Every parent dreams of their child receiving the world class education to secure their future. With the rising cost of higher education in the present scenario, it has become a matter of prime concern for parents to be able to afford this dream. To meet the expenses of higher education, parents often have to end up taking a large amount of student debt loans and burden their child at the beginning of their career or sometimes even deprive them of their education.
According to a report published in a leading financial daily, the course fee of two-year management course in Indian Institute of Management- Ahmadabad (IIMA) for the class of 2018 is Rs 19.5 Lakh. This is 400% higher than the course fee in the year 2007. This accounts for 20% hike annually. If it
keeps growing with this pace, in the year 2025, the fee of the same course will amount to Rs 95 Lakh.
To put things into perspective, with the ongoing inflation rate of 10%, in another 8 years, an engineering graduate course that costs around 8 lakh rupees (and that includes only tuition fee) will soon rise to 20 lakh rupees. This can create immense financial difficulties for middle class households and for poor people even if they slog round the year; as accumulating such a large amount will be a farfetched idea for people with
limited income and no investment plan for child.
To be financially prepared when your child turns to university and avoid any kind of issues, read as debt; you need to start your saving towards his/her education at an early stage. The earlier the investment plan for child begins the larger and better it pays off. Now there are various options in the market to invest your money, the key to success is to save and invest regularly and wisely.
Take a look on some of the important points which will guide you through in multiplying your wealth faster and achieving your financial goals in easier way.
Pre-requisite Self Assessment:
Firstly, you need to assess all the sources of income. Next, identify your
future requirements and the amount you should accumulate to meet your requirements. Last and most importantly, know the time frame for investment. This information will aid you to chalk out a customized efficient plan for your investment purpose.
Choose investment product with high potential:
Once you are done with self analysis, comes an important decision making where you need to carefully assess the various investment plans for child available and choose the ones that best sync with your requirements. It is always an intelligent idea to pick out a mixed portfolio that
is, products with guaranteed returns and products with wealth creation potential. When you are making long term investments, especially for wealth creation potential, Systematic Investment Plan (SIP) route of Mutual Funds proves a wise decision.
The early bird catches the worm:
Young parents often mistake prioritizing expensive and lavish lifestyle at the cost of their savings during early years. This hugely affects their long terms investments plans. Late investment planning leaves you with an extra burden of a larger periodic amount and yet you may not reach there.
Earlier you start your investment, easier it will be for you to reach your financial goals quickly. Understand very clearly the power of compounding. It is always
beneficial to begin investing for your child’s higher education at age of 1 than planning when the child is already 11. The more time you allot for money to grow, the better it will multiply even with small investment amounts.
Slow and steady wins the race:
Investing small amount regularly is a good approach considering you go for market linked products. SIP route is the best option as it helps you attain this steadiness and invest regularly, thus benefits you with rupee cost averaging in the process.
Timely evaluation of investment portfolio:
Like we review the report card of our child time to time to check progress, it is highly important to review the performance of the mutual funds you have invested in, rate of return of the products with guaranteed returns etc. This enables you to practice changes in the investments if required.
Life Insurance Cover:
You must take a TERM INSURANCE policy from any Life Insurance Company after doing sufficient scrutiny. Term insurance policy helps you secure your child’s future in the long term from any unforeseen happenings. This is the most important thing you could do for your child’s financial security. Term Insurance gives your family a financial security and sip gives you assurance of achieving your financial goal of child education.
Saving for child’s education today is a wonderful gift for their future. Not only can they achieve their dreams of higher education without financial worries, but also it will help them start their adult lives with some savings in hand instead of loans and debts. With some awareness of investments along with the extensive guidance of experts, figure out the best products which will help you for your child’s future educational need and security.