Planning to create a college fund? Here is how to do it

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This can be dealt with if you plan and invest for it. For starters, one should decide on a target corpus which is sufficient to cover the education cost at a future date. Once you know the amount, you can evaluate the investment options. One of the options to build a corpus is to go for equity mutual funds. Depending on your risk tolerance, you can invest in schemes such as large cap, multi cap, mid cap, small cap, etc. Equity mutual funds offer you the opportunity to take advantage of growth in established companies, developing industries, and evolving market conditions.

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This growth in value helps in accumulating the funds. By investing early and for the long term, you can develop sizeable corpus for your child thanks to equity investment’s compounding effect. Investing in SIPs too allow you to schedule investments of fixed amounts on a monthly basis. This method helps you deal with market volatility by averaging the cost of purchasing mutual fund units across time. This systematic manner of investing ensures continuous flow of investment towards the education fund for your child. Equity mutual funds diversify the risk by spreading your investment across a variety of companies, industries and market areas. This way, the performance of a particular stock or industry won’t have a substantial impact on your portfolio. Diversification is a crucial risk management tactic that improves the overall performance of your child's education fund. The primary determinants of the choice of schemes for investors include their investment goal, time horizon, and level of risk tolerance. Experienced and competent fund managers of