Children’s Education Planning
By Akhil Chugh
Date October 22, 2020
“Education is the key to unlocking the world, a passport to freedom” – Oprah Winfrey.
Bringing-up child as a successful and responsible individual is a dream of every parent. Almost every parent sacrifices his or her own desires and wishes to make their child’s future secure. Many parents also face lot of hardships to save money and fulfil their child’s dream. Parents even stop caring about themselves when it comes to the career and future of their child.
Why do you need a Child Education Plan?
- A child education plan is essential to ensure a secure future for your child.
- It makes sure that your child receives the education he/she desires in the future.
With mutual funds oriented towards Child education goals is a good way to build the required corpus brick by brick taking one step at a time without hurting your finances considerably.
5 Steps to secure your child’s future with Mutual Funds –
Step 1: Set Child’s Future Goals
Consider the future goals you wish to save for and invest the money accordingly.. Goal could be an international university admission or a professional degree abroad. Set your goal in figures after taking in account the inflation amount.
Step 2: Start Saving
Once the goals are set, get into the habit of saving money every month.
Step 3: Start with SIPs
SIPS are great way to start your investment journey in a disciplined manner. Systematic Investment Plans or SIPs help you in averaging the rupee cost. This allows you to buy more units when markets fall and lesser units when market rises. SIPs can be started with nominal amount of Rs 500/month.
Step 4: Use SIP Top-ups
SIP Top-up helps you increase the amount of SIPs with increasing income. This increases the invested amount for your child’s future every month. A fixed rate of boost per annum can make a significant different to the total corpus at the end.
Step 5: Do not stop investing
Continue your Mutual fund SIPs till you meet your financial goal. If you stop investing for some unexpected reason, make sure to replenish it quickly from other sources. The more you delay, the more you will delay the prospects of reaching your goals on time.
Start Investing Early:
Early start is crucial for a successful Child Education planning. Each year delay can increase the cost dearly.
Real Life Scenario: Lets understand the benefits of early start with helpof below illustration:
Child: Amar, Current age – 3 years
Education Goal – Graduation after 15 years
Current cost of graduation – Rs 25 lakhs
Growth in Education cost – 9% pa
Future cost of graduation – Rs 90 lakhs after 15 years
Assuming the annual investment yield of 11% pa over the saving period, the required SIP amounts to achieve the desired corpus of RS 90 Lakhs in 15 years will vary significantly depending on how early you start your SIPS.
As is evident from the table above, you may have to shell out almost 70% more money if you delay saving for your child graduation by just five years. So, it makes a lot of sense for you to start saving for your child future early.
There are numerous products and options that are available to save for Child’s future. Finding the right one could be bit tricky. We have simplified the whole investing process by designing our app in a user friendly interface with all premium features. Net Broker app has a feature to show you all the mutual funds across all leading AMCS across country, specifically designed for child education goal, making it easy for you to make the right decision.
Still confused and need further financial assistance to understand it better, call Akhil Chugh +91-9811264927!
Happy Saving!