Best Mutual Funds to Invest for Child Education
Child education expenses are increasing year on year. There are several best mutual funds to invest to bear expenses of child education. However, many parents make a mistake of investing in some or other mutual funds and cannot take maximum benefit from them. In this article I would help such parents to choose the best mutual funds to invest in their child education. I would also highlight which mutual funds are best based on child age and tenure of investment. I am recommending Top 5 Mutual Funds to invest for child education based on child age.
Also Read: Top 10 Best Performing Mutual Funds to invest in 2017
How I picked these best mutual funds to invest for child education
Once the child is born, child education is the first goal for any parent. Education became costly these days. Professional courses cost lakhs of rupees. Foreign degree is valuable these days. Hence, parents would like to ensure that they invest some money so that it does not burden them when such high fees needs to be paid. Here are some of the parameters I have chosen about picking the top mutual funds to invest for child education.
1) These mutual funds are picked based on highest returns received in the last 5 years, including the years where there was a downturn in stock markets.
2) Mutual funds that are rated by Crisil as Rank-1, Rank-2, Rank-3 and Rank-4 are picked for these top funds, list which indicates consistent performance in all market cycles.
3) Value research Online (VRO) rated these funds as 5 star, 4 star and 3 Star. Highest star rating indicates that these funds can perform well compared to its peers in various stock market cycles.
4) Filtered based on Mutual fund AUM (Assets under management) which has > 1000 Crores. This refers that more and more investors are investing in such funds create investor confidence about the fund.
5) Funds chosen based on the tenure of the investment. Since parents may need child education expenses at various phases, these funds are bifurcated based on the tenure of investment.
6) Some of the funds would be a repetition from my earlier recommendations as they continue to perform well.
Top Mutual Funds to Invest for Child Education when Child age is 0-10 Years
1) Your child is just born or he is growing and less than 10 years. You are planning for his future educational expenses. Here, you are ready to invest your money through Systematic Investment Plan (SIP) in small amounts of say ₹ 5,000 in mutual funds and aim to get superior returns.
2) When your child is between 0-10 years, you cannot invest all your money in either largecap, small cap or balanced funds. You need to diversify your portfolio so that your overall investment achieves your objective of getting higher returns. Hence, I have selected 3 large cap funds, 1 Midcap/small cap fund and 1 balanced fund. Combination of such funds provides stability and can give you high returns.
3) Parents can invest upto 10 years in such mutual fund schemes through SIP. If you invest ₹ 5,000 (₹ 1,000 in each such MF scheme), your total investment would have been ₹ 3 Lakhs in 5 years (₹ 5,000 x 60 months) and your investment value would have grown to ₹ 5.3 Lakhs in 5 years by investing in such mutual funds.
Best Mutual Funds to Invest when Child age is 11-15 Years
1) Your child would have crossed 10 years. You are planning for his future educational expenses after 10th Standard. Here, you are ready to invest your money through Systematic Investment Plan (SIP) in small amounts of say ₹ 5,000 in mutual funds and aim to get superior returns.
2) When your child is over 10 years, you cannot invest all your money in equity funds. You need to diversify your portfolio as your investment objective is only up to 5 years. Hence, I have selected 1 large cap fund, 1 multicap fund and 3 balanced funds. Combination of such funds provides stability and can give you superior returns in the medium term of 5 years.
3) Parents can invest up to 5 years in such mutual fund schemes through SIP. If you invest ₹ 5,000 (₹ 1,000 in each such MF scheme), your total investment would have been ₹ 3 Lakhs in 5 years (₹ 5,000 x 60 months) and your investment value would have grown to ₹ 5.1 Lakhs in 5 years by investing in such mutual funds.
Also Read: Best Mutual Funds for 10 year investment
Best Mutual Funds to Invest for Child Education where child is over 16 Years
1) Your child is over 16 years and might be studying 11th / 12th Standard. You are planning for his future educational expenses for his graduation / engineering / medicine / Others. Here, you are ready to invest your money through Systematic Investment Plan (SIP) in small amounts of say ₹ 5,000 in mutual funds, aim to get good returns, however, you wish to invest only for short term of 1 year to 5 years.
2) When your child is over 16 years, you cannot invest your money in equity funds. You need to invest a major amount in debt segment. Hence, I have selected 1 balanced fund and 4 short term debt funds. Such portfolio would help you to get good returns and use such funds immediately for child education. This is one of the best way to plan for your child.
3) Parents can invest from 0 – 5 years in such mutual fund schemes through SIP. The returns per annum would be between 9.5% to 12.6% of debt segment and 12% to 15% for balanced fund.
Readers, what is your opinion about these best mutual funds to invest for child education? What strategy you have adopted when you were investing?
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Suresh
Best Mutual Funds to Invest for Child Education
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I want to invest for child education.He is 4 years old only.Plz suggest me good sip for 5000.
I want to invest in Mutual funds for my child education.Could you please guide me to select the portfolio.
