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Best Mutual Funds to invest for Child Education Best Mutual Funds to Invest for Child Education


Child education expenses are increasing year on year. There are several best mutual funds to invest to bear expenses of child education. However, many parents make a mistake of investing in some or other mutual funds and cannot take maximum benefit from them. In this article I would help such parents to choose the best mutual funds to invest in their child education. I would also highlight which mutual funds are best based on child age and tenure of investment. I am recommending Top 5 Mutual Funds to invest for child education based on child age.

Also Read: Top 10 Best Performing Mutual Funds to invest in 2017

How I picked these best mutual funds to invest for child education


Once the child is born, child education is the first goal for any parent. Education became costly these days. Professional courses cost lakhs of rupees. Foreign degree is valuable these days. Hence, parents would like to ensure that they invest some money so that it does not burden them when such high fees needs to be paid. Here are some of the parameters  I have chosen about picking the top mutual funds to invest for child education.

1) These mutual funds are picked based on highest returns received in the last 5 years, including the years where there was a downturn in stock markets.

2) Mutual funds that are rated by Crisil as Rank-1, Rank-2, Rank-3 and Rank-4 are picked for these top funds, list which indicates consistent performance in all market cycles.

3) Value research Online (VRO) rated these funds as 5 star, 4 star and 3 Star. Highest star rating indicates that these funds can perform well compared to its peers in various stock market cycles.

4) Filtered based on Mutual fund AUM (Assets under management) which has > 1000 Crores. This refers that more and more investors are investing in such funds create investor confidence about the fund.

5) Funds chosen based on the tenure of the investment. Since parents may need child education expenses at various phases, these funds are bifurcated based on the tenure of investment.

6) Some of the funds would be a repetition from my earlier recommendations as they continue to perform well.

Top Mutual Funds to Invest for Child Education when Child age is 0-10 Years


1) Your child is just born or he is growing and less than 10 years. You are planning for his future educational expenses. Here, you are ready to invest your money through Systematic Investment Plan (SIP) in small amounts of say Rs 5,000 in mutual funds and aim to get superior returns.

2) When your child is between 0-10 years, you cannot invest all your money in either largecap, small cap or balanced funds. You need to diversify your portfolio so that your overall investment achieves your objective of getting higher returns. Hence, I have selected 3 large cap funds, 1 Midcap/small cap fund and 1 balanced fund. Combination of such funds provides stability and can give you high returns.

3) Parents can invest upto 10 years in such mutual fund schemes through SIP. If you invest Rs 5,000 (Rs 1,000 in each such MF scheme), your total investment would have been Rs 3 Lakhs in 5 years (Rs 5,000 x 60 months) and your investment value would have grown to Rs 5.3 Lakhs in 5 years by investing in such mutual funds.

Top 5 Mutual Funds for Child Education when Child age is 0-10 Years  

Best Mutual Funds to Invest when Child age is 11-15 Years


1) Your child would have crossed 10 years. You are planning for his future educational expenses after 10 th Standard. Here, you are ready to invest your money through Systematic Investment Plan (SIP) in small amounts of say Rs 5,000 in mutual funds and aim to get superior returns.

2) When your child is over 10 years, you cannot invest all your money in equity funds. You need to diversify your portfolio as your investment objective is only up to 5 years. Hence, I have selected 1 large cap fund, 1 multicap fund and 3 balanced funds. Combination of such funds provides stability and can give you superior returns in the medium term of 5 years.

3) Parents can invest up to 5 years in such mutual fund schemes through SIP. If you invest Rs 5,000 (Rs 1,000 in each such MF scheme), your total investment would have been Rs 3 Lakhs in 5 years (Rs 5,000 x 60 months) and your investment value would have grown to Rs 5.1 Lakhs in 5 years by investing in such mutual funds.

Best Mutual Funds to invest for Child Education when Child age is 11-15 Years

Also Read: Best Mutual Funds for 10 year investment

Best Mutual Funds to Invest for Child Education where child is over 16 Years


1) Your child is over 16 years and might be studying 11 th / 12 th Standard. You are planning for his future educational expenses for his graduation / engineering / medicine / Others. Here, you are ready to invest your money through Systematic Investment Plan (SIP) in small amounts of say Rs 5,000 in mutual funds, aim to get good returns, however, you wish to invest only for short term of 1 year to 5 years.

2) When your child is over 16 years, you cannot invest your money in equity funds. You need to invest a major amount in debt segment. Hence, I have selected 1 balanced fund and 4 short term debt funds. Such portfolio would help you to get good returns and use such funds immediately for child education. This is one of the best way to plan for your child

3) Parents can invest from 0 – 5 years in such mutual fund schemes through SIP. The returns per annum would be between 9.5% to 12.6% of debt segment and 12% to 15% for balanced fund.

Top Mutual Funds to invest when Child age is over 16 Years

Readers, what is your opinion about these best mutual funds to invest for child education? What strategy you have adopted when you were investing?

If you enjoyed this article, share it with your friends and colleagues through Facebook and Twitter.

Suresh

Best Mutual Funds to Invest for Child Education

22 comments

  • sonal

    Hi Suresh
    Great article! Comes in the correct time for me..
    I have invested in 4 of your above 5 mf, can you confirm an alternative mf for icici balanced fund.i am skeptical because moneycontrol website says to switch to a btr performing fund in this funds review. My investment horizon is 15 years for my child education portfolio.
    Rgds
    Sonal

    • Hi Sonal, You can invest in TATA Balanced fund or HDFC balanced fund

      • sonal parodia

        HI SURESH,

        Tata balance fund also showing ‘switch to better performing fund’ in money control and I am already invested in HDFC balanced fund for a separate goal based portfolio. Any other option left for me in balanced fund category? How about SBI Magnum Balanced fund?

  • Abhijeet

    Hello sir
    I want invest 5000 pm for my child education through 2nd for 12 yrs time frame pls suggest..

  • Ajay

    Hello sir,

    Thanks for sharing this information. Could you please advise on the cons of putting 5000 in just one mutual fund. I am new to investing in Mfs

  • premakumar

    Please give details of one time investment its advantages and disadvantages,

  • Harsh Patel

    Hi Suresh Ji,

    Hope your are fine and doing well.

    Its really a great idea to write an article on child education investment.

    I would like to share my opinion on article.
    1. Selection of fund:
    I am in agreement with the parameters used by you in selection of MF. As i have learnt this only from your blog which i am reading regularly.
    2. Returns from fund:
    If anyone is investing for their child future perspective then it is necessary to have safe and positive returns (even in worst case also). As you have included 2-3 balance funds in portfolio, it is right thing becasue you will have comparatively less risk in balance fund than equity alone. On otherside you will have comparatively bit less returns than equity but it will not to be worried about it. As you need to be more safe. Perfect analysis and portfolio created by you.

    This is my opinion, may be varied from person to person view.

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