Investment tips for child education

Investment tips for higher education in India

Parents should be aware of investment tips for higher education in India so that they can plan, invest and save the required amount accordingly. 

Education inflation is high at 10% – 12% a year and is considered one of the biggest outflows for an Indian family.

Lifestyle inflation is also high and greatly impacts the decision of a parent to send their child to the best available educational institution.

It is at such times that parents need saving tips and investment tips to plan for their child’s higher education expenses and lessen the future financial burden.

investment tips for education

Important investment tips for meeting higher education expenses

Step 1: Get an estimate of the education costs

One of the first investment tips for higher education in India is to get an approximate estimate of the educational expenses so that it becomes possible to make financial plans accordingly.

The education costs vary from one person to another, and various other factors like the type of course selected by the child, admission in government or private institutions, and admission in India or abroad.

A comprehensive assessment and a realistic estimate of the financial needs will help to create a proper financial plan for a healthy future. 

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Step 2: Prepare for any unexpected expenses

Consider unexpected expenses besides the education expenses to meet the unforeseen needs of the child.

Pocket money, accommodation costs, travel expenses, food expenses, additional tuition, and reference books are some of the expenses that parents should be prepared for.

There could be occasions when parents might need to help their children financially, and it is better to be prepared for such unforeseen circumstances from the beginning. 

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Step 3: Identify your time frame

Determine the number of years you have in hand before you have to spend on your child’s higher education.

If you are an early starter, then it is well and good as you will have several years for both short-term and long-term investment plans, but even if you have realized a bit later, then there is no need for concern because there are several investment options just for these types of investors.  

Establishing a time horizon and calculating the years you have in hand makes it easier to make investment plans for your child’s higher education. 

Step 4: Look at savings options

Look at the savings options available in the market and choose the best available option based on time horizon, future goals, and risk tolerance.

Child insurance plans and child education plans offered by insurance companies are also good options if you are looking for safe havens.

In India, government saving schemes like Sukanya Samriddhi Yohana (for girls) are considered good for conservative investors as it offers tax benefits up to INR 1.5 Lakhs under Section 80C of the Income Tax Act. 

Smart savings is the need of the hour, and parents have the option of choosing SIP or recurring deposits for easy and hassle-free ways to save for future needs. 

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Step 5: Identify the investment options

Depending upon the target corpus and the rough estimate of the required returns you wish to generate, identify the investment options available to you.

The ones considered suitable for a child’s higher education fund are Gold ETFs, term deposits, savings schemes, solution-oriented schemes, and mutual funds. 

Investors can choose from equity, debt, and hybrid mutual fund schemes as they are high-return schemes if invested for long-term periods. 

Opt for smart investments to secure your money for higher education in India because well-planned asset allocation and regular investments increase the returns at a greater pace. 

Investment tip for child education

Step 6: Take the help of a financial advisor

Take the help of a financial advisor to save and invest sensibly. The financial advisors on the Edufund App are some of the best in the field if you are interested in creating a safe and secure personalized financial plan.

The various tools at their disposal like the college cost calculator are a tremendous help in identifying future costs and making investment plans based on personal requirements. 

Step 7: Start now

Do not delay, as the more time you waste, the less time you have to create an appropriate education fund and accumulate the necessary amount. 

Create a financial strategy now, as planning for a child’s future is more important than any other task.

Consult an expert advisor to get the right plan
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