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IDCW in mutual fund means Income Distribution cum Capital Withdrawal. It is a dividend option in the market of mutual funds, and one can term it IDCW Mutual Fund.  The change in the name introduced by (the Securities and Exchange Board of India) SEBI became operational in April 2021. Irrespective of the name change, the role of the dividends is the same. As per SEBI regulations, the investors must know that they can use and distribute the income capital as dividends.  Why did SEBI change the dividend name to IDCW?  The term means the distribution of income of a mutual fund scheme. It includes dividends paid by stocks and capital gains made by selling stocks from the scheme portfolio. The name change happened to highlight that the income is coming out of the depositor’s income value, which means the withdrawal of capital.  The term IDCW accurately represents mutual fund dividends and will remove any misunderstanding about mutual fund dividends for the investors as per SEBI.   The highlights of IDCW in mutual funds   The IDCW is mainly selected by investors who want to access a periodic inflow of funds. Note that the IDCW happens at the discretion of the fund manager. There is no specific assurance that it will be declared at periodic intervals.  Investing in an IDCW mutual fund is a great alternative to conventional investment instruments like fixed deposits or savings schemes. Senior citizens and investors who want to access low-risk returns can always consider IDCW mutual funds to brighten their investment portfolios.   Things to consider about IDCW in mutual fund There are many misconceptions floating around this field. Here are some facts that would help you break out of those misconceptions and plan better.   Mutual fund scheme dividends may include the ones received from underlying stocks in the portfolio and profits books by selling those stocks.  The dividends are not an extra income over the redemption profits you’ve made. The dividends, instead, are capital appreciation, which is ultimately paid from your capital. Therefore, the dividend scheme’s Net Asset Value (NAV) falls to the extent of dividends paid to you.  In the case of the growth option, the profits are reflected in the NAV and reinvested in the scheme.  At the discretion of the AMC or fund manager, a portion of the profit gets distributed to the investors in IDCW. However, it must be noted that this is not mandatory for an AMC under the dividend option. Tax benefits associated with IDCW in mutual funds   If you are a short-term investor, opting for IDCW in mutual funds is a viable option. That’s why an IDCW in a mutual fund is more appealing to conservative investors. However one cannot deny the importance of the tax benefits of IDCW in mutual funds.   Since the payout of IDCW in mutual funds is regular, whatever payout you receive is included in the income of the investor. And as IDCW offers an investor the promise of regular cash flow, you can always opt for such a mutual funds scheme. Note that the payout frequency of the IDCW is solely dependent on the fund manager.   IDCW pays out from the surplus investment accumulated. Income received by the investor as IDCW is added to the gross taxable income. Moreover, it is taxed based on the income tax slab rate of the investor.  Being a dividend distribution plan, dividends in IDCW exude practicality to the investors. Usually, retired investors want regular income from their portfolios. In that case, opting for IDCW in mutual funds is an excellent idea. Here are some noteworthy points of IDCW funds you should be aware of.   Based on SEBI, the dividends can only be paid from the profits earned by the respective mutual fund.   The payout rates of dividends may vary based on the payout cycle   Dividends paid on both debt and equity mutual funds can be taxed as per the investor’s tax slab.   Investment experts recommend the IDCW option when the market trajectory is moving upwards. During this time, the net asset values of funds rose consistently. Moreover, there is a greater likelihood of a fund declaring great dividends.   Where should investors invest? IDCW or Growth  Considering the in-growth option, the profits made by the scheme remain in the scheme investment. For long-term investment, the investor will profit for a long time. It is also known as compounding and will have a prominent role in wealth creation for investors.   IDCW in a mutual fund is something where the profits will improve the scheme, and the investor will get the best distribution with full or partial discretion of the fund manager with AMC. In this option, you will lose the compounding advantages the investors receive periodically. If the investor wishes to have a daily cash flow of the investment, then IDCW will be your best option.   Who should opt for the IDCW in mutual funds? IDCW in mutual funds is best suited for -  Investors looking for a regular income through their investments. Investors with low-risk tolerance levels.  Those looking for dividends during the bare market phase. Conclusion  Your choice of investment depends entirely on your financial goals. Moreover, you should also consider your investment horizon and tax situation to choose the best mutual fund. To be precise, IDCW mutual funds are suitable for those who want to have access to periodic payouts. Investing in mutual funds is a viable way to accumulate money for bigger purposes in life. If you want an investment portfolio with minimum risks, opting for IDCW is a better alternative.  FAQs Is IDCW income subject to tax? Yes, the IDCW income is added to your taxable income. It is subject to normal tax-slab rates. And if the dividend exceeds INR 5,000, there's also TDS on IDCW. What does IDCW stand for? IDCW stands for 'Income Distribution Cum Capital Withdrawal’. Can we change from IDCW to growth? Yes, you can. But it must be noted that depending on how long you had invested, the switch will attract capital gains and exit load.

In the previous article, we discussed 5 degrees for your child that can cost up to 1 crore. In this article, we will discuss the best way to save for any kind of education expense Saving and investing money is simpler when there is a goal in mind. For parents, their child’s education is the ultimate goal. Given the skyrocketing cost of education in India, it is one of the biggest financial outlays that families take into account.   This is because education is not just about tuition fees; it includes a host of expenses like a laptop, phone, course fees, etc. To make sure you can provide for all your child’s needs, let’s find out which is the best way to save for any kind of education expense.   Why is education becoming expensive?  The education inflation rate measures how rapidly educational expenditures have increased over time. Education inflation in India is presently between 10 and 12 percent, which is more than twice as high as inflation in the economy.  Most parents frequently find themselves going to banks to take out school loans, despite the rising inflation and education costs. Given that you have an added duty to make interest payments, this may not always seem sound advice. So, how should a parent save money for their child's education? Let's examine that in the part that follows.  Top ways to save for your child's education expense  Plan ahead and take the necessary actions to save money for your child's future. This will prevent financial constraints from impeding their ability to pursue higher education. So, these are the best ways to save for education expenses:  1. Set a goal amount for higher education  Parents generally don't know how much money to set aside for courses like medicine, engineering, the arts, science, and business. The annual costs for these courses range from Rs. 2.5 lakhs to Rs. 15 lakhs. When you have time on your side, you can save for this desired amount with a regular SIP and the power of compounding.  Once you've chosen the SIP amount, use the step-up function to raise it as needed with your bonus or extra cash flow. As your salary rises, you should ideally increase the SIP contribution each year.  2. Time is a big factor  For young parents, the ideal time to start saving is - before your child's birth. This allows you to financially prepare for their future and minimize the risk that comes with investing. By starting early, you would have sufficient money if you were saving consistently for 18 years. If you begin saving later than you intended, you may still be able to catch up by raising the amount you want to set aside each month.   3. Investment plans  The best way to save for any kind of education expense is through investing. Your saved money can be invested in PPF, ULIPS, and SIPs for kids every month. These alternatives allow you to set aside a sum of money every month based on your budget as well as goals.   Systematic Investment Plans (SIP)  Making money work for you is always an excellent idea rather than working for your money. Everyone makes an effort to save money, but you may be savvy and invest your funds to see your money increase. You can invest modest amounts on a regular basis using a Systematic Investment Plan (SIP), which will enable you to realize your goals.    