5 Pro tips on creating your child’s education fund
Everyone speaks about the rewards of preparing early for education funds and securing them as soon as possible.
What they forget to explain is how to reach that goal. Fear not, for we have prepared a list of things you might want to tick off if you want to secure your child’s education.
1. Choosing the right platform is important
There are a number of investment platforms available for investors. As an investor with a goal in mind (the education fund for your child), it is important to choose a platform that is built for that purpose or has certain advantages in the pursuit of your goal.
There are two great advantages of choosing a goal-specific platform – one, you separate your investments in a way that you know how much amount is set aside for that particular goal every month, and second, you get the added goal-related benefits that the platform could offer.
In the case of EduFund, a platform built for parents to save for their children’s education fund, you have added advantages like readily available education loans if you fall short, or free counseling if your child needs it.
2. Investing in the right mutual funds
Once you decide to invest in mutual funds to achieve higher returns than Fixed Deposits, you also need to do your research to find which investment schemes are best suited for you. Many factors play crucial roles in this procedure.
For example, one of the first things you need to consider is the balance between your monetary goals and the level to which these will be fulfilled by the fund returns and the risk associated.
Time is another important factor that will shape your decision in this matter. You also need to consider what exactly you want out of your investment whether it is tax reductions or high returns with high risks or more stabilized returns with low risks. To indulge in smart investments, stay aware of the best investment schemes currently trending in the stock market.
3. Investing in international stocks
Parents who like to stay alert about the current trends related to the education system and finances must be well aware of the phenomenon called education inflation.
This is what makes a global education exponentially more expensive than one attained within India.
The value of the Indian Rupee has depreciated over the years against foreign currencies like the American dollar. This means that the cost of a course pursued in a foreign land like the US or the UK will be tenfold compared to the same course pursued in this country. The cost of living will be equally high overseas.
A smart way to deal with this problem is to invest in international equity funds. This means higher returns because if you invest in US stocks, you will be earning in dollars, not rupees.
Moreover, if your investments in Indian stocks get affected by market fluctuations, you can still depend upon your foreign stock investments which will remain relatively more stable.
4. Consider the availability of education loans
Sometimes your life savings and your investment returns are not enough to fund your child’s education. Do not worry. Education loans can take care of your child’s aspirations in such situations.
Even if you are in a position to be able to afford your kid’s dream college, student loans are still a healthy way to teach your kid the value of money and how to build credit.
Creditworthiness is a virtue that will financially discipline your child so that they can take monetary decisions in your absence. It will also ensure that they can take future loans as part of their education fund at low-interest rates.
Only loans exceeding a very high amount of money require collateral or a security deposit, which means you can easily avail of student loans.
5. The right guidance for your children
Career and academic counseling sessions are crucial for your kid if they are going through a transition phase in their lives.
As their primary caregiver, you are entitled to guide their way but sometimes what might be required is professional help. You are longer required to pay for these counseling sessions.
A platform like EduFund offers them the best education counseling services in India for free of cost. Let nothing stop your child from achieving their goals.
6. Expert advice to get you to your goal
EduFund believes in helping you attain as much clarity on financial affairs as possible. In case of expert advice on investment, you can rely on the world-class experts from EduFund.
The Edufund app provides you with all the useful tools to attain the best from your child’s education fund.
For example, it comes with a calculator that helps you calculate the education cost. This is a smart calculator developed to give you inflation-adjusted rates.
This is the first step toward getting an idea of how much you will need to invest or save up as an education fund.
How do I plan my child education fund?
Starting early is key to building your child’s education fund. You can start saving with mutual funds, PPF, US stocks, Indian stocks, fixed deposit and much more. Before starting it is important to consult a financial advisor and figure out the cost of education before starting an SIP.
Which fund is best for child education?
Here are some of the best funds for your child’s education fund:
Axis Long-Term Equity Fund
SBI Equity Hybrid Fund
Parag Parikh Flexi Cap Fund
Aditya Birla Sun Life Tax Relief 96 Fund Growth
Aditya Birla Sun Life Tax Plan-Growth
DSP BlackRock Tax Saver Fund Growth
Axis Long-Term Equity Fund Growth
How do you build a corpus for child education?
The first step to building a corpus for child education fund is to figure out the cost using the College Cost Calculator. Knowing the financial goal you need to invest in before starting an SIP helps you remain focused and know the exact amount you need to save monthly to get started.
What seems like a mammoth task can be easily managed by diving it into smaller tasks and simplifying it. Each small step is quite crucial in itself.
But once you have the checklist ready, you can be sure if not losing sight of things.
Mutual fund investments are subject to market risks. The previous performance of a fund or scheme is no guarantee of future success. Please read the offer document carefully before investing.
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