Combine Educational goals

Hi, More than it is good or not, you need to look at and analyze is it possible? If you have to accumulate the required corpus for UG + PG in advance, obviously you need to save and invest more.  Nothing wrong in aiming for higher corpus well in advance, that will put you/your family in a good position, as we are all aware of the fact that education inflation is very high in India, and you may never know what your Son would like to become and achieve academically after 10+ years from now. Related article  : https://www.relakhs.com/calculate-kids-education-goal-amount/  

Thanks for your response. Well said, We do not know, what will be our kids choice of education after 10+ years now. Even we do not have any estimate on how much amount to be accumulated for them. Roughly i am making an estimate of 10 Lacs for UG and 5 Lacs for PG.  What is your estimate on Goal amount for UG and PG in india.  I know its hard to give clear estimate, But you can share it on your own experience and readers query.

Hi, It depends on the type of course that one choses to pursue in UG/PG. For example : MBA in a normal college can be completed with say Rs 2 to Rs 5 lakh (max). Again this depends on whether it is a residential program or not.  The same MBA from a prestigious institute like XLRI can cost around Rs 20 lakh (Present value).  So, I always believe that as a parent one needs to save and invest as much as possible, as frequently as possible for two high priority goals ie Retirement and Kid' Education. Do note that the child can easily get Education loan if he/she achieves a seat (engineering/medical/mba...) in a prestigious institute/University.  

I am keeping educational goal inflation as 10% for my kids. What could be the inflation rate to be considered for Retirement (19 years away) and Marriage (25 Years away ) goals.  

Hi, The average inflation rate for the last 10-15 years can be considered as around 6-8%. Unofficially, the rate can be much more than this and we are witnessing the price raise across all products / services. Personally, I keep 15% for education goal, for other priority goals like Retirement minimum can be assumed as 8-9%

Below article has a chart of 'Historic Inflation data in India'.. https://www.relakhs.com/long-term-investment-horizon-importance-examples/

 When you increase the inflation rate for calculating Required amount for investment towards goal, Its much more higher than my savings per month for the goals. Can i invest whatever is possible amount or prioritize the goals.   

Hi, You may prioritize the goals and may allocate higher amount to high priority goals. For ex : Retirement & kid's education goals can be your high priority goals, whereas you may allocate lower amount to say Kid's marriage expenses goal. Invest as much as possible and as frequently as possible for high priority goals. Whenever you get any lump sum amounts (salary hikes, annual bonus, gifts etc) you may allocate such amounts to your high priority goals. Keep reviewing your goals' status at least once in a year. Related articles : https://www.relakhs.com/investment-planning-investment-plan/ https://www.relakhs.com/formulas-calculate-returns-investments/  

What could be expected returns from Equity funds and Debt funds for the goal calculation of required SIP Amount. Secondly, How much asset allocation(60:40 or 70:30 ...like) to be kept for Moderate risk profile for each goals.( Goals are 17 years away)  

Hi, It depends on your other savings/investments too. For example, if an individual is contributing to EPF/PPF, this can be considered as part of Debt allocation. Personally, I believe in investing in Equity oriented products as much as possible at the early stages of goal time-line. May be, one can add a balanced fund that can help in automatic re-balancing to a certain extent. Regarding returns expectation - I assume 7 to 9% from debt products and 12% on equity oriented products. Balanced funds around 10%. (for long term or medium term goals..) How to calculate expected returns on a portfolio : Let us say you defined the asset allocation of debt:equity as 30:70. Return expectation from debt is 7% and equity is 10%, then the overall portfolio return expectation is as below. (70% x 10%) + (30% x 7%)= 9.1%.