I want to save money for my niece and nephew for their marriage. I don’t want to overburden myself so plan to keep a small amount safely for them. I have two nephews and two nieces, one nephew is in college while the other is in 12th. One niece is in her second year of college while the other is in class 5. Could you suggest some SIP specifically for marriage purposes? Should I start SIP for all individually or one would do depending on the age gap? I belong to a middle-class family.
By Balwant Jain, tax and investment expert
I appreciate your concern to provide for marriage expenses for your niece and nephew. Since the ages of nephews and nieces are different, the mutual fund scheme suitable for making investments for each one of them would also differ. As you have not mentioned the time within which each of them will get married, I would give you a broad idea about the mutual fund category in which to start the SIP. You should invest separately for each of the nephews and nieces to be able to monitor the growth of the investments against the targeted amount.
It seems you do not understand much about mutual fund investing and periodic monitoring and rebalancing of investment is very important I would recommend you invest in index funds where you do not have to monitor and rebalance periodically.
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In case the marriage is away beyond five years and within seven years, you can start investing in any large cap. Of late a significant number of large-cap schemes have not been able to beat their benchmark, I would suggest you invest in an Index fund representing the entire gamut of the large-cap category and start an SIP in HDFC Nifty 100 scheme with a growth option.
In case the marriage is more than 7 years away but not more than 10 years away, I would suggest you invest in the mid-cap category which is a little more volatile than the large-cap category but the volatility gets ironed out if you invest for a longer period. During this period I would recommend you start a SIP in ICICI Prudential Nifty 150 Midcap index fund under growth option.
And for the last category where the time horizon is beyond 10 years, I would recommend the small-cap category which is the most volatile but due to a very long investment horizon of beyond 10 years, the volatility gets ironed out. For this category, I would recommend Nippon 250 Small-cap Index fund.
If you can initiate the SIP investments, you can go for a direct plan else you can take the help of a mutual fund distributor for regular plans. Please note that the returns on direct plans are higher than regular plans due to marketing expenses debited to regular plans.
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 07 Nov 2023, 12:19 PM IST