Unit Linked Insurance Plan (ULIP)  Insurance providers provide unit-linked insurance plans that combine insurance protection with an investment strategy for investors. In this situation, a ULIP will be beneficial to you because it combines an investment and insurance plan.  Public Provident Fund (PPF)  There is no minimum age requirement to create an account with Public Provident Fund schemes, which are well-liked long-term investment plans. As a result, you can invest in a PPF for your child as it provides security, an alluring interest rate, and tax-free profits.  4. Look for Scholarships  Scholarship hunting in India is much simpler than you may imagine. With technology, finding scholarships and applying for them is easier. It may be simpler for you to obtain scholarships in India if you are a member of a specific caste or religion or come from a low-income household.  Always inquire about any available scholarships before accepting admission to any institution. These bursaries may be merit-based or available to low-income students. You can apply for merit-based scholarships by taking the exam that evaluates your knowledge and abilities. All they ask for from poor or category students is an income certificate and a category certificate.  5. Withdrawal plan  Even when investing long-term, the investment process is never static. Experts have recommended equity funds for individuals with an investment horizon of more than 12 to 15 years. However, it would help if you started moving money out of stocks and into debt five years before your target. Begin a planned transfer of funds from your equity fund to your short-term debt fund. It highlights the necessity to exercise caution while saving for an urgent need that cannot wait. Remember that your child's admittance to college has a set date.  When it comes to your child's education, having a clear strategy in mind is crucial. This is due to the significant disparity between present and future schooling expenditures. For your child's financial stability, it is crucial to establish a well-defined savings and investment strategy and implement it over the years! 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A bond is a debt instrument that an investor purchases from the issuer and receives interest on it periodically. Financial institutions, companies, banks, non-banking financial companies, and the government provide bonds. Bond is one of the financial instruments that help companies finance themselves; it acts as a loan for these companies that raise money directly from investors.   Bonds are ideal for investors seeking low-risk investments, and they carry lower risk than equities and help diversify the portfolio. https://www.youtube.com/watch?v=iYJzL-H5sds What are some primary differences between bonds and stocks? Bonds Stocks In bonds, you provide an amount to the lender to invest in an organization/ government In a share, you own a portion of the company equity by investing. The person who invests in a bond receives a fixed interest over time from the issuer. An individual dealing in stocks sells the shares once the price rise.    These are a debt. The long-investment bonds are riskier. These investments are long-term and short-term. Long-term offers the potential to the investor. Safer investment option than stocks Profitable investment option than bonds   However, bonds are not entirely free from risks. If the company goes bankrupt, the investors stop receiving interest payments. In many cases, individuals do not get the principal amount as well. It is thus advisable to invest in bonds in India carefully. Analyze the growth and issuer’s creditworthiness. Companies with AAA ratings like HDFC Bank Limited or Infosys are considered the best bond issuer.   How to Invest in Index Funds? Read More What are the 5 types of bonds to invest in India?   Here are the top 5 bond types of investing in India:  Government security bonds   The Government of India issues this debt instrument. These are one of the safest bonds in India, and they do not carry any credit risk and pay interest semi-annually.  Corporate Bonds   Firms provide these bonds to individuals for a fixed period, and the account holder earns consistent interest over time. However, companies use the money to fund their business requirements; hence, these are highly risky.   Zero Coupon Bond  A Zero-Coupon Bond is a pure discount bond. In this, individuals do not receive interest or any benefit until the bond’s maturity.  Convertible Bond  It is a hybrid bond that acts both as equity and bond. However, it does not happen simultaneously, allowing the investor to convert a bond into equity and qualify for shareholder benefits.  RBI Bonds  It is also known as a Floating Rate Savings Bond (RBI). Released in 2020, the government pays interest every six months on the bond, and one has to repay the bond post 7 years of expiry.   https://www.youtube.com/watch?v=_vd24QDztRo Is Investing in a Bond beneficial?   Here are some popular benefits of investing in a bond:   Provides investors with a steady income source  Flexibility to receive interest income or receive both cumulative interest and principal on maturity  Some bonds offer tax benefits on returns and interests  Investors receive benefits from preserving or increasing the investments  Investors share a higher priority claim to assets in comparison to stockholders  7 Tips to Choosing the right bond  Individuals often dwindle between the right bond and a profitable bond. Here is how you must pick the bond:  Define your investment objectives  Analyze your risk-taking abilities  Identify the bond provider rating  Expected yield on the bond  Research the bond’s strengths, weaknesses, and future scope  Read the terms in fine print carefully  Decide whether a long-term investment is ideal for you.   How to invest in bonds in India?  One can invest in bonds through a primary or secondary market. In the primary market, an investor can invest in bonds issued by big companies. In this, the companies provide bonds to build capital. They release IPO (Initial Public Offering) to raise funds for generating capital. When a company raises capital from the market to expand its business or growth, it is termed an IPO.  In contrast, a secondary market exchange refers to organizations like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). Investors buy and sell stocks by operating in any of these organizations independently.  If you need a pre-mature exit, you can view a secondary market.  In the primary market, an individual has to undergo a documentation process to invest in bonds in the DEMAT account.   Purchasing a bond in the primary market is subjected to strict screening. The company offering securities reviews it and creates a prospectus outlining the details of the securities. In opposition, the secondary market offers more flexibility in trading.   Ways to invest:  By Connecting with a Bond Broker  Connecting with an authentic broker is one of the ways to choose and invest in the right bonds. Fees may vary from broker to broker.   Invest through Institutional Investors   In this, investors bids on government securities. The yield on the bond is less than the interest rate one receives. But a higher bid rate makes it profitable.  Purchasing Mutual Funds and ETFs   It is among the best and fastest methods for bond investing. The provider provides the best ETFs (Exchange Traded Funds) on your behalf.   Buying Bonds through RBI retail   If you are seeking government securities to invest in, you can do so through RBI retail. Register for a GILT security account under RBI. An investor needs to update the dashboard post-logging:  An investor must update details like- issue size, date of bidding, price per security, and bid value range  Place the bid by mentioning the investment value and security  Complete the payment  TALK TO AN EXPERT

In the previous article, we discussed, how to plan for your child's bachelor's in Australia. In this article, we will discuss how to plan your child's bachelor's in engineering Raising a child involves both, financial and emotional considerations. Along with retail inflation, education inflation is constantly rising.   Once you've determined the potential cost of Engineering education and which university to enroll in, the next question is how much you'll have to pay each semester.  You may relieve your concerns about your children's academic expenditures by taking a few simple actions like -  Being specific with your goals,   Calculating the cost of a bachelor's in Engineering across universities, and  Choosing an investment option.  Now, let’s explore them in detail.  Why is it necessary to have an early financial plan for education?  Per an ASSOCHAM analysis, the cost of primary education has increased by 150% in the past 10 years. Regarding professional education, the average rise in tuition costs at the top three IIMs has been roughly 242% in the past 5 years. Parenthood in the twenty-first century is not an easy task. Education inflation is constantly increasing by more than 10% each year. Consequently, managing educational fees for children is becoming a huge financial concern for parents.   Therefore, if parents plan and take the appropriate measures slightly earlier in a child's life, covering his or her higher education expenditures will not be a difficult challenge.  How to calculate the future potential engineering course cost?  It is definitely required to calculate the future potential cost of the present Engineering tuition fees.   