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March 24, 2022

How to plan for your child’s education? Should real estate be considered?

how to plan child education

Parenthood is the best experience for all humans. However, it is also true that raising a child comes with huge expenses that can challenge your finances if you are not well-prepared. 

Education forms a significant chunk of all the costs incurred in raising a child. Thus, planning your child’s education is as crucial as retirement planning for yourself. 

Let us see in this article how one should go about education planning what assets one should explore, and the role of real estate in your portfolio, in accumulating the corpus for your child’s education.

How to plan your child’s education? 

Planning your child’s education starts in the early stages of a child’s life. Today, higher education is quite expensive and costs around Rs 20-25 Lakhs for a degree in India.  

This number increases further if you are looking for a foreign education for your child. Additionally, the currency depreciation that the Rupee (INR) is witnessing against currencies like the USD adds to the parent’s worry.  

While estimating the cost of education and tuition fees, you should look at other costs such as accommodation, transportation, stationery and books, coaching, etc. You can explore EduFund’s unique cost calculator. 

Let us now talk about planning your child’s education financially and the steps involved. 

Step 1. Estimate the Cost of Education

Parents have to make an active choice for  

  1. Place of education 
  1. Tier of school 
  1. Type of course or field for the child to study in

You will also need to consider whether your child wants to study abroad or prefers a domestic education. The education cost in India is increasing at a high rate.  

Beginning from the admission process to the entire school life, parents increasingly find it challenging to meet the increasing fee structure and other costs associated with education.  

Inflation in education has led to rising costs. The education inflation trend has been 10-12 percent over the years, double that of household inflation.  

For example –  

  • A 4-year engineering course costs around Rs. 12 lacks.  
  • 10 years, the cost will likely increase to Rs. 31 lacks
  • By 2038, it would cost around Rs. 61 lacks to get an engineering degree. 

Step 2. Decide the time horizon

Calculate your child’s graduation or post-graduation time. 

Step 3. Analyze your current assets and liabilities

This helps to know the current financial position to help the parents plan better. 

Step 4. How much to save?

Once you estimate the cost of education, decide how much to save in a lump sum or a monthly contribution. 

Step 5. Investment Planning 

Plan a proper asset allocation that is well-diversified and reflects suitable risk-adjusted returns.  

For example Suppose you have a long-term horizon to accumulate the corpus. In that case, you should consider equity as an investment asset class in the portfolio.  

As you come closer to the goal, your allocation on debt tends to increase, and distribution inequity reduces. 

Step 6. Start investing 

Real estate as an asset class 

In general, real estate is considered a great investment option in India. The two types of real estate investment options are  

  • Residential properties  
  • Commercial properties

Real estate can be an excellent alternative to many investment options that offer lower risks, yield better returns, and diversify.  

Characteristics 

  • Durability: Investment doesn’t come with a fixed maturity plan and has the possibility of creating wealth for multi-generation 
  • Immobility: Real estate investment is very illiquid in nature. 
  • Transparency: When purchasing a property, there could be a possibility that the seller is withholding information. 
  • The cost involved: A significant lump sum is locked in to pay initially when purchasing a property.  

Additionally, housing loans help to bridge the gap between savings and the cost of acquiring a property. Post-down payment and a monthly mortgage payment include a part of the principal and the interest on the loan.  

Registration and Stamp duty payments need to be made to the legal owner of the property. In addition, there are various other charges such as preferential location charges, maintenance charges, parking charges, and taxes like Goods and Service Tax, property tax, capital gains tax, etc.

how to plan child education in India

Why is real estate not a good option for a child’s education investment? 

One main reason real estate is not a good investment option is its illiquid nature. Because education is a defined event and cannot be pushed further, the parents must be ready with the required corpus before the child is ready for school/college (as applicable).

If an investor is required to sell the property in a short duration, it could lead to distress selling, where the seller faces a substantial loss compared with the current market value.

