual funds to invest for child education in 2019? Are you adopting any other strategy?

If you enjoyed this article, share it with your friends and colleagues through Facebook and Twitter.

Suresh

Best Mutual Funds to Invest in India for Child Education

9 comments

  • Smita

    I have invested about 1 lakh in Aditya Birla Sun Life elss fund.it is safe or should I exit the same

  • Sharan

    Hi Suresh

    Nice Article. I want to invest in MF for my son education.
    He is 3 years old now, my time horizon is 15 years. Investment goal is to have 35 Lakh Corpus money for son education. I am moderate risk taker

    My queries,

    Do i need to invest in multiple multiple mutual fund or one MF enough?
    Which mutual funds will be best to achieve the goal?

    Thanks in advance.

    • Hello Sharan, If you see i have given 4-5 mutual fund schemes. One should not depend on one fund. Go ahead and invest in 4-5 mutual funds. In future if for some reason, one fund is not performing well compared to its peers, you would have another 4 funds that might be performing well

      • Sharan

        OK got it. Thanks. I need to invest in ELSS scheme for tax saving. Can you suggest Scheme in the same portfolio to achieve the goal

      • Sharan

        Got it thanks. Can I add one Elss scheme in the same portfolio for tax saving purpose, I am thinking of Aditya birla96 elss scheme, which fund can I replace with Elss fund or any alternative suggestion in elss scheme in the same portfolio to reach goal Thanks

    • Smita

      I have invested in Aditya Birla Sun Life .is it a safe investment or should I exit the same.amount would be around a lakh

  • Sharan

    Hi Suresh,

    Its good article to start saving for the child education.
    I am planning to invest for the my son education for a corpus of 35 Lakh. My son is 3 year old & have 15 years time to invest it. My query are,

    How much do i need to invest/month to meet the corpus of 35 Lakh.
    Currently i can save only 3000/Month. I will increase the saving 50% from next year. Which fund should i select from above list to start with 3k investment. How do i modify the investment in future?

    Appreciate your advise. Thank you

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