The compound interest method computes the future rate of the present educational tuition expenses. For example, suppose the present course price for a Bachelor in Engineering degree is Rs 10 lakh and the inflation rate is 10%.   In that case, the prospective cost after 15 years may be calculated as Target so, you can concentrate on savings accordingly. Here’s how you can calculate -  Current Amount * (1 + inflation rate) Tenure = 10,00,000*(1+0.10) ^15 = 55,00, 000 (approximately).   Now that the target amount has been established, it is easy to select the types of financial products that would assist you in building a repository of Rs 55 lakh.  Infographic to show calculations of future potential education costs. Estimate future education costs   Today, diverse educational websites assist in calculating or categorizing the cost of a bachelor's in Engineering degree. Create a record of the current cost of the Bachelor in Engineering degree. At this phase, it is important to pick whether the child will study in their home country or abroad.  As a result, when estimating the Bachelor's in Engineering degree fees, one must also consider the currency component. Only after the present cost is known, determining the probable future cost of the degree on the projected timeline will be easy. This will assist in determining an acceptable savings goal.   Another factor to consider at this stage is inflation. This is because, with education inflation growing at a rate of 10% or higher, inflation is likely to eat into your funds. First-year total course expenses at the world's top engineering colleges. World's Top Engineering Colleges City/ State Course expenses  Massachusetts Institute of Technology  Cambridge, USA  $ 69,000 Stanford University  Stanford, USA  $ 63,000 University of California - Berkeley Campus  Berkeley, USA  $ 48,000 University of Cambridge Cambridge, UK  $ 68,000 National University of Singapore  Singapore $ 30,000 Nanyang Technological University  Singapore $ 33,000 The University of Melbourne  Melbourne, Australia  $ 50,000 University of Toronto  Toronto, Canada  $ 57,000 McGill University Montreal, Canada  $ 32,000 HECTOR School of Engineering and Management, Karlsruhe Institute of Technology Karlsruhe, Germany  $ 20,000   Course expenses at India’s top engineering colleges: India’s Top Engineering Colleges Course expenses  IIT Kanpur  Rs 8.38 lakh IIT Kharagpur Rs 10.46 lakh IIT Roorkee  Rs 8.58 lakh IIT Guwahati  Rs 8.56 lakh IIT Madras  Rs 8.19 lakh IIT Delhi  Rs 8.66 lakh IIT Bombay  Rs 11.51 lakh IIT Indore  Rs 8.75 lakh IIT Varanasi  Rs 10.41 lakh VIT Vellore Rs 7.83 lakh   Plan an early investment option  According to anyone's financial product expertise and risk tolerance, one can choose equities, borrowing, or a combination of products, including a diversified portfolio, which includes both equity and debt elements.  A child's education requires a minimum of 15 years to invest. And, for extensive goals, equities are the ideal asset type to concentrate on. If you started saving early, in about 15 years, the multiplier impact in the power of compounding kicks in; the longer the planning range, the greater the multiplier advantage. To combat excessive inflation, it is critical to employ a multi-asset financial strategy as education expenses have soared.  Education costs have gone up during the previous ten years: How to plan your child's Bachelor in Engineering?  Going by the increase in education costs might be alarming. After all, they are not insignificant quantities. The goal should be to participate in a proper instrument regularly and in the appropriate amount, and then you'll be capable of building this portfolio.  Traditional products, such as fixed deposits, may not be sufficient to cover your child's educational needs. Other products, such as equities funds, stocks, and balanced funds, should be considered. You can pick the investing programs based on your investment horizon and timelines. Before establishing an education fund, you should carefully consider the characteristics, dangers, and terms and conditions.  The number of students enrolled for various disciplines of Bachelors In Engineering is increasing every year. It's becoming a definite need for the parent to start an early investment strategy.  Number of undergraduate engineering students enrolled in India in 2020, by discipline (in 1,000s) Conclusion  Education expenses are rising, and if you don't start saving early, supporting your child's Bachelor's in Engineering education may become difficult. You must begin by outlining specific goals, like the child's desired schooling and the associated fees.   This can assist you in determining how much you can set aside for savings after paying all of your monthly expenses. As the objective financial approach, it is prudent to limit your stock exposure to mitigate the risk of adverse market fluctuations. TALK TO AN EXPERT

Changing courses after admission is fairly common! In fact, US's National Center for Education Statistics shows that 80% of college students end up changing their majors. So, what should you do when your child changes their education dream?  Discussing the matter with your child is a great start. But the first step is helping them understand their new goals and preventing them from panicking. For instance, if your child does not want to pursue an engineering career in India and instead wants to opt for graphic design from a foreign country, then there are a lot of financial parameters you as a parent must consider.  First, switching from engineering in India to graphic designing abroad will increase the cost of education you have anticipated. It increases the educational budget dramatically, forcing you to evaluate the best course of action to help them achieve their dreams. Making the switch easy on your child for the future involves financial and emotional support! How do switch educational courses?  Many students switch their majors and courses after and before joining colleges. This is why there are many colleges that allow you to transfer from a course and college. Every college has its own procedure to help students follow their passion. Once your child has decided to change their subject, they can speak to the student services offers, fill out forms and start the application process for the new course. Transferring to a new course is like applying from the start and involves the same type of effort and motivation. How should parents support their children during the change of course?  Allowing your child to transfer or change their career is not easy but in the long, highly beneficial. Even if they think of re-enrolling their name in a different education course, consider the bigger picture. Here are the things you can do as a parent:  1. Have faith in them  A progressive educational dream enables them to serve on high versions of life. Besides, it lets them think out of the box. At times, a dream makes your child stronger. Thus, encouraging them is the beginning step to helping them accomplish their career goals.  One quick note: Allowing your child to fulfill their educational dream helps them discover hidden talents, thereby exploring more skills. So, if your youngster has rediscovered the ultimate dream career, have faith in them. 2. Show them your support  Spend time with them to figure out their career path. Always retain trust & lend your helping hand whenever possible. For instance, if your child wants to pursue music instead of engineering, ask them why. If you get a valid reason, show your support.   3. Encourage them  Even if they have been admitted to a course recently, what matters the most is their interest. So, you must encourage your youngster to learn about the course they want to pursue Source: pixabay What steps should you take for your child's promising career?  After communicating with your child regarding the shift in education, you must take some crucial steps:  Look for internal transfers where your child can change their course yet stay at that same institution  Help them look for affordable universities that offer the same course if your budget is restricted  Your child may opt for deferring for one or two semesters if they think they need time to process the next move  Consider checking the costs involved with the transfer fees (note that transfer fees might be hefty, and if your child wants to pursue a course from abroad, it becomes more expensive)  One quick note: Early saving can help parents to afford the expense. If you are not ready with early savings, you can always opt for education loans. What is Re-Balancing? Read More Why would your child wish to change their course?  Each parent wants their child to get into a prestigious university. But if your kid has switched to another educational domain, you must not show your disappointment. Each individual has a specific preference, and undermining their area of interest puts them in a burdensome situation.  If your child opts for a different education path, it should not dishearten you. Instead, always try and analyze what made them prepare for another field.   As a parent, understanding why they wish to change their career is your prime responsibility. Endless reasons lead scholars to change their educational paths. The wrong course selection may end their career growth. So, if your child wishes to change their education dream, it might be because:   They cannot see themselves pursuing a career in that area after acquiring admittance  They are wondering where the course will take them to  They want to pursue a different career opportunity  Upon enrolling the name in that particular course, they have discovered an area of their choice  After outlining the reason, you must guide your child in changing their educational path accordingly.  You cannot predict if your child will change their career, but you can save for it! Start a college fund regardless of what your child hopes to study today and enable their tomorrow with healthy savings. TALK TO AN EXPERT

