Ask ET Mutual Funds: Where should I invest for my child’s education?

I want to invest in mutual funds for my child’s education. Target amount is Rs 40 lakh. I have five years. I have already saved Rs 5 lakh. Please suggest.
– Sanjeev Kalra

Deepesh Mehta, Certified Financial Planner, Grow Wealth, responds:

This is one of the key goal which every parent desire to have for their child and which cannot be postponed. Hence investment in this goal has to be planned carefully and exposure to equity cannot be very high though you have five years’ horizon. A dynamic oriented balanced fund would be a right fit for your requirement.


Invest the current amount of Rs 5,00,000 for four years in a balanced fund plus annually invest Rs 6,00,000 for four years, starting anytime this year. At the end of four years, redeem the entire investments and invest in an equity savings fund in the last year (5th year) to protect it from a downfall in the stock market.

Doing this, you will save on exit loads, capital gain taxes and protection from equity markets fall in the last year (if any) which is very crucial.

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