On the front of the returns, the rate of return does not justify the costs and taxes incurred in property investment after adjusting for inflation. Interest on loan and mortgage payments further reduces the actual value of return received on property investments.  

Due to inflation, the return is just a poor single-digit number lost in many years. It also requires more initial capital in the form of a down payment which may be difficult for parents in the initial or mid-stages of their careers.  

Buying a property vs. systematic investing 

Let us consider a case where Mr. A buys a house to fund his child’s education after 16 years, and Mr. B considers investing in mutual funds via SIP for the same duration.  

1. Case of Mr. A 

In the first case, Mr. A makes a down payment of Rs 10 lakhs (10% of the current property value) and gets an EMI of Rs 79,892 for the period of 15 years.

He then sells the property in the 16th year. The real estate growth estimation is at 6.5%. 

2. Case of Mr. B 

Mr. B starts a SIP of Rs 50,000 per month when the child is born for a long-term period of 15 years.

Step by step guide: Child education planning
Source: Edufund Research Team
Table showing the investment in real estate vs mutual funds.
Step by step guide: Child education planning. real estate vs mutual funds
Mr A Outflow is the sum of the down payment and all the subsequent EMIs.
Mr B Outflow is the sum of all the SIP.
Source: EduFund Research Team

Note: Outflow is the total money paid by Mr A and Mr B.

Graph showing the difference in the outflow and total value of the investment in real estate and mutual funds

The difference in cash outflow (Total EMI vs. Total SIP) is considerable at Rs 53 Lakhs – is because when an individual starts paying EMI, he ends up paying the principal and interest component, both due to which the cash outflow is high. 

 Further, when we consider the amount accumulated in SIP after 16 years and the amount recovered from the property sale, there is a staggering difference of Rs 40 Lakhs. 

Thus, the total benefit in mutual funds over real estate stands at nearly Rs 1 crore.

We see that investing in real estate creates a hole in the investor’s pockets. Moreover, many investors may not have such a substantial initial lumpsum readily available to invest in.  

Mutual funds provide the feasibility to start with SIP and increase the amount gradually. But for a housing loan, a minimum down payment is a must.  

EMIs for housing loans are like an expense for an individual. Whereas SIPs are like reasonable EMIs where an investor earns interest on their periodical installments.  

Also, mutual fund SIPs have the power of compounding, whereas real estate investments only have an average inflation rate that gets added to the asset value year on year. 

To plan your child’s education, you should also ensure that your portfolio has the necessary liquidity. The property sale is a difficult and lengthy process, requiring time in hand.

Mutual fund redemption is instant, and the investor receives the funds in 2-3 business days. The properties in a preferential location have a reasonable appreciation rate, but that may not always be the case. 

Distress selling takes place in case of an urgent need for money through a property sale, that is, property sold at much less than the actual market value. 

But in the case of mutual funds, even during emergencies, the investments are sold at market value. Therefore, transparency and liquidity are more in mutual fund investments. 

These points are more than enough for a parent to choose mutual funds or other alternate investment options over real estate while planning their kid’s education.

Consult our expert to discuss the right plan for you.

FAQs

Which mutual fund is the best to plan for a child’s education?

The best choice of mutual fund scheme varies highly from investor to investor. One shoe doesn’t fit all. Hence, it is important for investors to understand their goals, risk level, time horizon, etc, to find the best mutual fund. However, some of the top AMCs offering mutual funds that investors can explore on the EduFund App include UTI, HDFC, ICICI, DSP, etc.

How much money do I need to start investing for my child’s future?

There’s a common misconception that only rich people can invest. The truth is that you can start a SIP for as low as 100 rs/ month. Explore your options on the EduFund app and make an educated decision with the help of our Savings Experts.

How can I save money for my child’s education?

There are many ways to start saving for your child’s future education. Some common ways are – investing in mutual funds, putting money in eligible saving bonds, buying digital gold from licensed sources, investing in US ETFs to prepare for foreign education, etc.

