Education is an investment and one should always plan investments carefully. It is never too late to start planning your child’s education, but in a rising economy where expenses and the income are growing parallelly at the same rate, you must start planning as soon as possible. So, getting your child’s education plan in place for the future is the best gift you could give your child.
An early start of any saving plans means lower investment and higher returns. A small gap of 2-3 years can vary the amount by thousands per month. To formulate a dependable child education plan that will cover education expenses in future, one must look at the twin risks of inflation and the rate at which educational costs are increasing with every passing year. Planning is a step by step process which needs to consider certain aspects. Here are few such important parameters that you need to consider
When you start saving for a child’s education, it is not necessary that you can picture which career or course your child will opt for. However, what’s important is having a plan and funds for your child’s dreams. So that no matter which college or course they opt for, you are always there to support them.
Consider all the probable lucrative career avenues and zero in on a budget that will cover costs for such courses in India or abroad.
Along with the tuition fees take into consideration other costs such as living expenses or hostel fees and travel costs for internships and projects. With a growing economy, the inflation rate also rises. So, when you get the entire cost, calculate the inflation on that so that you can plan your current savings accordingly.
The best path
Funding education is a sincere financial goal and the key is to have minimum risks when it comes to investment choices. On the other hand, while keeping the security as a priority, the investment should be able to grow at a rate beating the inflation and rising costs.
Creating a portfolio that balances long-term growth schemes like equity and mutual funds, gives your investment the power to beat inflation. Secondly, a long-term investment reduces volatility making it less risky. While on the other hand, investing in debt funds like short-term plans provide stable returns through the period. The best way to approaching investment is by maintaining balance.
Choosing the right products
The products can be chosen after understanding the risk profile of investors. The systematic investment plans in appropriate funds help in reaching the goals established. A combination of balanced funds, children’s gift funds, equity funds and even short-term debt funds can be one of the best ways of beating inflation and meeting your financial goal for your children’s fund.
The time-period plays an important role in the choice of products and asset allocation. Going for bank loans should be the last resort while looking at educational planning. Bank loans are needed at a point when the time is very short for any investment to be made and the need is urgent. The lesser time an individual has towards the goal, the costlier it gets.
While keeping all these factors in mind, one can come up with some of the best child education plans. One can also take the help of a financial adviser, who would guide you according to your goal and the period of the investment. Financial Advisers understand every aspect of your investment plan, the final goal and your finances and suggest the best path to take, keeping in mind all the variables.
The aforesaid article presents the view or an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ before making any decision.
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