Why mutual funds are a smart choice for planning your child’s education

As a parent, you want your child to have a promising and bright future. To make this happen, quality education is important. It provides children with the skills they need to become successful doctors, psychologists, professors, or any other profession they may choose. High quality education also promotes critical thinking and enhances their overall personality, preparing them for a rewarding career.

However, higher education is becoming more expensive, making it difficult for many families to afford. So, it is important to start early, save responsibly, and invest wisely to finance your child’s education. This is where mutual funds can help.

With mutual funds, you can start building a reserve for your child’s education early on. This way, you will not have to depend on loans or other assistance and put your child in debt even before they start their career. Given its importance, let’s explore more benefits of mutual funds and how they can help you plan for your child’s education.


  1. High flexibility

Mutual funds are highly flexible and you can start with a small amount through systematic investment plans and increase your contributions over time.

You can also choose from different mutual fund schemes as per your goals, risk appetite, and time frame. If you want a low-risk investment, you can choose debt mutual funds that offer predictable gains. If you are an aggressive investor with a high risk appetite, you can invest in equity mutual funds to earn above average returns.

  1. Diversification

If you invest a huge amount in one stock, you risk everything on the performance of that company alone. Mutual funds diversify your investment across multiple asset classes and securities. So, the performance of one stock doesn’t have a major impact on your overall portfolio. This minimises the risk of your investment and protects you from market fluctuations.

  1. Convenience with expert management

Parents with busy schedules may find it difficult to buy mutual funds for their children’s education goals with careful research and evaluation. However, mutual fund schemes like balanced advantage and dynamic bond funds adjust portfolio positioning based on market conditions. These schemes are extremely beneficial for parents with less market knowledge or busy schedules.

Moreover, online mutual fund investment platforms make it simple to invest in these funds while receiving real-time updates. This frees up time for parents to focus on other aspects of their children’s education and future.

  1. Partial withdrawals

Educational expenses come in different forms at different times. For example, you may need funds semester wise to pay for your child’s college fees, while monthly withdrawals may be needed to cover their rents and regular expenses.

Mutual funds offer regular withdrawals via SWP or systematic withdrawal plan. This feature helps you focus on your long-term strategy and align your goals with the education timeline of your child.

To wrap up

Being a parent is an incredible experience, but it is also a responsibility to secure your child’s future. The flexibility, affordability, and diversification provided by mutual funds make them a smart choice for long-term investing towards education. As a parent, you should take advantage of your child’s early years to invest in their future and work for their future.

It is equally important to review your portfolio (at least once every 6 months) to align your investments and long-term goals. And to make sure that your child’s education is well funded, track your portfolio growth and make necessary adjustments according to market conditions.

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