Advice required regarding balanced funds

[kunalp123]

Hello,

I am investing monthly around 10,000 total in equity mutual funds through SIPs like HDFC top 200, hdfc equity, reliance rsf, birls sun life equity, idfc premier plan -a etc...

I am thinking of building a corpus for future for lets say child education, and thinking of investing in balanced funds around 2000 per month...for e.g. hdfc prudence fund...Will this be advisable..Kindly suggest...




Thanks & Regards,
Kunal.

 

[kunalp123]

Hi,
I forgot to add one more thing, my age is 30 yrs and I dont have child now but planning for it.



Regards,
Kunal.

 

[KoolSIM]

Since you have time on your side for goals like child's education, you should go for equity funds instead of balance funds. As your goal nears, you should switch your money to balanced funds and/or debt funds.

 

[asterix24]

Hi,
I forgot to add one more thing, my age is 30 yrs and I dont have child now but planning for it.



Regards,
Kunal.

Hi Kunal,

First of all, I would like to appreciate your forward looking planning process. As for your current question, I have some pointers, as i performed this exercise very recently.

For planning your child's education and marriage, first get an estimate on how much you would spend in today's rates. Take a guess on potential inflation rate (I have taken 10% to be safe). With these, you will be able to get an expected corpus.

Now, based on your term and expected rate of return on MF (12% is my guess), you can arrive at your monthly SIP amount. If you planning for your child's education (and you are yet to have a child), I would definitely recommend investing in Large-Cap Diversified funds as compared to Balanced. Please do note that HDFC balanced is a good fund, but as your time horizon is a pretty long one, I would recommend starting off with Large-Cap.

Happy Investing !!