How to invest for your children’s higher education?

You must plan your investments by quantifying your financial goals and assessing the risk you can bear
I want to invest in mutual funds to secure the future of my two-year-old son (planning - MBA) and four-year-old daughter (doctor). I am a lecturer by profession and earn Rs. 1.2 lakh per month. I want to invest in Sukanya Samridhi Yojana for my daughter and mutual funds for better returns for both my children. Please suggest suitable investment options for their higher education and the right approach to the investment amount. I am planning the education within India only.
You must plan your investments by quantifying your financial goals and assessing the risk you can bear. Also, calculate the time you can remain invested. Keep inflation at the top while quantifying your financial goals. It will help you get the realistic lump sum corpus you may require to achieve your goals better and let you understand the required monthly investment amount.
Apart from the mutual fund & Sukanya Samridhi Yojana investment, you may also like to create a small emergency fund which will be 5-10% of your monthly income, which can be utilized in exigency.
Considering your long-term investment horizon and goals, we assume your risk profile will be aggressive. You can look at investing in equity-oriented mutual fund schemes through a systematic investment plan (SIPs) as equity has the potential to deliver superior returns in a longer time frame. Hence, you may divide your total monthly investable amount equally among funds like ICICI Pru Large & Mid Cap Fund, HDFC Large & Mid Cap Fund, Parag Parikh Flexi Cap Fund, Kotak Emerging Equity Fund, Canara Robeco Small Cap Fund & SBI Contra Fund. This way, your portfolio will be diversified across the category, geography, and AMCs. It is also advisable to review your portfolio at least once a year.
Traditionally, people had an invariable preference for fixed deposits (FDs) to safeguard their children’s future or to meet their financial goals. Consistent interest rates and zero market-linked risk made FDs an attractive avenue for locking in one’s money. This scheme functioned perfectly well until about a decade ago. The rate of return offered ranged between 7% and 9%, which resulted in a reasonable corpus by the end of the tenure. But then, the Indian economic conditions changed drastically, and the prevailing FD rates saw a steep cut to an all-time low of ~5%.

Hence, those looking for a feasible and safer alternative can consider a guaranteed return plan. It ticks the check-box of primarily being an investment for the risk-averse, with the added benefits of the life insurance element. Moreover, it promises a guaranteed rate of return without getting impacted by market volatility. It, therefore, offers the best of both worlds.
Guaranteed Return Plans are an apt product for salaried people, especially solo bread earners, and can be purchased by anyone between the age bracket of 18 and 60 years. Additionally, this plan is an ideal saving tool for tenure as long as 10 to 45 years. It is also an optimal means to meet future long-term goals such as a child’s higher education, marriage, and even retirement planning. In addition, it provides a guaranteed return that is fixed at the time of purchase. This particular aspect is opposed to fixed deposits, where the rate of return fluctuates, is subject to taxation, and therefore, is relatively lower.