Ask Money Today: How much monthly SIP needed for kid's higher education?

I am a married woman and I wish to start saving for my child's higher education within 19 years. Give an estimate of how much I should start saving monthly and how much may be the total corpus needed to build a corpus of Rs 16 lakh plus inflation?

- Surbhi Kumari

By Naveen Kukreja - CEO& Co-founder, Paisabazaar.com

Assuming a 10 per cent average inflation rate in higher education, you will need to save Rs 97 lakh for your child's higher education after 19 years. An inflation rate of 10 per cent will increase the cost of an education course worth Rs 16 lakh today to Rs 97 lakh in 19 years. As equities as an asset class outperform fixed income investments by a wide margin over the long term, investing in equity funds to build your child's higher education corpus will allow you to build the adequate corpus with much lower monthly contributions. Assuming an average annualised return of 12 per cent, a monthly investment of around Rs 12,000 in equity funds through SIPs will comfortably build you a corpus of over Rs 97 lakh in 19 years.

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You can distribute the monthly contribution for your child's higher education corpus equally among the direct plans of these four funds --- Axis Bluechip Fund or Axis Focussed 25 Fund; Mirae Asset Large Cap Fund; Parag Parikh Flexi Cap Fund; and Tata Index Sensex Fund or HDFC Index Sensex Fund.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)

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