School fees have experienced multiple hikes in the past two decades in India. Did you know that private schools in India raised the price of tuition fees by 10% during the coronavirus pandemic? Shocking, isn’t it?   But the tuition fees aren’t entirely responsible for the increased cost. Just as inflation affects the cost of tuition; it affects the costs of additional school fees that parents have to pay. What are these additional school fees? Let’s find out!  Additional school fees that parents must save for Tuition fees are the basic amount you need to pay for your education. As your child moves to the senior class, this amount tends to increase. Schools usually charge this amount once every three months. Although it is the most significant chunk of the total amount, it still doesn’t equal half of the total amount paid. It can be somewhere around 50% to 60% of the total fees being paid. https://www.youtube.com/watch?v=VJ0F69KTZgs Academic books and school uniforms  When your child goes to school for the first day, they are asked to get certain books by the prescribed authors. Most of the time, schools collaborate with a shop that provides all these requirements. Parents and students tend to buy these necessities from the prescribed store. Similarly, school uniforms can be expensive and can add to the total cost of sending your child to a good school.  Transportation costs  Transportation is the next area where you have to pay a lot. Fuel prices have been rising every single day. In India, most parents prefer sending their children to school on public transport such as vans, buses, etc. According to a survey conducted recently, transportation cost is the third-largest contributor to the overall educational expenses of your child. It can go 12% to 15% of the total fees.  Tips to avoid overspending Read More Infrastructure costs  Every parent wishes to send their child to a school that provides good learning and has a good infrastructure. All the schools’ primary goal is to build new buildings in the first 20 years of their establishment. The infrastructure would include new facilities, science labs, computer labs, games room, auditorium, etc. These infrastructure setups are some of the most vital parts of an educational institution. Schools charge parents maintenance and accessibility fees for these. It is usually taken once every year at the beginning of the session accounting for almost 10% to 12% of the total fees paid in the year’s first half.  Admission fees  When your child is new to a school, you should pay an additional amount in the name of admission fees. This amount accounts for a significant chunk of the total cost. According to a survey, it accounts for the fifth largest head regarding school fees. Furthermore, when your child moves from primary to senior classes, you are supposed to pay the re-admission fees for your child. This amount varies significantly from one school to the other. Usually, it accounts for 8% to 10% of the total fees paid.  Tax Benefits on Child Education Fees Read More Activity and laboratory fees  Schools try to make learning interactive for your child. For this purpose, they conduct various activities which can help your child learn in a better manner. There are certain activity rooms constructed in the building where children go to perform different actions. Also, schools conduct various activities, including school trips, sports days, annual functions, science days, etc. This amount is usually asked at the beginning of a session. Some schools also ask for the required amount right before conducting the activity.   The strategy differs from one school to the other. Laboratories are an integral component of a school. Every school has numerous labs, including computer, physics, chemistry, biology, etc. Students go to these labs to conduct experiments and learn in the process.   These were some of the additional fees that add up to the total fees paid by the parents. We cannot deny that all of these components are extremely important. But simultaneously, it gets heavy on the pocket of the parents who are tight on budget.   You may not be able to stop costs from rising but you can save for this cost. Save today and give your child the future they dream of!  FAQs What are the additional school fees parents need to save for? Additional fees include academic books, school uniforms, transportation costs, infrastructure fees, admission fees, activity, and laboratory fees. How much do academic books and school uniforms contribute to the total fees? Academic books and uniforms add to the total cost of sending a child to school, and their expenses vary depending on the prescribed requirements. What percentage of the total fees does transportation cost contribute to? Transportation costs typically account for 12% to 15% of the overall educational expenses for a child. What are infrastructure costs, and how much do they contribute to the total fees? Infrastructure costs cover maintenance and accessibility fees for school facilities, and they usually make up around 10% to 12% of the total fees.

In the previous article, we discussed AUM in mutual funds in this article, we will discuss what is foreign investment. Financial institutions and individuals wishing to diversify their investment portfolios seek multiple ways to earn outside income. The increasing inclination toward stocks, IPOs, and bonds investments sparked the individual’s interest. They keep up with the latest investment updates.   Apart from this, Foreign Investment is considered a growth catalyst for India. Companies exploring opportunities for business expansion internationally benefit from it the most. Goldman Sachs, J.P Morgan, and Morgan Stanley are some leading international investors.   Some businesses seek opportunities to capitalize on relatively economic labor and production costs. Likewise, Indian companies seek relaxation from a tax perspective internationally.   There is a lot to know & understand about investments. The blog discusses nearly every nut and bolt of foreign investments.   If you are an active or ambitious investor seeking opportunities to invest in foreign stocks, this blog is worth a read. Let’s begin with the first things first.  What does foreign investment imply?   Foreign investment implies an investment of a native business or a company in the assets of an international company. It generally includes long-term physical investments made by an Indian company in a foreign company, listed on the stock exchange.   Foreign investment is of two types: Direct and Indirect. It involves cash flow transactions between countries. If the investor's stake is higher in a company, he shares the right to regulate the company’s decisions. These are long-term physical investments like - bridges, damn, and infrastructure in foreign countries.    For example, if a person or a business holds (a 75%) share in the company, they share the larger portion of the company’s equities available in the market. They can regulate and dominate the company’s decisions.   So, are you now clear about – What is the foreign investment?   Let’s move on to the most asked query under this.  What are the most popular types of overseas investment opportunities?  Foreign investments have two main categories- direct and indirect investments.  Direct Investments   Foreign direct investments are the equipment, plant, or factory an investor purchases in a foreign country.  Indirect Investments   Indirect investments imply purchasing stocks and equities of foreign companies listed in their respective countries.   Direct investments are much in demand than indirect investments owing to the long-term benefit prospect. The value of these tangible assets multiplies more than liquid assets. These boost the country’s economic status over time.  In contrast, indirect investments are short-lived. These are time-sensitive investments that do not share any future scope or value.    Given this, who can legally invest in these assets? Let’s find out.  source: pixabay Who is eligible for foreign investment?   Most individuals are anxiously googling-   “What is foreign investment?”  “How does the foreign investment work?”  There is so much to explore on the topic. But before that, one should be knowledgeable about the eligibility criteria to invest internationally.   If you are considering an overseas investment, check whether you meet the below criteria set by RBI (Reserve Bank of India):  Residents, corporate entities, and partnership companies registered under the Indian Partnership Act of 1932 are eligible for foreign investments.   These individuals can invest in foreign ventures or wholly owned subsidies.   Residents may invest according to Q3 of the law.  How can residents invest in foreign companies or ventures?   