Top Schemes To Fund Your Child's Higher Education

With the cost of education increasing day by day in India, parents have to plan their children’s higher education well in advance these days. While the cost of education does not seem likely to come down in the near future, it would be unwise to depend only on educational loans to get access to the required funds for the higher education of your child. Investing in mutual funds is one of the best ways to increase your wealth over a specific investment period, making it one of the top ways you can get the funds you need for your child’s higher education.

There are several factors that you should consider before selecting the right plan for your investment.

  • The age of the child
  • The income of the investor
  • The type of investor
  • The investment horizon
  • The risk-taking capacity of the investor

Check out the 4 best mutual fund schemes and their key features that are available in India that you can invest in to receive the required funds for your child’s higher education.

  1. Tata Young Citizens’ Fund
  2. Type of fund

    It is an open-ended scheme that invests for children and has a lock-in period of at least 5 years or till the child turns 18, whichever is earlier.

    Investment objective

    The main objective of this fund is to generate long-term capital appreciation through investments in equity and equity-related instruments along with debt and money market securities.

    Ideal for

    Investors who are looking for a balanced approach to savings while planning for the future needs of their children.

    Plans available

    • Regular Plan
    • Direct Plan

    Options under each plan

    Growth Option

    Risk

    Moderately high

    Systematic Investment Plan

    Available

    Systematic Transfer Plan

    Available (subject to lock-in period)

    Systematic Withdrawal Plan

    Available (subject to lock-in period)

    Minimum application amount

    Rs.500 and in multiples of Rs.500 thereafter

    Minimum additional investment

    Rs.500 and subsequently in multiples of Rs.500

    Entry Load

    Not applicable

    Exit Load

    • If units are redeemed before the child attains 18 years of age - 1%
    • If units are redeemed after the child attains 18 years of age - Nil

    Benchmark

    Crisil Hybrid 25+75 - Aggressive Index

  3. SBI Magnum Children’s Benefit Fund
  4. Type of fund

    It is an open-ended plan investing for children with a lock-in period of a minimum of 5 years or till the child becomes a major, whichever is earlier.

    Investment objective

    The primary objective of this scheme is to generate regular income by investing in debt and money market instruments while offering capital appreciation through investments in an actively managed portfolio of equity and equity-related securities.

    Ideal for

    Individuals who are looking for long-term capital growth along with regular income to fulfil the future financial needs of their children.

    Plans available

    • Direct Plan
    • Regular Plan

    Options under each plan

    Growth Option

    Risk

    Moderately high

    Systematic Investment Plan

    Available

    Systematic Transfer Plan

    Available

    Systematic Withdrawal Plan

    Available

    Minimum application amount

    Rs.5,000 and in multiples of Re.1 thereafter

    Minimum additional investment

    Rs.1,000 and subsequently in multiples of Re.1

    Entry Load

    Not applicable

    Exit Load

    • For exit before the completion of 1 year starting from the date of allotment of units - 3%
    • For exit before the completion of 2 years starting from the date of allotment of units - 2%
    • For exit before the completion of 3 years starting from the date of allotment of units - 1%
    • For exit after the completion of 3 years starting from the date of allotment of units - Nil

    Benchmark

    NIFTY 50 Hybrid Composite Debt 15:85 Index

  5. HDFC Children’s Gift Fund
  6. Type of fund

    It is an open-ended fund making investments for children with a minimum 5-year lock-in period or till the child attains the age of 18 years, whichever is earlier.

    Investment objective

    The investment objective of this mutual fund is to generate capital appreciation in the long run through investments in equity and equity-related securities in addition to debt and money market instruments.

    Ideal for

    Investors who seek capital growth over a long term along with regular income to meet the future needs of their children.

    Plans available

    • Direct Plan
    • Regular Plan

    Options under each plan

    Growth Option

    Risk

    Moderately high

    Systematic Investment Plan

    Available

    Systematic Transfer Plan

    Available

    Systematic Withdrawal Advantage Plan

    Available

    Minimum application amount

    Rs.5,000 and subsequently in multiples of Re.1

    Minimum additional investment

    Rs.1,000 and in multiples of Re.1 thereafter

    Entry Load

    Not applicable

    Exit Load

    • For purchase or switch-out of units before the completion of 1 year starting from the date of allotment - 3%
    • For purchase or switch-out of units after the completion of 1 year and before 2 years starting from the date of allotment - 2%
    • For purchase or switch-out of units after the completion of 2 years and before 3 years starting from the date of allotment - 1%
    • For purchase or switch-out of units after the completion of 3 years starting from the date of allotment - Nil

    Benchmark

    NIFTY 50 Hybrid Composite Debt 65:35 Index

  7. Axis Children’s Gift Fund
  8. Type of fund

    It is an open-ended scheme which invests for children and has a lock-in period of a minimum of 5 years or till the child turns 18, whichever is earlier.

    Investment objective

    The primary objective of this plan is to generate long-term capital appreciation through investments in equity and equity-related securities in addition to debt and money market instruments.

    Ideal for

    Investors who are looking for capital growth in the long run in order to fulfil their children’s future financial needs.

    Risk

    Moderately high

    Entry Load

    Not applicable

    Exit Load

    • For redemptions and switch-outs before the completion of 1 year starting from the date of allotment of units - 3%
    • For redemptions and switch-outs after the completion of 1 year and before 2 years starting from the date of allotment of units - 2%
    • For redemptions and switch-outs after the completion of 2 years and before 3 years starting from the date of allotment of units - 1%
    • For redemptions and switch-outs after the completion of 3 years starting from the date of allotment of units - Nil

    Benchmark

    NIFTY 50 Hybrid Composite Debt 65:35 Index

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