I want to save for my kid’s (an year and a half old at the moment) higher education — about fifteen years away. I can set aside Rs 10,000 each month. Where should I save or invest?
Here’s the investment strategy that I recommended:
- Rs 5,000 each month in a Public Provident Fund account.
- Rs 5,000 each month — through an SIP — in a diversified equity mutual fund. I’d pick the HDFC Top 200 Fund.
Assuming an 8% rate of return for both investments, you’d have a corpus of nearly 34 lacs at the end of fifteen years — sufficient enough to fund a decent higher education.
And, as I’ve written before, it’s prudent to think about the cash outflow of a financial instrument before you invest in it. For the options that I have recommended, it’s easy to stop/resume contributing depending upon your financial situation — you can even stop one and continue the other.
What do you think? Would you advise a different strategy?