How to create a corpus in three to five years?

I am a beginner to mutual funds. I would like to explore and take a small risk. My goal is to create funds for down payment for a new home and kids’ education in three to five years. Risk amount: Around Rs 5,000-7,000 per month divided between two portfolios. Please advise.
-- Royston Serrao

As you are totally new to mutual funds, it would be a better idea to seek the help of a mutual fund advisor for personalised advice. You need to pick your investment options based on your goal, investment horizon and risk profile.

You don't have a specific investment plan. You haven't quantified (or put a number to) your future goals. Even your investment horizon is stated loosely (three to five years). You are calling your investments `risk amount'. All these factors point that you need a seasoned mutual fund advisor to help you with your investments. These factors are crucial to offer a personalised advice. For example, if you are investing for three years, you must stick to a debt scheme or bank deposit to achieve your goal. However, if you have an investment horizon of five years, you may choose a hybrid scheme that invests a part of its corpus in stocks. You can opt for an equity-oriented hybrid scheme if you have a higher risk tolerance.


For example, you want to build a corpus for your child's higher education after 10 years. First thing to do is to find out how much does the higher education costs now. Let us assume that it costs Rs 10 lakh today. It would cost around Rs 16.29 lakh after 10 years if you account for an inflation of 5 per cent per year. Now, you will have to invest around Rs 7,000 every month for the next 10 years to create the required corpus. Please note, we have assumed that your investments are earning 12 per cent per annum for calculation.

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