Below are required details:
My age is 30 and child age is 6 months.I can invest 1 Lakh per year
I need amount after 15 year I.e long investment
Risk factor is Moderate
Interested in SIP only but which combination of mutual funds i needs to select for good returns?
My Intention is not for tax saving purpose.
Hi Sir,
I'm a beginner; like to invest in SIP for my child (8 months old) education on long term for higher education. I can invest upto 5000 INR / month
Hello Sir,
I can invest Rs 6000/- per month
Can you please suggest me on best MF to invest for Children educations for 5 years as a SIP
Regards,
Gopal .
Hi, great article on investment. I am a prospective investor and was wondering, is cibil score important for investors as well because it is a dreaded word in the borrower’s community?
Cibil score is important. However you need not worry much as long as you are prompt in making all your payments on time.
Hello,
Currently I am investing Rs.14000 monthly through SIP and want to add Rs 6000 more from next month. Please can you advise good funds for 15 years holding period.
Current Investment in SIP:
Axis long term Equity- 4000
Reliance Tax Saver- 4000
Franklin India tax shield-3000
DSP blackrock micro cap-3000
Investment in ELSS funds is to complete 80C limit. Also suggest if any changes are required in current portfolio.
Hi Ronak, You are investing in good ELSS funds. Continue that. DSP BR Microcap fund is also good. You can add large cap funds like Birla SL Frontline, kotak select focus fund, BNPP Equity fund etc.,
Why 3 ELSS funds ? Freeze them to a single decent ELSS fund. Apart from that, have a large cap / a small & mid cap / a multi cap fund / and may be a Balanced fund in your portfoilio, and you are done.
Hi Suresh
Great article! Comes in the correct time for me..
I have invested in 4 of your above 5 mf, can you confirm an alternative mf for icici balanced fund.i am skeptical because moneycontrol website says to switch to a btr performing fund in this funds review. My investment horizon is 15 years for my child education portfolio.
Rgds
Sonal
Hi Sonal, You can invest in TATA Balanced fund or HDFC balanced fund
HI SURESH,
Tata balance fund also showing ‘switch to better performing fund’ in money control and I am already invested in HDFC balanced fund for a separate goal based portfolio. Any other option left for me in balanced fund category? How about SBI Magnum Balanced fund?
Hello sir
I want invest 5000 pm for my child education through 2nd for 12 yrs time frame pls suggest..
Hello sir,
Thanks for sharing this information. Could you please advise on the cons of putting 5000 in just one mutual fund. I am new to investing in Mfs
Please give details of one time investment its advantages and disadvantages,
Hi Suresh Ji,
Hope your are fine and doing well.
Its really a great idea to write an article on child education investment.
I would like to share my opinion on article.
1. Selection of fund:
I am in agreement with the parameters used by you in selection of MF. As i have learnt this only from your blog which i am reading regularly.
2. Returns from fund:
If anyone is investing for their child future perspective then it is necessary to have safe and positive returns (even in worst case also). As you have included 2-3 balance funds in portfolio, it is right thing becasue you will have comparatively less risk in balance fund than equity alone. On otherside you will have comparatively bit less returns than equity but it will not to be worried about it. As you need to be more safe. Perfect analysis and portfolio created by you.
This is my opinion, may be varied from person to person view.
Dear Suresh Ji,
Hope your fine and doing well.
Its really a very good idea to write article on investment for child education.
Here would like to share my opinion on MF selection.
1. Selection of fund:
I am in agreement with the parameter used by you to select best MF, as i have learnt from you only by reading articles regularly.
2. Returns from fund:
If we are investing for child education then at least we should have some positive returns (in worst case) from investment. Here you have chosen minimum 2-3 balance fund in portfolio which are comparatively less risky to equity alone but also give comparatively less return to equity. So balance fund in portfolio will ensure some guaranteed positive returns & which is really necessary for child educ. Perfect analysis done by you.
This is my believe, may be varied from others point of view.
Dear Suresh Ji,
Hope your fine and doing well.
Its really a very good idea to write article on investment for child.
Here would like to share my opinion on MF selection.
1. Selection of fund:
I am in agreement with the parameter used by you to select best MF, as i have learnt from only you by reading articles regularly.
2. Returns from fund:
If we are investing for child education then at least we should have some positive returns (in worst case) from investment. Here you have chosen minimum 2-3 balance fund which are comparatively less risky to equity alone but have comparatively less return to equity. So balance fund in portfolio will ensure some guaranteed positive returns & which is necessary for child educ, Perfect analysis done by you.
This is my believe, may be varied from others point of view.
Dear Sir
Your inputs are priceless for a honest investor. Many Thanks
Could you let us know how we can initiate and set up these MFs. Are we supposed to go through any agent?
Warm regards
Baburam
You can open MF account with any MF agents like icicidirect or fundsindia. You can also directly invest in these funds, however you need to do your own KYC and other process. Since you are new to MF investments, my advice is to open account with any MF agent and start investing in them
Suresh,
Please take in consideration the falling & rising interest rate scenario too.
Very nice article Suresh Ji. Thanks for educating the parents like me.
Regards,
Prashanth