Is investing in Mutual Funds a good idea for saving for your child’s education?


It can be nerve-wracking when you are required to think of your child’s education. After all, with an increase in competition and standard of living, the race to do better and live better has become extremely fierce. Not only that, education is a stepping-stone for a happy and secure life. Thus, having appropriate cushions and fall back options that guarantee a good education for your child is a must. For this, you must start saving early and it is just not savings that are important. Thinking critically and rationally is extremely important as well. Have you chalked out a long term investment plan for your child’s education in the future? If you haven’t yet, it is about time you start building a solid mutual fund portfolio! Look up best mutual funds to invest in and pick the best investment plan for your child’s future.

Why choose Mutual Funds Investment?

There will be times when you will have to be your own financial planner and it can get really tedious. But, in order to prevent that from happening, you must be aware of the various saving instruments available to you and to ascertain which one is the right choice for you. There are two major options you can choose from Child Plan and Mutual Funds. However, we recommend you to choose Mutual Funds Investment due to the following reasons.

  1. Child Plan can be seen as insurance. What you need for your child are investments that can help your funds grow. Insurance’s main purpose is to provide protection in the future. Therefore, the very basic concepts are different.
  2. Both are diversified portfolios. This is a major plus because, in the long run, this diversification prevents major losses and dilutes risk over various market instruments. Since your funds are invested in various asset classes, there are chances of money growth in an online mutual fund.
  3. A Mutual Fund is managed by professionals. These professionals are people who have a lot of experience in the investment market and are also very transparent with investors. So in case you are a new entrant, you need not get too involved with managing your funds.
  4. One of the major reasons as to why you must choose Mutual Funds as a long term investment is that when the time comes close to using the funds for your child’s education, you can divert the fund from high risk, high return Mutual Fund to a low risk one. Hence, it gives you the flexibility to migrate funds based on your risk-taking behavior.
  5. For your child’s education, you cannot have ifs and buts. You need an avenue that is not only safe but that which also guarantees your child the best education. However, not a lot of people have the luxury to invest a large amount in one go. With Mutual Funds as a long term investment plan, you can start small and gradually increase. This is one of the most lucrative advantages of choosing to invest in Top Mutual Funds.

How to choose the best investment plan for your child’s education?

After you have decided that you would like to opt for Mutual Funds Investment for your child’s education, you need to understand and ascertain which Mutual Fund is the best for you. This mainly depends on various factors like the time horizon, your risk appetite, your income trajectory etc. Here is how you should progress.

  1. You can choose to opt for more than one Mutual Fund. This just ensures that you reap benefits from the expert knowledge of various fund managers. Further, it also lowers the risks.
  2. Go for funds that are associated with lower volatility in the long run. However, if you choose the one with greater volatility, be rest assured that your chances of getting rewards in the future increase manifolds. This depends on how open you are to take risks.
  3. As already mentioned, the time horizon is important. If you have 10-15 years, go for equity funds as they have great growth potential in the long run. If you do not have that kind of time, try and balance your funds between equity funds and hybrid funds. If you have less than 5 years, you can choose debt funds. Do speak to your financial adviser before choosing a fund.
  4. Do look at who will be managing your fund. You are saving for your child’s future and hence it is important to be sure of the knowledge and intentions of the manager.
  5. Be sure to clear out the kind of education you are looking at. For this, you need to re-think the amount you might require 10 years down the line.

Mutual Funds are a safe and secure option when it comes to planning your child’s education. However, a clear understanding of which fund to invest in and what are the other factors you need to consider before you start saving is crucial. Reach out to IndiaBulls and explore limitless possibilities in the mutual fund’s investment!