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4 W’s of Balanced Advantage Funds

4 W’s of Balanced Advantage Funds

What is a Balanced Advantage Fund? A balanced advantage fund is a fund that can invest 0-100% in the equity market or 0-100% in the debt market dynamically as per the prevailing market condition. For example - If a fund manager finds that the price of the equity market has gone up, he will tilt the portfolio more toward the debt market. Likewise, if the equity market trades at a discount, then the fund manager can tilt/shift the portfolio toward the equity market.  The valuation is the internal process of the fund. Based on valuation, the fund manager can take the call. This way, the fund manager can take the opportunity and change the asset allocation. The fund manager can go aggressive in the equity market or can also decide to play conservatively to reduce the portfolio's volatility. The aim is to minimize the portfolio's downside risk and maximize the returns.  Who should invest? Investors who are looking for long-term wealth creation. Investors who are not comfortable with the market volatility. Investors who do not want to face high volatility and looking for equity-like returns. Investors who are unsure which type of fund they should invest in, whether in the equity or debt-oriented fund. Risk-averse equity investors with an investment horizon of more than three years. Additional read: Financial mistakes to avoid Why should you invest? A balanced advantage fund is a dynamically rebalancing fund between two asset classes, i.e. equity and debt. It has the complete flexibility of rebalancing from 0-100% in both asset classes. It provides you with better risk-adjusted returns. It manages the equity market volatility and provides stability in the portfolio by diversifying the portfolio into the debt market. It offers you equity-like returns, which help your portfolio to grow at a much faster rate than debt funds and also helps you to beat inflation. Minimizes the downside risk and provides scope for growth by investing in the equity market. When should you invest? When the volatility in the equity market increases you do not want to have such high exposure to the prevailing volatility. When you want equity-like returns but do not want to face high liquidity. First-time mutual fund investor looking for long-term wealth creation. Conclusion Try to allocate some portion of your portfolio towards a balanced advantage fund if you want to reduce the portfolio's volatility. A balanced advantage fund is like a season fund. FAQs What is a Balanced Advantage Fund? A Balanced Advantage Fund can dynamically invest 0-100% in either the equity or debt market, depending on market conditions. Who should consider investing in Balanced Advantage Funds? Investors seeking long-term wealth creation, those uncomfortable with market volatility, and those unsure about equity or debt-oriented funds can benefit. Why invest in Balanced Advantage Funds? These funds offer flexible asset allocation, better risk-adjusted returns, and stability by diversifying into the debt market. They provide equity-like returns, growth potential, and risk mitigation. When is the ideal time to invest in Balanced Advantage Funds? Consider these funds when equity market volatility increases, and you want equity-like returns without excessive risk. What is the aim of Balanced Advantage Funds? The aim is to minimize portfolio downside risk, maximize returns, and adapt to market conditions, providing both stability and growth.
5 financial things to consider before child planning.

5 financial things to consider before child planning.

