Rajiv Singh, 38, email
I am 35, and a single parent. I need Rs 15 lakh for my child’s foreign education in 10 years. Should I choose Mutual Funds (MFs) for growth, or switch to safer recurring deposits (RDs) to ensure the money is guaranteed and safe?
RDs are safe but insufficient as their returns do not beat inflation. With inflation rate at 6 to 8 per cent and education inflation rate around 10 per cent, MFs are a better option. They suit your 10-year horizon, help beat inflation, and have the potential to deliver a return of around 12 per cent.
Investing Rs 7,500 a month in a good diversified MF can accumulate around Rs 17 lakh, assuming a 12 per cent retun. However, a current requirement of Rs 15 lakh could grow to around Rs 39 lakh in 10 years due to education inflation. To build that corpus, you should invest around Rs 17,000 a month.
Suhel Chander CFP®, Handholding Financials
1 August 2026
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Prachi Tripathi, 45, email
I need Rs 15 lakh for medical treatments in two years. Should I liquidate my equity MFs now to secure the cash, or take a personal loan to preserve the growth of my long-term portfolio?
There are a few important details before deciding the best course of action: the size of your current MF corpus, your income, monthly surplus and job stability.
If you have a stable income and enough monthly surplus, you can consider a strategy based on your MF corpus and cash flow. For a planned expense of Rs 15 lakh within two years, you have five choices: redeem part of your MFs, take a personal loan, opt for a loan against mutual funds (LAMF), save your monthly surplus towards the treatment, or use your emergency fund.
Selling MF units makes sense if your long-term goals are significantly affected, your corpus is much larger than Rs 15 lakh, or you want to avoid EMIs during a period of health or income uncertainty. Since equity MFs are volatile, a market correction could reduce the loan amount available under LAMF or even trigger a margin call, requiring you to pledge more units or repay a part of the loan.
Between a loan and a LAMF, the latter is more cost-effective. Personal loans carry interest rates of around 12-24 per cent and approval depends on your income, job stability and credit score. LAMFs generally cost around 8-12 per cent.
Under LAMF, you pledge your MF units as collateral, continue earning returns until liquidated. It does not trigger capital gains tax because the investment is not sold.
In contrast, redeeming MF units may result in capital gains tax. LAMFs are usually available up to 50-60 per cent of equity MF value and up to 80-85 per cent for debt MFs. Repayment may be through regular EMIs or an overdraft facility.
Before applying, review your portfolio, prioritise funds, compare lenders, processing fees, loan-to-value ratios and prepayment charges, and borrow only what you need. Monitor pledged portfolio and consider using future salary hikes to prepay. A personal loan may be suitable if your MF corpus is small or volatile, or if you prefer to keep your investments unencumbered. Ultimately, analyse your financial situation carefully.
Uma S. Chander, CFP®, Handholding Financials
Richa Desai, 34, email
I am planning a self-funded career break next year, for a year. Can I generate monthly payouts from my Rs 20 lakh fixed deposit (FD)? Are there other avenues?
For a planned one-year career break, your priorities should be capital safety, predictable cash flow, and easy access to money. Protecting against inflation is secondary compared to the risk of capital loss in volatile investments.
You could generate monthly payouts from Rs 20 lakh FD. Another option is liquid or short duration MFs, if you want high liquidity, are comfortable with small fluctuations in value, and do not need guaranteed returns. These funds aim to deliver returns. You can use a systematic withdrawal plan (SWP) for your monthly needs and redeem the rest, when required.
If the Rs 20 lakh is specifically meant to fund your career break, keep 9-12 months of expenses in liquid or short duration funds and maintain 1-2 months’ worth of expenses in your savings account for immediate needs.
Suhel Chander CFP®, Handholding Financials