Residents can invest in foreign investments without any restrictions or limits. The companies they tend to invest in must have a 10% share in an Indian company listed on a stock exchange in India. It should be listed as of 1st January as the investment year.   How are foreign investments beneficial for the Indian economy?   FDI occurs when an individual or a company holds 10% dominance in a foreign asset or company. If an individual or business owns less than that, IMF deems it as a part of the stock portfolio. It might not grant complete control over the company’s politics but a percentage to investors.   Foreign direct investment grants power and dominance to influence the foreign firm’s operations. Foreign investment can prove beneficial for the existing economy.   1. Funding and expertise   Developing nations require the apt tangent and growth momentum to utilize their potential. Corporations operating in these countries need the expertise, guidance, and funding to expand business operations. Here Foreign investment proves profitable in upscaling a brand and nurturing its prospects.   As per research, “Global FDI collapsed in 2020 and plummeted from $1.5 trillion in 2019 to $859 billion”. It is the lowest ever recorded since 2008.  However, as per recent stats by Hindustan Times, “ The FDI inflow has increased by 23% after COVID blues. March 2020-2022 recorded an inflow of $171.84 billion inflow.”  It stands in steep contrast to $141.10 billion between February 2018-and 2020.  Thus, investments in the country can prove a breakthrough in economic terms.   2. Increases employment opportunities    What follows with growth is personal development.   India is facing the harshest blow post-COVID-19, she needs a comeback. With businesses shutting down, the country is losing momentum. FDI can breathe in the needed inspiration.   However, India can prosper independently, but a mere international push can open up a wide growth arena for the country and its people. FDI help create employment opportunities, especially in the manufacturing industry. It not only boosts the economy but makes its people independent.  3. Access to leading-edge tools and technology  To compete in the international market and gain an edge, India must optimize its economic structure. Foreign investment is one of the panaceas that share the potential to rationalize it.    It can promote access to advanced tools and technology that help streamline a business process and economic growth.  These are some popular growth opportunities that foreign investment can provide.  Which country topped the FDI index of India in 2022?   Singapore topped the FDI index with a share of 27%. It is followed by big giants US (18%) and Mauritius (16%) respectively.   What does FDI cover for India in the future?   As per Business Standard, “India recorded the highest ever annual FDI of $83.57 billion in the year 2021-22.” It reveals a progressive India in the coming years.   Furthermore, the “FDI to GDP ratio may rise by 2025.” The recent shift in FDI structure and the “Atmanirbhar Bharat” policy provoked the estimation.   Conclusion  It is evident from the listed facts and figures that foreign investment can ensure a profitable shift in the Indian economy.   If you are still confused regarding “What is the foreign investment?”, detailed research and analysis will help you gauge the importance of FDI from the Indian perspective. Consult an expert advisor to get the right plan for you   TALK TO AN EXPERT

Moving to America, living in the Big Apple, and making money in US dollars – is an aspiration of millions of Indians. While moving to America may not be possible for everyone, one thing is definite, you can make money in US dollars from anywhere in the world with just one tap! How? By investing in US stock markets, you can invest in dollars and watch your money grow greener.   The US stock exchange is the world’s largest investment market in the world. It offers tremendous opportunities for growth and allows investors from across the globe to invest in selected securities, stocks, and ETFs across indices.   Indian investors who hold Indian stocks have the option to own some of the world's most extensive blue-chip reserves located in India.  Invest in US Stocks Let's look at some reasons you should invest in the US stock market while building a portfolio.  Geographic diversity  All of the key US stock exchanges have companies listed worldwide, making it a potential investment destination. Investing in the US share market diversifies your financial portfolio while investing in worldwide companies.   A national emergency could lower the rating. The effect, however, would be negligible. On the other hand, Indian firms dominate Indian indexes. Even minor unrest in the nation might send the indexes crashing.   The American stock market is varied and robust in times of adversity. However, in India, this is not the case.  Asset-based diversification, industry-based diversification, time-based diversification, and geography-based diversification are the four core tenets of diversification.   Whereas most investors are good at asset, industry, and temporal diversity, most investors' portfolios lack geographic diversification. Your holdings are not confined to a single location when you use a geography-based diversification approach.  Benefits of Investing in the US Stock Market Read More Participating in the largest stock market  The equity market in the United States is the largest in the world. The US financial markets accounted for 54.5 percent of worldwide stock market value as of December 2021.   As of March 2022, the New York Stock Exchange (NYSE), the world's largest stock exchange, had a market capitalization of about $27.69 trillion.  US Stock Market Timing Read More Being a part of global companies  Some of the brands we use daily, such as Facebook (now Meta), Apple, Google, Amazon, and others, are publicly traded in the United States.   In addition to these global giants, you can also buy shares in new firms in industries that are bound to expand across the globe, such as AI technologies, cloud-based services, and electric cars.   Investing in firms or ETFs registered on the US securities exchange can provide exposure to these areas.  Source: pixabay Better potential results  The US equity market has a higher return than the Indian share market. The NYSE lists companies from all over the world and those from the United States.   Investments in US stocks can help you get a good return on your money because global corporations are there, and the return you receive will be high due to various factors.  Explore US Market Access to fractional investing  Unlike India, you can hold US stocks in fractions. After all, buying a single Google share is out of range for most individuals.   You can own a part of the company for as little as Rs 1,000 or even less. You can acquire more or build a portfolio of US shares over time if you only have a certain amount of money.  Currency gains  According to historical data, the Indian Rupee has been losing value against the US dollar, and there is a probability that this trend may continue.   The rupee-to-dollar exchange rate influences the profit you make from foreign equities. Any weakening of the rupee helps to boost profits if dollar-denominated investments such as US shares appreciate.   Even if global markets are disappointed or remain steady, you benefit if the rupee falls against the dollar.  Apart from these worldly benefits, one also has a few psychological benefits associated with such investments. Such investments help fulfill your aspirations and goals conveniently.   We all have ambitions to study, travel, or even live overseas worldwide. When you invest in the stock markets of the United States, you are trading in US dollars, so you may effortlessly save for all of these worldwide goals without having to worry about currency risk.  Investing in US equities from India is easy, straightforward, and rapid. You can purchase Nasdaq stocks or trade thousands of ETFs and stocks on other top indexes such as the S&P 500, Nasdaq 100, Dow 30 or Russell 2000 Index from India.  The US stock market contains a diverse range of top worldwide corporations, from technology to pharmaceuticals and from large-cap to small-cap equities.   The FAANG stocks – Facebook, Apple, Amazon, Netflix, and Google – are ready to be bought now that the US share market is showing weakness. It's time to start accumulating them to build long-term riches! FAQs Why should I invest in the US stock market as an Indian investor? Investing in the US stock market offers geographic diversity, access to global companies, better potential results, fractional investing, and currency gains, providing opportunities for growth and diversification. What are the advantages of geographic diversification in the US stock market? Geographic diversification allows you to invest in companies listed worldwide, reducing risk by not being confined to a single location and providing exposure to a variety of markets and economies. How can investing in the US stock market give me exposure to global companies? Many global giants, such as Facebook (now Meta), Apple, Google, and Amazon, are publicly traded in the US. Additionally, investing in US securities exchanges allows access to emerging industries like AI technologies, cloud-based services, and electric cars.

