I am a 38-year-old government servant. My monthly income is ₹88,000. I have two kids aged seven and two.

For the last one year, I have been investing via SIPs of ₹1,000 in the following mutual funds: Aditya Birla Sun Life Equity, HDFC Equity, HDFC Top 200, Sundaram Mid Cap, Franklin Short Term Income and SBI Blue Chip. My aim is to accumulate a corpus of ₹1 crore for my children’s education in 10-12 years.

Will this be enough?

Jatin, Delhi

Assuming you would like to accumulate roughly ₹ 50 lakh per child, you would have 10 years to build an education corpus for your first child and about 15 years for your second child.

Assuming a 15 per cent return on your investments, you would need to invest about ₹19,000 per month in SIPs to get to a ₹50-lakh corpus in 10 years for your first child. At the same return, you will need to invest ₹12,200 per month to get to ₹50 lakh in 15 years for your second child.

Clearly, your current SIPs totalling ₹6,000 per month are quite inadequate to meet these targets. You could solve this problem by saving more as and when your income grows and also by signing up for step-up SIPs, where your SIP amount will grow every year with your income, at a rate determined by you.

Given that your targeted corpus is high relative to what you are investing, your investments will need to earn a high return to get to your goal.

The funds you have selected are good choices, but are mostly large-cap-oriented conservative funds which may not fulfil this objective.

We suggest that you use a mix of multi- and small-cap funds to get to your goals.

In our view, HDFC Equity, Sundaram Mid Cap, Franklin India High Growth Companies, Aditya Birla Sun Life Pure Value and HDFC Mid-Cap Opportunities may be good choices for your portfolio.

Do review these funds every six months .

Send your queries to mf@thehindu.co.in

comment COMMENT NOW