_1609311026964_1609311043784_1654872914942.jpg "The target is to accumulate around ₹2 crore for son’s education and some for family use (Shutterstock)")
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I am 33 years old and have a 5-year-old son. I am planning to invest Rs. 20,000 every month for the next 18 years. My target is to accumulate around Rs. 2 crore for my son’s education and some for family use. How and where do I invest?
Pavan Kishore S
I suggest, you must first consider whether you are looking for ₹2 crore in today’s value or in terms of value in 18 years. To have ₹2 crore worth in today’s value in 18 years, assuming an average rate of inflation of 6%, you would need to have ₹5.7 crore by the end of the term. To reach a goal of ₹5.7 crore, you would need to save and invest ₹75,000 a month over this period. On the other hand, if you think ₹2 crore in 18 years would suffice, then you would need to save and invest ₹26,000 per month. So, either way, you would need to increase your SIP (systematic investment amount) amount to meet your financial goal. The portfolio question is rather easy. Given that you have a very long-term investment frame, you can go practically all equity in your portfolio and hope for the markets to lift your savings up with the growth of the economy. Index funds for large-cap allocation and managed funds for flexi and mid-cap allocation will suit you fine. A four-fund portfolio with equal allocations to UTI Nifty Index Fund, Parag Parikh Flexi Cap Fund, SBI Small Cap Fund, and ICICI Prudential Balanced Advantage Fund will make a nice portfolio for your need. As per SEBI, a flexi-cap fund must invest at least 65% of its net assets in equity (large, mid and small caps) and a balanced advantage fund can invest in both equity and debt that is manged dynamically.
Srikanth Meenakshi is co-founder, PrimeInvestor. Send in your queries at mintmoney@livemint.com and get them answered by industry experts.