To provide for my daughter’s higher education, I have started two SIPs of Rs 10,000 each in a mid-cap fund and a small-cap fund.
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I selected the funds by looking at a chart in a popular online mutual fund investment portal. Please guide me on whether I have made the correct decision.
I want to point out a potential oversight in your approach to financial decisions. Think of it this way: when you’re unwell, turning to the internet for self-diagnosis and treatment isn’t the most prudent choice. Seeking advice from a qualified doctor ensures a more informed and effective path to recovery. Similarly, consulting a certified Financial Planner is crucial when it comes to crucial investment decisions.
In this context, I recommend dividing your Rs 20,000 investment into 5 SIPs of Rs. 4,000 each.
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Two SIPs should be allocated to selected large-cap funds, the 3rd SIP to a mid-cap fund, the 4th SIP to a multi-cap fund, and the last SIP of Rs 4,000 can be invested in a fund of your choice, such as a small-cap fund, an Index fund, or a value fund.
Additionally, it’s important to calculate the amount required for your daughter’s education in future years, factoring in expected inflation. Once you opt for a qualified advisor, he will guide you on whether a monthly SIP of Rs 20,000 will be sufficient to accumulate the necessary funds for your daughter’s education or if an adjustment is needed.
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However, just for better understanding, if you invest Rs 20,000 for 20 years, assuming a rate of return of 12%, you will roughly be able to generate an income of Rs 2 crores.
