Consider These 3 Child Mutual Funds For Their Education

According to research by the National Sample Survey Office, the cost of private schooling in India has increased by more than 175% in the last decade. During the same period, the cost of technical and professional courses has increased by more than 90%. And the education expenses are only expected to rise in the future.If you are concerned about your child’s education, you cannot simply rely on your income and savings. You should start investing as early in life as possible to ensure that you have a corpus that could take care of your child’s education expenses in the future. Mutual funds can be a smart choice for such long-term objectives.Here is a list of 3 mutual fund categories that you can consider for your child’s education-

Equity funds are probably the top choice for long-term goals, such as a child's education. In the equity fund category, you can choose a diversified equity fund. These funds invest in equity and related instruments across industries. The primary goal of these schemes is to deliver long-term capital growth.Diversified equity funds can be further divided into large-cap, medium-cap, and small-cap funds as per the market capitalization of the companies they invest in. 2-3 schemes across these capitalization categories are recommended for long-term objectives.

If equity as an asset class is very risky for you, you can consider investing in hybrid funds. These funds generally invest your money in equity as well as debt instruments. While the equity portion will deliver higher capital appreciation, the debt portion works as a cushion in case if equity underperforms.You can find equity-oriented hybrid funds and debt-oriented hybrid funds. The equity-oriented funds invest at least 65% of the portfolio in equity while the rest is invested in other asset classes. Similarly, debt-oriented funds invest at least 65% of the portfolio in debt and the rest in other assets like equity.

If you are a conservative investor who is not comfortable with the volatility of equity funds, you can consider investing in pure debt funds. There are now many different types of debt funds, such as long-term, short-term, ultra-short-term, liquid funds, monthly income plans, and more.If you are looking for the best child mutual fund , prefer long-term debt funds as they can generate excellent returns in the longer run. You can also consider debt funds from 2-3 different categories to ensure that your portfolio has adequate diversification.

These are some of the top options you can consider if you want to invest in mutual funds for your child’s education. Consider lump sum investment or start a SIP in a few different funds. Be disciplined with your investment approach as the duration for which the investment is held often has a significant impact on the returns.You can also consult a professional investment advisor to help you build a basket of mutual funds that are ideal for long-term goals.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.