Want to invest in mutual funds but don’t know how to go about it?

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Get all your mutual fund related queries answered by our expert, Vishal Dhawan, founder and chief executive officer, Plan Ahead Wealth Advisors, on our show Mutual Fund Corner.

Q: 34-year-old Rakesh Patel writes us from the Netherlands. I want to create Rs 3 crore corpus in the next 15 years for my child's education.

A: It's good to know that you have a clear target for the education goal for your child’s education. We would also assume that the Rs 3 crore target actually adjusts for education inflation, which tends to be much higher than regular inflation in most parts of the world.

Assuming a 12 percent per annum rate of inflation on education, the Rs 3 crore comes to approximately Rs 55 lakh at current cost levels. If you are comfortable with having an aggressive strategy towards this objective, considering the long term nature of the education goal, you would need to save approximately Rs 60,000 per month towards this goal over the next 15 years.

The ideal way to save towards this goal is to save Rs 78,000 per month in more aggressive investments like diversified equity funds for the first 12 years, and then move the entire portfolio into debt funds three years before you need the funds. Also, run your SIPs into debt funds during this last phase to avoid any surprises towards the end. You could use a combination of index funds and multicap funds for this objective for the first 12 years, followed by a short term debt fund oriented strategy later.

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