Previously we discussed 5 things to consider before sending your child abroad for education. In this article, we will discuss how to plan your child's bachelors in Australia. Are you planning your child's bachelor's in Australia? Why wouldn’t you? Australia's excellent educational system, laid-back nature, with high living standards make it a perfect choice for parents and students alike. https://www.youtube.com/watch?v=MwQWKYxxJ8o How prospective is Australia in pursuing a bachelor's education?  The unique opportunities of studying bachelor's in Australia extend beyond the classroom program. It is about getting an excellent culture for study and work. There are great placement opportunities with average to good salary packages. There is also the flexibility of part or full-time study programs.   Given the job opportunities and thriving conditions in sectors like finance, tourism, education, agriculture, and construction in Australia, students have ample options to choose from for jobs.    The post-pandemic reforms introduced by the Australian government like extending student work hours, offering students to return to Australia to find work on their work permits as well as increasing the tenure of post-work visa has made Australia can an excellent place to not only study but to build a career.   https://www.youtube.com/watch?v=Ew2MC3RCo68 Let's look at some prominent reasons to choose Australia for undergraduate studies. University offers academic excellence   Australia has some of the best universities, offering top education systems for international students. The quality of education and commitment of faculty is evident in the international ranking that the universities get.     Internships and placements are advantageous   Most study programs in Australia offer internships or placement opportunities. With unique options, students get a chance to have better experiences and discover advanced jobs or career opportunities. It gives way to better understanding skills and improves communication among aspirants.   The study program with scop for an internship is beneficial as it gives students a work experience with practical experience. From this, students get an understanding of work-life culture. They can learn how to implement their study of course program into the practical field. Therefore, internships are golden scopes for students to acquire knowledge, apply it in-field, and eventually hone their skills.   That being said, choosing a bachelor's program that offers either an internship or good placement opportunities for students is better. Discover a welcoming university life   Australia is the right place to provide adequate support to international students. Be it about getting a job, finding accommodation, networking, and others, it has plenty of options.   Therefore, Australia has a welcoming environment for international students, helping them adjust to the new education system. In addition, it helps students organize and get accommodation easily.   The universities focus on a problem-based learning approach, helping students become independent learners. The class patterns are flexible, and the study approach makes it easy for the students to cope with the educational system.   source: pixabay What is the cost of living in Australia?  Before packing your child’s bags, make sure you are aware of the study program packages in Australia and the cost of living. Top-class education isn’t cheap and so check its scholarship options available for international students. There are eligibility criteria to avail of scholarships, and one should check them before applying.   1. Tuition fees   The Australian universities’ tuition fees are among the highest in the world. For a bachelor’s degree, it is 20000 and 45000 AUD yearly. The private ones are more costly and may not offer scholarship benefits.   2. Accommodation fees   The on-campus accommodation is affordable, which starts at around 440 AUD monthly than any other accommodation in Australia. The rent of a place may take around 1300 AUD to 1750 AUD. Even the monthly grocery costs are around 300 to 600 AUD. So, the overall living costs are approximately 1200 AUD monthly in some cities, which can rise to 1500 AUD in other cities.   Plan your expenses, and make sure you have some money left for monthly savings. When planning to send your child for a bachelor’s in Australia, it is important to have this in mind.   The Hidden Cost of Education in Australia Read More How do financially plan for your child’s bachelor's?  Whether you pick Australia or any other country for your child’s bachelor's, you need to start saving. The average cost of education is rising at an unprecedented rate and the only way to meet this cost is to start saving aggressively!   Today, the yearly expense to support your child in Australia can be anywhere between Rs. 10-20 lakhs. This cost greatly varies based on your child’s needs and lifestyle, however, it’s important to remember that your child may have to pay double this amount when it’s their time to study in the country due to education inflation.   So, calculate in advance how much you need to send your child to Australia, create a financial plan with the help of an expert, and start saving via SIPs to ensure you have the funds you need when it’s time to send your child to the land of opportunity!  FAQs How do I start planning my child's bachelor's degree in Australia? Start by researching universities and courses in Australia. Consider factors such as reputation, rankings, course offerings, and tuition fees. Look into admission requirements, including English language proficiency tests. Plan for accommodation, student visas, and finances. Seek guidance from education consultants or online resources. What are the steps to apply to universities in Australia? Check application deadlines and gather required documents, including academic transcripts, English language test scores, and recommendation letters. Submit online applications through the university's admission portal. Pay the application fees and monitor communication from the university regarding the application status and any additional requirements. How can I support my child's transition to studying in Australia? Help your child with pre-departure preparations, such as obtaining a student visa, booking flights, and organizing travel insurance. Familiarise them with Australian culture, lifestyle, and local customs. Connect with university orientation programs and student support services. Encourage open communication and emotional support throughout their journey. TALK TO AN EXPERT

Individuals' interest in index funds is increasing due to an overarching desire to compound and capitalize on wealth.   Amid constant volatility in markets, it has become imperative to explore investment ways that dilute any potential risks of losing on high-return investments.  This is why people are incredibly inclined toward building different buckets instead of leaving all eggs in a single basket. In investment terms, diversifying the portfolio by investing in different equities and sectors is one of the best techniques to evade market risks.  It is where investment in index funds emerges as a market dominator in the current Indian scenario.   What are Index funds?  Index funds work differently from active funds. These funds are appropriate for those wishing to evade risk and diversify investment. One can only manage the investments passively.   It implies that a person cannot invest directly in an index but through mutual funds called “Index Funds.” A manager or investor invests in the same equities as present in the index.  The market index leverages a company’s market capitalization to determine the total weightage of securities in the index. The total value of the company shares is equivalent to the number of outstanding shares.  As per Economic Times, “Since February 2020, the number of index funds has surged 144% and the assets managed by these investors grew by 590%”.   As a part of the ongoing research by the Economic Times, “The number of index funds grew from 32 in February to 78 in July 2020”. ETF draws the investor’s interest during this phase.  https://www.youtube.com/shorts/FlrxZAJjemE Who should invest in index funds?   Investments in index funds are profitable only for a selective bunch. If you meet the below investment behavior, index funds are just right for you:  You wish to evade any risks associated with investment/slash investment risks  You want to diversify your portfolio by starting and investing a low amount  You prefer to invest only a fixed amount in a particular index fund  You would like to invest in multiple investment forms – like real estate, gold, equities  Early savings help in child's future Read More How to invest in index funds?   Index Funds are a type of investment vehicle like mutual funds and exchange-traded funds that help achieve results on specific indexes. Here is how you can invest in index funds:   1. Figure out your investment goals  Before investing, it is important to ensure clarity over the present and future financial goals.   When do you want to retire?   How long till you achieve your financial goals?   What do your risk appetite and budget look like?   2. Pick one index to invest in  Index Funds, apart from helping diversify the investment, track broad sectors like large capitals and emerging markets. Different index types serve different purposes.   