What kind of funds should one invest in?

I am 26 and earn Rs.10 lakh a year. My wife has taken a break from working and we have a 2-year-old daughter. We are able to save Rs. 20,000 a month, and I wish to save for my daughter’s education 15 years from now. What kind of funds should I invest in? - Ravi Mathur, Delhi 

It is encouraging to note your eagerness to start saving early for your daughter’s education 15 years later. If your Rs.20,000 investment a month over the next 15 year grows at 15 per cent; it will be worth Rs.1.2 crore when your daughter finishes school. At a conservative return of 10 per cent, the corpus will be Rs.83 lakh. These figures give you an idea on the advantage of starting early. Considering the long time frame that you have for the goal to materialise, we suggest you invest in 2-3 diversified equity funds, which have the potential to beat inflation as well as earn returns that are fairly above what fixed return instruments pay. Make sure you invest regularly in these funds and review their performance once a year to ensure the funds are faring well. Over the next 15 years, you will have the money needed to fund your daughter’s education.

olmdesk@outlookindia.com