How to invest in mutual funds for education/study abroad
12 December, 2024
Synopsis
- Starting early with regular investments in mutual funds can create substantial wealth for a child's education, including studying abroad.
- For long-term objectives, diversified equity funds, international funds, or gold funds are recommended investment options.
- As the spending objective approaches, adding debt funds to the portfolio can help minimise overall risk and reduce the chances of sharp losses.
Every parent hopes to give their child the best possible education. However, with rising education costs, especially for studying abroad, ensuring adequate funds can be challenging. This is where mutual funds can help if you start investing from initial stage. Mutual funds invest in diverse assets like stocks, bonds, commodities, currencies, etc., to grow your money over time. In this blog, we’ll discuss how to invest in your child’s crucial years, as well as some of the education mutual fund investments.
How You Can Create an MF Portfolio for Your Child’s Education?
Firstly, it is better to start investing early in mutual funds because the returns will compound as time passes, creating a huge surplus. Also, in mutual funds, you can regularly invest small amount through SIP, giving you the benefit of flexibility and compounding.
Secondly, analyse the expected cost factored in with inflation and the time horizon left for your child’s higher education.
If you have more than ten years to go, then you can invest more towards multi cap funds, flexi cap funds and aggressive hybrid funds. These funds allow you to invest across all market caps, capturing the right opportunity at the right time. Some portion can be invested in international mutual funds to diversify to the global markets, and some towards gold funds to beat inflation.
If you have a short period, like 5 years, or only 2 or 3 years left, you can also add debt funds, like medium-duration funds, to your portfolio. This helps minimise the overall risk and reduces the chances of sharp losses.
Long Term Investment Options for Children's Education
To choose the best mutual fund for students you can invest in, you can use the HDFC Bank SmartWealth App’s Smart Jar Feature to fulfil your child’s dream.
Here is the step-by-step process:
Log in to HDFC Bank SmartWealth App and Explore your education mutual fund from Study Abroad Smart Jar
Set the Target amount and Tenure
Choose between SIP or Lumpsum Investment
Choose the inflation rate which helps you to keep on track
You can even unlock the full potential of Smart Jars by tagging unmapped investments.
Realising your dream would be easier if you knew the best investment possibilities for children's education early on. So, unlock the power of HDFC Bank SmartWealth App’s Smart Jar feature and invest in a portfolio tailored to your needs.
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