While deciding on the index to invest in, analyze the below parameter:   Which industry do you share knowledge in and is growing lately?   How much is your risk tolerance?   What are the company size and market capitalization?  What index fund would you find comfortable investing in (stocks, bonds, or commodities)?   Highlighting and improvising on these parameters will help you choose the right index fund. It will help build a growth foundation.   3. Decide the index funds to invest in  Each fund and company has different marketing capital, growth potential, and shares available to invest in. The best research method is by researching Asset Under Management (AUM). It is the total investment value that an expert manages on the client's behalf. Analyze the AUM index of a given fund and the ease of trading.  Here are some best index funds for 2022:  IDBI Nifty Junior Index Fund Growth  ICICI Prudential Nifty 50 Index Plan Direct-Growth  UTI Nifty Next 50 Index Fund Direct-Growth  As per ClearTax - “IDBI Nifty Junior Index Fund Direct Plan-Growth, is one of the most profitable index funds in India."  Index funds companies can vary in their short and long-term costs.  4. Sign up for a brokerage account   After signing up for a brokerage account, utilize the above points to figure out the best index funds to invest in. Here, an investment expert may help you meet the purpose according to your financial goals.   In the initial stage, having expert backing works well. An expert can help you develop an investment strategy that aligns with personalized financial goals. It makes investment in index funds a smooth journey.   5. Manage investments cautiously   It is important to manage and check potential opportunities for growth. Start with small investments and set up automatic monthly deductions. Monitor the fluctuations and returns throughout the year. Modify the strategy if the market demands.  While Index funds are a great way to start investing, it's good to remember no market is without risks. FAQs What are the benefits of investing in index funds in India? Index funds offer benefits such as broad market exposure, diversification, low costs, and simplicity. They track a specific index, like the Nifty 50 or BSE Sensex, providing exposure to multiple stocks. Their passive nature keeps costs lower compared to actively managed funds. Index funds are easy to understand and suitable for long-term investors seeking market returns. How can I choose the right index fund in India? Consider factors like the index being tracked, fund performance, expense ratio, and fund house reputation. Look for funds with a low tracking error and a consistent track record. Evaluate the fund's size and liquidity. Read the scheme's offer documents, prospectus, and seek expert opinions to make an informed decision. What are the risks associated with investing in index funds in India? Index funds are subject to market risks and fluctuations. Their returns are influenced by the performance of the underlying index. If the index experiences a downturn, the fund's value will also decline. Additionally, tracking errors may occur, resulting in deviations from the index's performance. It's important to understand these risks and have a long-term investment horizon when investing in index funds. Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT

44% of Indian parents wish to send their kids abroad for further studies. This is a life-changing decision that should not be taken lightly. Here are five things to consider before sending your child abroad. 1. Finding a right course  Numerous universities offer a wide range of courses that have a high demand in the professional world. It is a daunting task to find the perfect course for your child. You must understand what your child wants to pursue in such a situation.   Once you are clear with your child’s wish, start searching for universities that are known for that program. Make a list of it, and understand the ROI and the level of exposure. There are specific points that you must keep in mind while choosing the course, which is:  Subject covered in the particular course  Campus Location of the Institute  Career Prospects of the Course  Demand in the Industry  Try to ensure that these points align to improve your child's career growth and environment.   2. Comparing and choosing the right university  Once you have a list of universities, you should shortlist the college that fits perfectly with your child’s interest and growth. For proper analysis, you must keep a tab on your budget and the university’s location. Furthermore, analyze the faculty qualifications, student-teacher ratio, number of students in a class, and so on.  Although it may seem to be a challenging task, make sure you adhere to all of them. You can always reach out to experts who can guide you in your quest!   Source: pixabay 3. Selecting the right country  The selection of the correct country is made based on various factors. It is usually challenging to list a particular country’s pros and cons. Some of the significant factors that you need to keep in mind while selecting the country are:  Types of Universities  Lifestyle and Culture  City of Town of the Country  Job Opportunities  Safety  Budget  Quite often, parents ignore the cost aspect when deciding which country is the best place for their child. This is a huge foresight because it can throw you off budget and increase your spending by lakhs!   4. Know all deadlines and costs of applying   The application process can be daunting for first-timers. Every university has its own criteria for admissions. Ideally, the application process takes six to eight months to complete and requires the candidate to pay for application fees, exam fees, student stay deposits as well as fulfill visa requirements, etc. These require thorough planning and spending so it’s always good to prepare for every expense in advance to help your child.   To understand the different costs involved in the application process, you can always reach out to professionals and get details of the actual breakup of the total amount required. This can help you can manage your funds.  Source: Pixabay 5. Safety of your child  The safety of your child holds paramount importance. Ukraine - Russian war and its spread of COVID-19 have severely impacted the way we think of medical emergencies. As a parent, you have the right to ensure your child lives in a safe environment. So do your due research on the country, your child’s accommodation facilities, healthcare facilities, town or city area, and the cost required for an average lifestyle, and buy health insurance to secure your child’s needs.    Reputed institutions have strict guidelines and protocols for the safety of their students. Another primary concern revolves around robbery and theft. You must train your children about safety measures and digital payments. Always invest some amount of money in travel insurance. Countries have different levels of crime rates. Read the statistics given online and choose wisely.   From selecting the right course to safety, parents need to consider all these factors before sending their child to a foreign land. Not considering these things can increase your financial as well as mental stress so try to prepare for every eventuality to give your child the best study abroad ever! FAQs How can I financially plan for my child's education abroad? Financial planning is crucial when sending your child abroad. Research the cost of tuition, accommodation, and living expenses in the chosen destination. You can use the EduFund Cost Calculator for that. Explore scholarships, grants, and financial aid options available for international students. Set a budget and encourage your child to manage their finances responsibly. Consider opening a bank account in the host country for easier transactions. Look into education loans specifically designed for studying abroad. You can explore EduFund Scholarships for the same. Consult with a financial advisor to understand the tax implications and any additional financial considerations when sending money abroad. What factors should I consider when sending my child abroad? Consider the destination's safety and security, the quality of education, cultural and language differences, the cost of living, and the support available for international students. Research the country's crime rates, political stability, and the healthcare system. Evaluate the reputation and ranking of universities, available scholarships, and career prospects. Understand the cultural norms, language barriers, and the support services offered by the institution for international students. Lastly, calculate the cost of tuition, accommodation, and living expenses to ensure it is affordable for your family. What steps should I take to ensure my child's academic success while studying abroad? Emphasize the importance of effective time management and organization skills. Encourage them to familiarize themselves with the curriculum, course requirements, and assignment deadlines. Advise them to actively participate in class, ask questions, and seek clarification when needed. Help them create a study routine and find suitable study environments.