Both life and wallet will never be the same once you decide to have a baby. No event in your life will signify financial change quite the way this one does, from the first prenatal appointment to the day of college graduation (and beyond). 5 financial things to consider before child planning 1. Create a budget Before you start child planning, you need to have a budget in place. You and your partner may need to create a realistic budget based on your expenses and your streams of income. Once you know how much you can afford to spend, you will be able to tackle the costs easily. A new child is a new family member that needs space! So if you need extra space once the baby is born, figure out what kind of home you can afford, whether it's a slightly larger apartment, a warm cottage, or a pricey house. Will you want the latest baby things or your sister’s passed-on ones? Think about what sort of child care would you require and get candid with your expenses before you start making any purchases. Money Management Tips for Homemakers Read More 2. Costs associated with birth As new parents, you need prenatal vitamins, alternative therapies, labor and delivery alternatives, and screening tests. Give yourself enough time to change or upgrade insurance plans should you need more comprehensive coverage. Good health insurance is vital in this economy. Hospital bills, medical fees, and maternity costs can be high. According to estimates from the industry, a straightforward delivery could cost between Rs 50,000 and Rs 70,000, but a private specialty hospital could charge up to Rs 2-3 lakh. A cesarean delivery could result in a cost rise of up to Rs 4-5 lakh. Before having a kid, you should make financial arrangements for the costs associated with the delivery and child care. 3. Consider maternity leave The vast majority of Indian employees are not entitled to paid family leave. If the mother is employed, you might need to think about taking a lengthier (unpaid) maternity leave or a sabbatical for a year or two. This can be a huge financial loss for families that rely on both streams of income. Paid parental leave is not always an option. Find out if your workplace offers paid leave for new parents and if there are any policies in your favor that you can utilize. Determine the number of weeks covered and the proportion of your salary that is used. Do you have to use your sick and vacation days first? If you don't have access to paid time off or you're going to take more unpaid time off, you might want to cut costs or rely on your savings. 4. Purchase life and health insurance You'll want your child to be stable financially if something were to happen to you or your partner. A life insurance policy can assist in paying for things like child care, housekeeping, cooking, and more. Purchasing maternity insurance is the first action you can take to cover maternity costs. When purchasing health insurance, (even for a couple), it is important to confirm that the policy includes coverage for maternity costs and, if applicable, any applicable waiting periods. Additionally, by paying a larger rate, you might add pregnancy coverage to a current insurance policy. Buying health insurance is most important when considering having a child. Get your health covered in your plan so that you are not financially burdened in case of a health emergency. 5. Plan for the child’s education Just like the prices of lemons and oranges are growing, the cost of education is skyrocketing. Saving for your child’s college is a necessity. When it comes to saving money for college, time and compound interest are your best friends. Even while inflation is an unavoidable fact, keep in mind that education inflation is far higher. Utilizing the force of compounding is one approach to combat this, but it will only be effective if you have a long-term strategy in place. You indeed have no idea what career path your child will take, but you still need to put aside a portion of capital that can be utilized when the time comes. Right now, you need to think about the type of education you would like to offer because the practical costs of studying engineering in India vs. the US would be very different. From giving birth to seeing them off to college, watching your child grow and thrive is every parent’s dream! So give those dreams wings by planning ahead and investing for their bright future!  TALK TO AN EXPERT
5 investment plans every parent should have

