Parenting is difficult. There are too many things going on at once. Without a doubt, you devote a lot of time to caring about the safety, academic success, and social skills of your children.
To help them achieve great things, you need to start setting money aside for your child’s education as soon as possible.
But in order to save effectively, you need a plan and a cautious estimate of future costs. The following formula can be used to determine how much money you should set away for your child’s education.
How much do you need for your child’s higher education?
Let’s look at the price of several well-known courses in India at prestigious institutions and estimate their future cost 15 years from now, assuming inflation at 10% p.a., to determine the amount of the Investment Corpus necessary.
How to invest in child investment plans?
- If you want to be completely prepared for any circumstance, you should invest time and effort into your child’s future. When deciding when to begin investing, the following factors should be taken into consideration.
- The length of time you intend to continue making the commitment is one of the most crucial factors to take into account when planning future investments, therefore you must decide on the time frame for your investment. The advantages are frequently greater as the time horizon gets longer.
- The second factor to be taken into account is the typical expense of your child’s future education. Although this varies by school, costs for postgraduate study might occasionally be more than those for graduation. Consider whether you want your child to have a local or a global education as well. You may also take into account your child’s graduation from high school in your own country and their following post-graduation in a different country.
- You must first assess your existing condition before formulating future goals. Consider all of your options carefully before making a decision. If you’re investing a portion of your money in a child plan, you should be fully aware of its current worth. Knowing the current worth of an investment may help you avoid overspending on other financial goals, such as retirement. Please don’t utilize the Child plan for other low-priority expenses like home improvements.
- It’s a good idea to always be ready for the unexpected. Other expenses, such as rent and pocket money, might be included. In addition to school and tuition fees, there are a number of other considerations after your child reaches high school. Even if these amounts initially seem small, they could wind up costing you more over time. It is much more crucial if your child intends to pursue graduate or postgraduate education abroad.
Different investment options for your child
It’s possible that fixed deposits and other conventional products won’t be sufficient to pay for your child’s education expenses.
It is important to consider other products like shares, balanced funds, and equity funds. Depending on your time range, you can choose one of the following investing strategies:
- If your child will want the cash within five years, debt mutual funds are the best choice. Such funds have the ability to produce returns that are higher than the rate of inflation while also supplying liquidity.
- For long-term objectives, you can combine several financial instruments. Gold, equities, and debt are all investment options available to you. Although being exposed to the stock market might be risky, buying stocks allows investors the possibility to make more money over time.
- One of the best investment alternatives for supporting a child’s education is the PPF. You must start this early and invest continuously in order to build up a sizeable capital. A variety of kid-focused services are offered by several insurance companies. You may decide to put more responsible rules into place when your child needs the money to pursue further education.
Investment strategy for children’s investment plan
List specific goals upfront, such as the child’s preferred education and related costs. After paying all of your regular costs, you’ll be able to estimate how much you can afford and how much you’ll need to set aside each month.
However, you must remember that loans can also be utilized to fund your education. As a result, you do not have to sacrifice other expenditures like healthcare and retirement to save for your child’s education.
As the financial goal draws near, reduce your stock exposure to lessen the likelihood of adverse market movements.
Children’s investment plans can assist you in preparing financially for rising education costs, unexpected illnesses, and unfortunate circumstances.
As soon as you can, you should start making plans for your child’s future. By doing this, the associated risks are dispersed and your assets have more time to grow.
