Medium-term goals (3-7 years)
With more time available for growth, taking a slightly higher risk is possible.
Child’s higher education
This is not a negotiable goal and you must ensure that you have the money well in time. Equity-based investments are advisable if your goal is far away, but if you have just 2-3 years, stick to the safety and assurance of debt.
Where to invest: Start a recurring deposit in any established bank. Banks offer a vast range of tenures, starting from 3 months and extending right up to 10 years. To be on the safe side, choose a tenure that matures at least 15-20 days before you need the money.
Buying a house
This is an important but flexible goal. Given the longer tenure, you can’t afford to overlook returns from the investments. To be able to stay ahead of inflation, you may have to lace your investments with equities for higher returns. Still, you cannot be too liberal with risk.
Where to invest: Take a balanced approach and invest in hybrid funds. Go for equity-oriented balanced funds if the goal is more than 3 years away. If less, opt for debt-oriented hybrid schemes that allocate only 15-20% of their corpus to volatile equities.
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