5 investment plans every parent should have

As parents, we have a profound responsibility to ensure a bright and secure future for our children. While providing love, care, and education are crucial aspects, financial planning plays a pivotal role in setting the stage for their success. Investing wisely is key to securing their future aspirations and safeguarding against unforeseen circumstances. Let's explore five essential investment plans that every parent should consider, ranging from mutual funds and US ETFs to US stocks and insurance. So, we will dive in and discover the strategies that can pave the way for your child's financial well-being. Education Fund: The Power of Mutual Funds One of the most crucial investments you can make as a parent is in your children's education. Start by setting up an education fund that specifically caters to their academic pursuits. Consider tax-efficient options like a 529 plan, which allows you to invest in a variety of mutual funds, ensuring growth potential while enjoying tax benefits. Platforms like EduFund (www.edufund.in) offer valuable guidance and tools to help you plan and manage your child's education fund effectively. investment plans US ETFs: Diversification Made Easy 1. Exchange Traded Funds Exchange-Traded Funds (ETFs) have gained significant popularity in recent years due to their flexibility and global exposure. Just like mutual funds, ETFs represent a basket of securities, including stocks, bonds, commodities, or a combination thereof. However, unlike mutual funds, ETFs are traded on stock exchanges throughout the trading day at market prices. ETFs offer several benefits, including transparency, liquidity, and cost-effectiveness. Parents can buy and sell ETFs at any time during market hours, allowing for more flexibility in managing their investments. Additionally, ETFs disclose their holdings daily, ensuring transparency in the investment portfolio. With generally lower expense ratios compared to mutual funds, ETFs offer a cost-effective investment option for parents. 2. USA Stocks For parents who are comfortable with taking on more active roles in their investment journey, investing in individual stocks can be an exciting avenue. Owning shares of well-established companies can offer substantial returns over time. While investing in individual stocks requires careful research and monitoring, it can provide the potential for higher growth compared to mutual funds or ETFs. EduFund's resources can assist you in understanding stock investing basics and identifying companies with strong fundamentals. To mitigate risk, parents can consider diversifying their stock portfolios across different sectors and industries. This diversification helps reduce the impact of a single stock's performance on the overall portfolio. In addition, parents should adopt a long-term investment mindset and focus on the fundamentals of the companies they invest in rather than short-term market fluctuations. Investment Tips for Dad's in India Read More Insurance - Protecting Your Family's Future Insurance is a pivotal component of any comprehensive financial plan, especially for parents. Life insurance provides financial protection to your family in the event of your untimely demise. It ensures that your children's education, living expenses, and future aspirations are secure, even in your absence. Term life insurance offers coverage for a specified period, providing a higher coverage amount at an affordable premium. Additionally, health insurance safeguards against unexpected medical expenses, offering peace of mind during uncertain times. By securing adequate insurance coverage, parents can safeguard their family's financial well-being and ensure a secure future. Investment Tips for Mom's in India Read More Mutual Funds - Diversify and Grow Your Wealth Mutual funds are an excellent choice for parents seeking diversification in their investment portfolios. These funds pool money from several investors to invest in a variety of asset classes, including stocks, bonds, and money market instruments. Managed by professional fund managers, mutual funds allow parents to benefit from their expertise and experience in making investment decisions. By spreading investments across different sectors and markets, mutual funds help reduce the risk associated with investing in individual stocks. Parents can choose from many types of mutual funds on the basis of their risk appetite and financial goals. For those seeking stability, bond funds can offer a regular income with lower volatility. On the other hand, equity funds offer an opportunity for capital appreciation through investments in stocks. Balanced funds offer a blend of both equity and bond investments, providing a balanced risk-return profile. By investing in mutual funds, parents can access professional investment management and enjoy the benefits of diversification. You can lay a strong foundation for your family's future by incorporating these investment plans into your financial strategy. Remember that investment decisions should align with your risk tolerance, financial goals, and time horizon. It's always suggested as advice to seek guidance from financial advisors who can provide personalized advice based on your specific circumstances. Conclusion  Investing wisely is an integral part of parental responsibility. By incorporating these five investment plans into your financial strategy, you can take proactive steps toward securing your child's future while also protecting your own financial well-being. Remember to conduct thorough research, seek professional advice, and regularly review your investment portfolio to adapt to changing circumstances. By combining long-term vision with disciplined investment practices, you can build a strong financial foundation for your children, allowing them to chase their dreams with confidence. Start planning today and pave the way for a prosperous future for your family. Consult an Expert Advisor
5 Reasons why Global Education is the Best for Indian Students

