How Capitalmind's Shenoy Bridged the Shortfall in Son's Education Goal

He wanted his son to study in India but later decided to send him overseas and so had to alter the funding strategy

- Jash Kriplani

Planning for your kids' education goals can be a complex process if you are not prepared for it. Deepak Shenoy, founder and chief executive officer of Capitalmind Financial Services, had to make some adjustments to his financial plan when his son showed more interest in overseas education.

"Earlier, I was building up the corpus for domestic education, but once it was clear that overseas education was more suitable for him, I made the necessary adjustments," Shenoy shared with Mint in an interaction for 'Guru Portfolio', a series where leaders from the financial services industry share how they manage their money.

Adjusting education portfolio Shenoy had started making investments for his son's education goal in 2017. As mentioned, the expected goal was domestic education at the beginning.

He started investing for the goal from his PMS in 2019. He assumed weighted average returns of 12.2% from a 60:40 equity:debt portfolio, which was part of his PMS firm's goal-planning tool. His son was 12 in 2019. The equity allocation was a mix of Capitalmind's active and passive PMS strategies. The debt portion was a mix of short-duration and long-duration funds.

In mid-2021, it was decided that overseas education would be more suitable, which meant adjusting the education portfolio. His son still had four years left before starting college.

"I had to get aggressive, increase my investments and increase the equity allocation to 75%," Shenoy explained.

For the overseas education plan, he made the following assumptions: US education inflation of 2.5% and currency depreciation of 3.5% (rupee versus dollar). While the education inflation ended up being higher at 3.5%, Shenoy made up for it with additional investments.