The cost of education increases every year but this cost is not uniform; there are some degrees that cost more than others. Some expensive degrees like MBBS, MBA, Psychology, Law, and Dental cost up to a crore; this includes tuition costs, living expenses as well as miscellaneous costs. This is because of the popularity, high competition, limited seats, university ranking and location as well as the tremendous ROI attached to the courses. Pursuing these degrees from top-tier universities and countries like the US or the UK can cost you almost a crore of rupees!   So how should you as parents plan to fund these expensive degrees? Here are a few financial planning tips that will help you take charge of your funds and help your child pursue her dream career without any stress! https://www.youtube.com/watch?v=tdwqQH0xkFw Financial planning tips Tip 1. Start early! While a corpus of Rs. 1 Cr. can sound daunting, it is achievable if you have 15 to 18 years in hand. That’s right. If you have big professional career dreams for your children, you must start saving for their education as soon as they are born. Some couples start even before the child arrives. After all, the earlier you start, the easier it will be to put the funds together.   Investment Plan for Girl Child Read More Tip 2. Define your corpus  Always work on your goals on the higher side. The cost of education is going up by almost 10-12% a year, so allow for these growth rates, and for fluctuations in currency rates. It is difficult to predict international situations two decades from now, so you must prepare for the worst, and work with higher numbers. This will save you from having to dip into your retirement savings at the time of your child’s education.   Tip 3. Do the number-crunching  This is part that most people who are uncomfortable with finance dislike. Once you have fixed the financial goal, break it down into years and months. That is the only way you will be able to build that corpus. Define how much money you will need and explore the returns options like equities that can over time give you up to 15% returns. Also, understand the risks involved. Be warned: stay away from get-rich-quick schemes, most people lose even their capital in such experiments.   Source: pixabay Tip 4: Be consistent  Remember, Rome was not built in a day. It took centuries. Luckily, you will have to work consistently only for a couple of decades. Just set up your SIPs in mutual funds, and equities, and start putting money away in Provident Funds and Bonds. While the returns on the latter are lower, these investments add stability to your portfolio. And do it month after month for the entire duration. Do not stop, do not opt out, and do not withdraw these funds for unplanned expenses like a foreign trip or a big-ticket vehicle. Stay focused on your corpus goal.   Tip 5. Go for high-return investments  The longer your investment horizon, the greater the risk appetite you can have. You can consider a 65/35 mix or even a 70/30 mix with a higher percentage being invested in equities and other high-return instruments. Do keep in mind that higher returns are usually coupled with high risk, and you must regularly balance your portfolio to avoid losing your capital.   Tip 6. Monitor your investments  All investments must be regularly monitored. Anything that is underperforming, you must get rid of and replace it with a better-performing option. But don’t try to time the market, keep your parameters clearly defined when you start your investments. This will keep you from making unnecessary mistakes in the market.   Source: pixabay Tip 7. Seek help with your investments   As the time for your child’s college admission comes closer, there are a lot of decisions you have to make to secure your child’s funds. Like turning your high-risk, high-return investment into safer options to protect your investments and corpus from any sudden market downturns, closer to the time of admission. This is an important aspect to consider as you cannot shift the time of admission. Though before taking any of these decisions, it is wise to consult a financial planner to safeguard your interests.  What we have shared here is a broad roadmap that will enable you to build the Rs. 1 Cr. corpus and fund any of the 5 expensive degrees your child may choose to pursue. While doing your initial calculations, also keep in mind that most of these courses also have entrance exams.   Preparation for these exams can start 2-3 years in advance and the coaching for the same is also expensive. You must consider having access to your funds well in time, to avoid financial stress at the last minute.   With planning, discipline, and consistency, you will be able to achieve almost any financial goal that you set for yourself. The key is to get your plans down on paper/on the computer and start working on them. So go ahead and start planning today! FAQs How can I start financial planning as a parent? Start by setting financial goals, creating a budget, and tracking expenses. Build an emergency fund and prioritize saving for your child's education and future expenses. Consider life and health insurance coverage. Consult a financial advisor for personalized guidance. How can I teach my child about money management? Introduce age-appropriate financial concepts. Encourage saving, budgeting, and goal-setting. Involve them in family financial discussions and let them earn and manage their own money. Model responsible financial behaviors and provide guidance along the way. What are some ways for me to save for my child's education? Explore education-specific investment options like Sukanya Samriddhi Yojana (SSY) for girls, 529 plans, and education loans. Start early, contribute regularly, and consider inflation. Research scholarships and grants. Consult a financial advisor for tailored strategies. Consult an expert advisor to get the right plan for you  TALK TO AN EXPERT

In the previous article, we discussed how to save your child from a student debt trap. In this article, we will discuss whether should you take a loan for a child's education. The cost of education has been steadily rising. Many parents struggle to provide for their children's educational expenses. Today, the price of an MBA ranges from Rs 10 lacs to Rs 25 lacs.   If you want your child to attend top-tier universities abroad, then the cost automatically multiplies!   Given the exorbitant price of college and the innate desire to give your child the best education possible, you may think about either saving money or borrowing money. Let us examine these two choices in more detail:   Education loan Access to education loans is simple and is given by all of India's leading financial institutions. An advantage of an education loan is that it is readily available.   You don't need to spend years building up a corpus. You can pay for your child's education in a few short weeks. Of course, the interest rate is a major drawback.   An education loan typically has an interest rate between 10% and 13%. Of course, this increases the price of schooling overall, which is already relatively high. Education loans have the drawback that your child will be responsible for paying them back once they are old and working.   Education loan puts undue pressure on your child. They may not be able to pursue a career that aligns with their interests because of the pressure of large repayments. This kind of debt may unnecessarily burden the family finances in the long run.   Thus, taking on an education loan is efficient yet the interest rates and pressure of repayment can be mentally and financially stressful for the family and your child. Let's look at investment as a means of paying for your child's education.   source: pixabay https://www.youtube.com/watch?v=tdwqQH0xkFw Investment Investment is an underutilized way of paying for your child's education. Many parents turn to loans rather than saving for their child's educational needs. Investment requires time and depends upon your child's age and the kind of education they want to pursue in the future. By utilizing a strategy for systematic investment in an equity mutual fund scheme, you can leverage the power of compounding to accumulate a sizable corpus by setting aside a manageable sum each month to pay for your child's education. There are no interest charges or payback obligations. Although you can immediately support your children's education with an education loan, it might not be the most excellent choice.   Your children will eventually be required to contribute a portion of their future income to the debt repayment. The repayment burden frequently emerges as a crucial factor when assessing employment alternatives.  The best way to save for your child's education is through a SIP. Your initial investment and monthly payments are not only considerably less, but you can take care of this significant expense relatively easily compared to taking a loan.  It is important to note that tax exemptions for education loans are allowed only for up to eight years. In contrast, the tax benefits to mutual funds apply even if you invest in equity-linked saving schemes (ELSS) that come with a lock-in period of 3 years.   Coming to the comparison, it seems that equity investments offer more advantages overall than student loans. However, you don't need to pick one; you can combine the two to achieve your objectives efficiently.   Utilizing both will ensure lower interest costs and leave money for unexpected requirements. Perhaps employ more investments rather than loans to fund your children's education. But ultimately, the choice is yours. TALK TO AN EXPERT