5 Reasons why Global Education is the Best for Indian Students

It is universally acknowledged that education is a very powerful weapon. Education can transform an individual and colleges can broaden a child’s horizon. Every child deserves to receive a quality education. There are various reasons why global education is the best for Indian students. ‍From our experiences, we know that when a student receives a world-class education, it helps them become their best version – professionally and personally. Pursuing higher education outside of India seems to be promising in more ways than one. In this blog, we will talk about how studying abroad can affect your life for the better. Let's get started. 5 Reasons why Global Education is the best for Indian Students When you think about it, there are innumerable ways in which a global education can benefit an Indian student. In this article, we will talk about the 5 major ones. Let's get started. 1. Changes Your Life, for Good! International exposure to study at a foreign university and the experience of living in a new country can be life-changing! The combined power of both results in gaining practical knowledge that can help you in life immensely. Living alone in a foreign country can be daunting in the beginning, but it teaches you an immense number of values, and ethics, and not to mention, you become a pro chef! You learn what is not written in the textbooks. Such experiences also shape your personality and groom you as a responsible professional. 2. Holistic And not just Academic Development The Indian education system offers academic rigor. However, there still is room for improvement and development. The cut-offs in premier Indian colleges soar to touch the sky. But whether these colleges provide excellent holistic development is still a big question mark. Regardless of the foreign country you prefer to study in, most global universities focus on not just academics, but also professional qualifications, leadership, and personal development. Foreign programs have gained popularity because the faculty is invested in a student's all-around growth. 3. Opens closed doors Whether it is studying for a master's abroad or a Ph.D. – Foreign universities offer what you commonly don’t find in India. An array of courses across all fields and subjects like - Artificial Intelligence and Data Security or Criminology, and Media Relations. You name it and they have it. As per reports released by the USIEF, in 2019, Indians studying in the U.S. made up 17% of the international student population there. If you want to take the road less traveled or pursue a career in a highly specialized niche, global education opens closed doors. 4. Brighter Career Prospects ‍Indian students who have received good foreign education have an edge over others. You wonder why? Recruiters view international experience as an asset. It is reflective of many things like your skills to compete in a global setting and your ability to adapt to diverse cultures. Global education helps you hone your skills and grow exponentially. ‍After completing their degree, outstanding students can bag an international job as well. 5. Diversity They appreciate unique students. Many top-notch B-schools and other universities seek to promote diversity and inclusion. This means that the admissions team deliberately tries to encourage people from different walks of life to join the classroom. Highly reputed universities welcome meritorious international students. Some even try to strike a balance in their gender ratio thereby including talented girls and giving them an equal chance to fly. As the saying goes- "Sometimes the smallest step in the right direction ends up being the biggest step of your life!" Take the first step towards a brighter future. And, live the life of your dreams! FAQs Why is global learning important for students?   International exposure gained while studying at a foreign university and the experience of living in a new country can be life-changing! The combined power of both results in gaining practical knowledge that can help you immensely in life.  What is the value of global learning?   ‍Indian students who have received good foreign education have the edge over others. You wonder why? Recruiters view the international experience as an asset. It is reflective of many things like your skills to compete in a global setting and your ability to adapt to diverse cultures. International education helps you hone your skills and grow exponentially.  Why foreign education is better than Indian education?   They appreciate unique students. Many top-notch B-schools and other universities seek to promote diversity and inclusion. This means that the admissions team deliberately encourages people from different walks of life to join the classroom. Highly reputed universities welcome deserving international students.    Why do Indians prefer foreign education?   Indian students prefer foreign education because of many factors. Studying at an international university will give students great exposure in terms of meeting people from different cultures and countries. It will also create excellent employment opportunities abroad. Having studied at a foreign university will add value to a student’s resume.   Conclusion These are some of the major reasons why global education molds an individual for the better. In reality, there are many more points that one can consider. Whether it is the quality of education- or the experiences one attains, education abroad is a stepping stone toward untapped opportunities. We know many of us are now thinking, "What about the funds required to study abroad?". Well, saving up for higher education is not as hard as you think.
5 reasons why SIP is the best investment choice?

5 reasons why SIP is the best investment choice?

