How do I explore mutual funds to meet my financial goals?

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—Name withheld on request

It is very important to invest in asset classes like equity to grow your savings. One of the best ways to invest in equities is through mutual funds.

For your children’s education, we are assuming that you may need ₹1 crore at the end of 15 years. For the same, we think a monthly SIP (systematic investment plan) of ₹15,000 with an annual step-up of 5% would be appropriate, assuming a return of 10%.

For your goal of retirement, we are assuming that you may need ₹2 crore after 20 years. For the same, we think a monthly SIP of ₹16,000 with an annual step up of 5% would be appropriate assuming a return of 10%. (The assumed return of 10% is on the conservative side considering the historical returns.)

You must consider investing in schemes across different market caps. A majority of your SIPs should be in large- cap funds like Nifty 50 Index fund. Some allocation should be made to mid- and small-cap funds. You can reach your goals earlier if you increase the amount of your investments.

For diversification of your portfolio, we would suggest you to invest in debt instruments like debt mutual funds, corporate bonds and FDs which will give you consistent and predictable returns. This will help reduce the overall volatility of your portfolio.

We also advise you to maintain an emergency corpus equivalent to six months of your salary or income. This fund can be kept in liquid or ultra short mutual funds. Additionally, if you haven’t already, consider taking medical and life insurance to provide financial protection to your family in case of any unfortunate events.

Please note that these calculations are based on the assumptions and information provided. You may consult with a financial advisor for