20 lakhs in 3 years for Child Education.

Ms. Priya Sharma wrote :

Hi,

I accidently came across your blog while searching for advice on mutual funds. I want your help in investment. I have the following investment

AVIVA little master- 2000/ m SIP

Bajaj alliance unit gain-4000/m SIP

HDFC tax saver-2000/m SIP

PPF-2000/m SIP

The first two are ment for my kids education they are now 6 and 2

I can invest 15000/ month . Can you suggest some funds.

I require 20 laks after 3 years. I have 7 laks now

thanking you

priya

SRIKANTH SHANKAR MATRUBAI advised ::

Hai Priya,
I am very sorry to say this, but your investments are not at all good. Your investments in Aviva Little Master and Bajaj Allianz Unit Gain are both ULIPs. And as you may already be knowing, ULIPs are the most missold (conned by agents, I should say) products in this country. These ULIPs have high Premium Charges which eat into your returns and thus leave you with lesser returns when compared with Mutual Funds. If you can consider stopping and cancelling these Ulips, please do so immediately. They are a waste of your money.
You have much better options and alternatives for investing for your children's education. First of all, take adequate Term Insurance to give security to your family. Then start investing in Good Diversified Equity funds.
Your investment in HDFC Tax Saver is a good one. Stay invested in the fund for now. However, you can stop future sips and rather consider investing in DWS Tax Saving Fund. This Fund has not only a good track record in its short history, but also as a added bonus give FREE LIFE INSURANCE 5 TIMES YOUR INVESTMENT.
For your 15000 per month investment, You can consider investing in the following funds.
1000 * 2 (two different dates) in birla sunlife Frontline Equity Fund (2000)
500 * 3 (3 different dates ) in Fidelity Equity Fund (1500)
1000 * 1 in JM contra fund (1000)
1000 * 2 in Kotak K30 Fund (2000) (Invest through Kotak Star Kid Facility to avail Free Life Insurance)
1000 * 2 (2 different dates) in HDFC Prudence Fund (2000)
1000 * 2 in HSBC equity Fund (2000)
500 * 2 in Reliance Growth Fund (1000)
500 * 2 in Reliance Natural Resources Fund (1000)
500 * 3 in Sundaram Select Focus Fund (1500)
1000 * 1 in Tata Pure Equity Fund (1000)

Achieving 20 Lakhs in 3 years is bit difficult, even after considering that you have 7 lakhs right now. So, in effect, to get another 13 lakhs in 3 years, even at 20% returns, you need to invest nearly 27000 per month.
So, either scale down your expectation or increase your monthly sip outgo.
Best of luck,
Srikanth Shankar Matrubai.