A systematic investment plan or SIP is the best plan that helps you invest in mutual funds on a regular basis.  You can choose to invest weekly, monthly or even quarterly – the most popular choice being monthly. There are multiple reasons why SIPs are the best way to grow your money especially when you have a goal to plan – e.g. your child’s education. SIPs can be bought easily and you can start with a very low amount - Rs. 500 per month. In this blog, we will talk about the ‘Big 5 advantages’ that SIPs offer to you as a parent. But before that, let's understand what a SIP is What is SIP? A SIP or systematic investment plan is an investment mode through which an investor can create a regular mechanism of investment for themselves. Let's take the example of investor X. Investor X wishes to invest Rs. 10,000 every month in a mutual fund. In this case, investor X can create a SIP for a fund they want to invest in and the money will be deducted every month automatically (the deduction can be weekly, monthly, or even quarterly, depending on the investor's choice). Think of it as a recurring deposit, with better returns. Now that we know what a SIP is, let's get to know why investing via SIP is the best choice you can make to enlarge your corpus. CALCULATE MONTHLY SIP 5 Reasons SIP is the best These are the 5 main reasons why you should invest via a systematic investment plan to reach your financial goals 1. Suitable for Long-Term Investment Any financial advisor will tell you that if you want to invest long-term, SIP is the way to go. The reason is simple, regular investing and automatic deductions keep investors motivated to stay invested and reach their investment goals quicker. During the 2008 financial recession, many people withdrew money from mutual funds. However, the ones that remained invested via SIP, attained a huge profit once the markets rose. Long-term investing makes sure that even if the market is down at the moment, once the markets rise, the investor will make profits. 2. Goal-planning ‍SIPs are good tools to plan for a future goal – to buy a 4-wheeler or to pay for college tuition fees maybe 10-15 years from now. When you determine the amount required to achieve your goal, you will know how much you should invest and how long it will take to reach your goal. This will help in planning effectively. Having financial goals is very important to creating a financially secure future. One must have a defined idea about what financial goal one wants to reach by the age of 30, 40, 50, and so on. 3. Effect of Compounding Compounding is one of the biggest advantages of a SIP. Over time your investments grow because you start earning returns not on your principal amount, but on the interest that keeps getting added to it. Let's take an example. Suppose you invest Rs.1,000 in a mutual fund that gives you a yearly return of 10% p.a. Your amount becomes 1,100. at the end of the first year. At the end of the second year, the rate of return is 11%, this time the returns will be calculated on Rs. 1,100 and not the principal amount, which is, Rs. 1,000. ‍This ensures the growth of your corpus and is one of the reasons why experts advise you to not withdraw your investments when the market is down. 4. Curated by Experts With the increasing number of fund types like equity, debt, mixed, gold-based, etc. there is a wide variety to choose from based on your risk appetite and preferred investment duration. This has led to customized offerings based on individual needs, supervised by experts in the SIP domain. All you need is to specify your goal and timeline and you are provided with the best possible funds that can meet your future goals. ‍SIPs have become popular over the past few years, because of the ease of investing and the flexibility provided in terms of the amount of money that can be invested. You can stay invested as long as you want, although average returns have been higher when invested in the long term. Research also shows that the returns offered by SIPs are more than recurring deposits in banks, in the long term. 5. Automates Your Investment Experience SIPs automate your investment experience, which makes you a regular investor. It is easy and convenient and because of the online surge, today, it is super easy to invest via SIP. If you choose the lump sum method, you will have to manually invest an amount and there may be times when you can miss an installment. ‍With automated installments and a streamlined process, investing via SIP has now become an extremely popular method, to reach long-term goals like saving up for your child's education. FAQs Why is SIP investment good? By investing through SIPs, you will do away with the burden of timing the market as you could then avail the benefit of Rupee Cost Averaging. By investing through SIP, you will tend to invest in the up and down markets. This helps you shy away from the volatility of the market. Additionally, you will benefit from the power of compounding, which fundamentally generates returns not only on capital but also on returns. Is SIP good for students? Investing in SIP can be a huge benefit for students. It cultivates a healthy investment habit, and they can invest a small amount to start their journey. SIP is best for beginners and a comparatively safe investment vehicle. What are the features of SIP? A SIP offers the following features: It is best for long-term investment, brings financial discipline, allows small investment amounts, benefits from the power of compounding, and is a comparatively safer investment tool. Why do people prefer SIP? A systematic investment plan helps bring discipline to an individual’s investment habits. A SIP will automatically deduct a pre-decided amount periodically. Investors also do not need to worry about timing the market while investing via SIP. It is one of the best investment vehicles for beginners. Consult an expert advisor to get the right plan TALK TO AN EXPERT
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