Saving for Child’s College Education – Plans and Schemes to Help Decide

As a parent, it is your biggest dream to secure your children’s future and give them the best education so that they can flourish in future. However, to ensure that your other priorities are not compromised with, you must make timely and worthy investments. Education in India is witnessing inflation at the rate of 10%-12%, which signifies how expensive higher studies will become. If you start planning early using the right investment instruments, you will be able to collect significant corpus to keep you worry free as you watch your children grow up and pursue their dreams.

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Investing in your child's future:Nothing is more important than securing your child's future
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We are rated++
rating
10.5 Crore
Registered Consumer
51
Insurance Partners
5.3 Crore
Policies Sold
Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

The key mantra: Start early

This is the fundamental rule for any kind of major investment for the future: begin while you have time so as to gather a significant sum of money.  Any course that costs Rs. 6 lakhs today will cost double in the next 6 years and more going ahead. So if you start while your children are young, you can make small strategic investments. Time gives you the strength of compounding. If you delay, you are likely to encroach upon important investments like your retirement savings

what are the best instruments to save for your child’s college~?

  1. Equity Mutual Funds

    Investing in equity mutual funds worth Rs 5000 a month can give you almost Rs 33 lakhs, if the return is approximately 12% p.a, which will suit your requirement. However, the key for this investment is that you need to give it time. Hence it is ideal for the long term when you have time on your hands.

  2. SukanyaSamriddhi Scheme

    An initiative taken by the Government of India, it is a good investment vehicle if you have a daughter. Under this scheme, you can invest anything between Rs 1000 to Rs 1.5 lakhs for a time period of 21 years. Although 21 years might be too long, you can make partial withdrawals after your child turns 18. So you can use this as a partial investment option, alongside other investments as this has an attractive interest rate of 9.2% p.a.

  3. PPF (Public Provident Fund)

    Keeping in mind its simplicity and flexibility, a PPF is the ideal tool for long-term investments like your child’s college education. Also, the time frame for maturity, i.e. 15 years, is ideally suited for this investment. Another key feature of this plan is that you can choose an amount as low as Rs 500 in a year, or go uptoRs 1.5 lakhs as your pocket permits.

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Invest ₹8K/Month YOU GET ₹80 Lakhs* For Your Child View Plans
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What if you have to plan for the short term?

If you haven’t started investing for your children education plan from their childhood, you still have enough investment options to gather adequate corpus to take care of college expenses. If you have a time frame of 8-10 years till your child attends college, you can consider investing in diversified equity funds, debt-oriented balanced funds or equity-oriented balanced funds. If your time frame is lesser than 4 years, you have to consider recurring deposits, MIP funds and debt funds to gather a significant corpus of roughly 20 lakhs. 

Things to bear in mind

When making long-term investments for securing your child’s future, you need to review the portfolio at least once a year, to ascertain that there aren’t any components that are not giving the desired returns. Also, assess your goals; if you are looking to send your child abroad, you will need to increase your investments. To be safe and ensure your money is safe, it is advisable that you begin shifting your money towards debt-based funds to keep safe distance from market volatilities. 

˜Top 5 plans based on annualized premium, for bookings made in the first 6 months of FY 24-25. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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