Rather than making investments on an ad-hoc basis, a parent must make a proper plan to meet their child’s educationalrequirements. Parents often aspire to provide the best to their children. A child’s educational needs is one of their top priorities. They dream to provide the best education to their children to secure their future. However, the ever-increasing cost of education in India at a reckless pace often act as an hinderance. Right from the kindergarten to primary, from secondary to higher education, parents often find themselves in a sticky situation to meet the swelling fee structure and supplementary expenses related to education. Educational expenses are continually inflating at a higher pace, and the returns on your mutual funds must outpace this inflation.
However, a silver lining in this adverse situation is that most parents are able to manage the costs of primary and secondary education from their regular income or salaries. However, the situation for higher education worsensas just like the costs, the demand is ever-increasing. Along with it the cut-off to get enrolled in a prestigious intuition has also increased with time. Due to this, parents usually prefer to send of their kids to private unitversities or colleges. However, this comes with a cost – substantially higher cost than most government institutions.Fret not. You can easily avoid this by planning well in advance. Read on to understand how to do the same.
Calculate backwards to assess the investment amount needed to invest in mutual funds. For a private college in India, the fees today could be ranging from anywhere between Rseight to twenty lakhs, or even more! A similar amount is needed to cater to post-graduation needs that may go as high as Rs 30 to 40 lacs. Do not forget to factor in inflation. Usually, an inflation rate of 6% per annum is considered to understand the true value of one’s investments. So, after factoring in inflation, the corpus required would be much more substantial.
Are you wondering how to attain the same? You can consider starting an SIP (Systematic Investment Plan) in equity mutual funds. SIPs promote the habit of regular investing among investors, thus instilling the much-needed financial discipline among investors. What’s more, SIP investments savour the advantages of the power of compounding that helps to reach the targeted corpus early. Additionally, you can consider transferring your corpus into a debt fund, once you are nearing your target amount. This will help to protect your capital. Remember, the longer you hold on to your mutual fund investments, the sooner you will able to achieve your targeted corpus, thanks to the power of compounding, also known as the eighth wonder of the world. Hence, invest early, so you wouldn’t feel the pain of mounting education costs.
With different types of investment available to an investor, choose an investment options that best aligns with your investing portfolio. Realise the importance of investing and begin with your financial planning to provide your child with the best education. Happy investing!
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