How To Build The Corpus For My Daughter’s Education Through Mutual Funds?

How To Build The Corpus For My Daughter’s Education Through Mutual Funds?

Mutual funds have long been a favored investment tool for Indian parents. Since a mutual fund offers high returns, you can build up a considerably large corpus for your child if you invest properly in a mutual fund. Take a look at this article to know how to invest in the correct funds, the steps to follow and the cautions to exercise.

Using a mutual fund to build up a children’s education fund

Your child is the most precious person to you. You, therefore, want nothing but the best for her. And since education is such a crucial component of life, you want to ensure low funds never become a hurdle in her educational journey. To build up a corpus for your child’s education through mutual funds you must:

  • Set an accurate goal: Do not shoot an arrow in the dark – know what you are investing for. Make a realistic plan and aim to build a set corpus. Unless you know how much you need, you won’t be able to invest in the correct manner. To do this, you need to take your child’s age into consideration. If the child is younger and has many educational milestones lying ahead, you need to think about building a larger corpus. If however, your child needs the funds for a specific reason (college admission fee, for example), you may need a smaller fund.
  • Assess your risk appetite: The different types of mutual funds expose you to different amounts of risk. Assess your financial health and your risk-taking capacities and then select the type of fund that matches your risk profile. This will help you to build an education fund in a more suitable manner.
  • Opt for long-term funds: If your children are small and have many years to go before they apply to your dream foreign university, you can consider investing in the long-term mutual funds. The risks are more even in such funds and you are sure to earn high dividends overall. So take your children’s ages into consideration and if it is feasible, opt for a long-term mutual fund for sure.
  • Look at SIP options: SIP, or systematic investment plans, are very handy financial tools that help you to invest and reinvest and grow your wealth quickly. If you do not want to lock your money up in a long-term mutual fund, go for the SIP options and you will notice your fund growing. Just be disciplined and keep reinvesting to ensure there isn’t a break in the earnings.
  • Seek expert advice: Whether you are a seasoned investor or a newbie, you will benefit immensely by seeking some expert advice while investing in a mutual fund. You are investing for your child’s future and so you cannot afford to make any mistakes. A small error here and there can have catastrophic impacts on your child’s educational well-being. So ask for help before you invest. Thankfully, there are some excellent mutual fund advisors available and they would be happy to help you whenever you need.
  • Keep your options flexible: Always look to keep some of your money in a flexible fund, so that you can liquidize them if there is an emergency. You ideally should not touch your child’s education fund, but if there is an utter need, you should be in the position to withdraw your own money and take care of the emergency at hand. Your mutual fund consultant will be able to guide you about the ultra short-term mutual funds and the liquid funds that you can include in your portfolio.

The bottom line

So as you can clearly see from the points mentioned above, you can build up a corpus for your child’s education if you invest wisely in a mutual fund. Keep the tips and suggestions mentioned above in mind and tread carefully as your child’s future lies in your hands. You are a responsible parent who wants to secure the finances for her, so investing in a mutual fund may just prove to be the winning move. What are you waiting for? Go right ahead and start investing today!