Published: 2026-06-17 · By Bhanuprakash Sardesai
4. Goal-Based Investing: How to Plan for a Child's Education
Most investors make a critical mistake: they save without a clear goal. They put away whatever is left at the end of the month and hope for the best. Goal-based investing flips this approach – you start by defining what you want to achieve, when you need it, and then work backwards to determine exactly how much to invest each month.
The foundation of goal-based investing is understanding the future cost of your goals. This is where inflation becomes crucial. A goal that costs ₹25 lakh today – say, a child's higher education – might cost approximately ₹80.6 lakh in 20 years if education inflation runs at 6% annually. If you ignore inflation and save only ₹25 lakh, you'll fall devastatingly short.
Education inflation in India runs at 8-12%, significantly higher than general CPI inflation. The cost of a professional degree that is ₹25 lakh today could easily exceed ₹1 crore in 15-18 years. This is not fear-mongering; it's mathematical reality. The solution is goal-based investing: define the goal, estimate the future cost, determine the monthly SIP required, and start immediately.
For example, if you need ₹50 lakh for your child's higher education in 15 years, and expect 12% returns from an equity SIP, you would need to invest approximately ₹10,500 per month. If you wait 5 years and only have 10 years left, the required monthly SIP jumps to about ₹22,500. Delay is expensive when it comes to long-term goals. You can instantly calculate your required SIP using our free online Target Goal Calculator.
When investing for education goals, consider the timeline. If the goal is more than 7-8 years away, an aggressive equity allocation (70-100%) is appropriate. For goals within 3 years, stick to debt funds or fixed deposits. Use our Target Goal Calculator to plan your child's education fund today.
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