MFs For Target Corpus Creation

Q.  I am 39 years old and I have a 9-year-old daughter. For her education, I want to invest in a mutual fund Rs 15,000 p.m. for 3 years and Rs 5,000 p.m. for 7 years. Please suggest some good scheme(s).

- Aarti Chauhan, Kharora, Raipur

A. Aarti, generally graduate education starts at the age of 17, so you may have to aim for the required corpus after 8 years. Assuming an inflation rate of 10 per cent for education, you will need to aim for a corpus in the range of Rs 21 lakh. With your savings plan in a moderate-aggressive portfolio, given the time range, you may still fall short by about Rs 3 to Rs 4 lakh. You could either increase your savings plan by Rs 3000 p.m. or adjust from other sources at the time of the need. You could choose a plan with 65 per cent in equity and 35 per cent in debt. After a couple of years, if you wish you could have a 100 per cent equity portfolio given your comfort level with market volatility!

It is a good idea to have a life insurance for the amount required for education, with your daughter as beneficiary and the bread-earner of the family as insured. A term plan is ideal.