How a lot ought to I put money into a SIP for my baby’s schooling?
I’m 36 years outdated and do not need a Systematic Investment Plan (SIP) thus far because of my house mortgage and different monetary liabilities. Now that I intend to start out a SIP, how a lot ought to I make investments each month to safe the way forward for my household, together with my baby?
—Name withheld on request
As a primary step you’ll want to set up how a lot you want in your monetary targets. Since you haven’t talked about your baby’s age so we assume that your baby is 5 years outdated and can begin school in about 13 years. Let us assume you want about ₹20 lakh for her school schooling (at at present’s costs). Now think about inflation to know the long run value. The value of upper schooling is rising by round 10% yearly, and 13 years from now you’ll need round ₹70 lakh.
Since the objective could be very long-term, fairness mutual funds can be the most effective funding automobile to take you there. As you haven’t began saving but for this objective, begin Systematic Investment Plans (SIPs) in a few flexicap fairness funds immediately. Despite your private home mortgage EMI, it will be advisable to start out making some investments as the price of these targets would hold escalating yearly because of inflation. Just a few prompt funds are: Parag Parikh Flexicap Fund, HDFC Flexicap Fund and PGIM India Flexicap Fund.
You want to take a position ₹18,000 per thirty days in these funds. Assuming 12% returns per yr, you’d have a corpus of ₹70 lakh in 13 years. If the SIP quantity is just too excessive, begin small at ₹12,000 a month and hold growing the funding by 10% yearly.
Please observe that the assumed requirement of ₹20 lakh is for home schooling. If you might be planning to ship your baby overseas for greater schooling, the price might be considerably greater at ₹50 lakh (at present prices).
The funding required for this can go up in the identical proportion.
Raj Khosla is founder and managing director of MyMoneyMantra.com
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Updated: 02 Aug 2023, 10:13 PM IST
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