Child Education Plans - Invest Judiciously for Your Child’s Future

Invest in Child Education Plan

It is every parent’s desire that the future is secured for his child. Ensuring best education is one of the top priorities for the Indian parent. A majority of parents want their children to study up to the post graduate levels. But, given the mounting rate of inflation, most parents are worried about building a corpus. A report by a leading daily suggests that the cost of education is rising at an alarming 10-12% annually. The fees in private schools have shown a hike of 150% in the last ten years. Parents today spend close to 40% of their income on their child’s education.

Funding for Higher Education

The cost of education in the earlier generations was lower and the levels of competition were not very high. Today owing to heightened competition students are forced to seek admission in privately run colleges where the fees are sky rocketing. In the present scenario as global education brands start offering courses in India, they come with high fees. Lifestyle inflation too has an impact on the decision about where to send children for education. The big question which worries Indian parents is how to fund higher education. 

Factors to Consider

To ensure that the child’s dreams are not compromised, parents should invest smartly. Making the right investment at the right time is important. Here a list of tips which you should bear in mind:

• At the onset it is crucial that you understand your family’s financial condition. Long term savings have to be connected to your present financial condition.
• Make sure that you learn about the alternatives. You should narrow down on one which helps you develop an integrated and effective approach to your child’s education in future.
• It is a good idea to take professional assistance. A professional advisor will help you opt for the right plan and will ensure that you protect your child’s future.
• Do not be overwhelmed at the thought of your child’s future. Set realistic goals which you will be able to achieve with regular investments.
• It is best to invest in a flexible plan which gives your child money whenever he needs it to accomplish his educational goals. 

Why Save Early

It always helps to start investing early. Not only will you be able to accumulate large sum of money but they will also gain from the power of compounding. By delaying this investment you may jeopardize other financial goals which crop up later. It is advised that you do not dip into your retirement savings to fund for your child education plans. As most of the employed drop out of the workforce in late 40s and early 50s it is necessary to start early.

Consider the Time Horizon

Before investing, think about the time horizon. How many years do you have before you can realize the goal? Longer the time horizon more is the risk which you can afford. If there are15 to 18 years left before your child’s college starts you can opt for equity funds. The volatility of the returns is flattened out in the long period of time. A high level of equity will help you to counter the high rate of inflation in education. 

Choose the Right Plan

Although a majority of parents take resort to PPF, traditional insurance policies or fixed deposit, they have very low yields. This means that owing to poor choice of investment plan most would lag behind in their goal. You can consider opting for an additional term insurance in your name to protect the child’s future. If you want to create sufficient wealth for your child’s education you can consider investing in mutual funds. Opt for large cap funds and balanced funds. You can also invest in NSC certificates or in ULIP schemes. Review the plans well before you invest in them.

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