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How much should I invest in a SIP for my child’s education?

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I am 36 years old and do not have a Systematic Investment Plan (SIP) so far due to my home loan and other financial liabilities. Now that I intend to start a SIP, how much should I invest every month to secure the future of my family, including my child?

—Name withheld on request

As a first step you need to establish how much you need for your financial goals. Since you have not mentioned your child’s age so we assume that your child is five years old and will start college in about 13 years. Let us assume you need about 20 lakh for her college education (at today’s prices). Now factor in inflation to know the future cost. The cost of higher education is rising by around 10% every year, and 13 years from now you will need around 70 lakh.

Since the goal is very long-term, equity mutual funds would be the best investment vehicle to take you there. As you haven’t started saving yet for this goal, start Systematic Investment Plans (SIPs) in a couple of flexicap equity funds right away. Despite your home loan EMI, it would be advisable to start making some investments as the cost of these goals would keep escalating every year due to inflation. A few suggested funds are: Parag Parikh Flexicap Fund, HDFC Flexicap Fund and PGIM India Flexicap Fund.

You need to invest 18,000 per month in these funds. Assuming 12% returns per year, you would have a corpus of 70 lakh in 13 years. If the SIP amount is too high, start small at 12,000 a month and keep increasing the investment by 10% every year.

Please note that the assumed requirement of 20 lakh is for domestic education. If you are planning to send your child abroad for higher education, the cost will be significantly higher at 50 lakh (at current costs).

The investment required for this will go up in the same proportion.

Raj Khosla is founder and managing director of MyMoneyMantra.com

 

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX composite little changed in late-morning trading, U.S. stock markets down

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TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.

The S&P/TSX composite index was up 0.05 of a point at 24,224.95.

In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.

The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.

The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.

The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.

This report by The Canadian Press was first published Oct. 10, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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