Shankar, our long-time domestic staff member, wanted to secure his daughter’s education. When she was born, he asked me to deduct ₹2,000 from his salary every month, invest it, and not return the money to him—even if he asked—until she turned 18.
What he needed was simple: automatic monthly saving, long-term growth and a meaningful lock-in.
For people with limited financial resources, saving before the money reaches their bank account and restricting access afterwards can be extremely valuable. Emergencies, family obligations and everyday spending can otherwise gradually consume the amount. Automatic saving turns a monthly decision into a one-time commitment, while lock-in protects the accumulated corpus.
The Employees’ Provident Fund Organisation shows how effective this combination can be. Salary contributions are deducted automatically, matched by employers and largely locked in until retirement. However, EPFO also shows that compulsory enrolment and difficult withdrawal processes can sometimes turn protection into a trap.
The National Pension System offers voluntary enrolment, salary deduction, lock-in and investment choice, but it is mainly designed for retirement. It does not address goals such as a child’s education.
A voluntary “goal-maturity mutual fund” could fill this gap. Investors could choose a maturity date, invest automatically every month and redeem only after that date. Such a product could combine the low cost and investment choice of mutual funds with disciplined saving and a real lock-in.
Close-ended mutual funds already have fixed maturity dates, but they currently cannot accept fresh investments after the initial offer period. Regulators could consider allowing continued contributions until maturity. Investors facing genuine emergencies could still sell the units on the stock exchange, preserving liquidity without making withdrawals too easy.
Since no suitable product existed, I arranged an equity-fund SIP for Shankar around his salary date. His dependence on me became a substitute for the lock-in the product lacked. A properly designed goal-maturity fund would have allowed him to choose how much to save, when the money should become available and where it should be invested—without needing such a jugaad arrangement.
