When to Start Investing in Child Investment Plans?
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Updated date : 05 June 2020
Invest in Child Future Plans
Suraj, a 33-year-old Bangalore based working professional in an MNC, was excited that his son is old enough to get admission to a school. He selected some of the best schools to get his admission done. But the exorbitant school fees even for nursery class came as a shock to him. Without compromising on his son’s education, he decided to go ahead even if it meant to cut down his own expenses.
A lot of parents in India today find themselves stuck in such a situation amid the insane growth in the cost of education. While they are able to meet the cost of primary education right now, the cost of higher education becomes a challenging task to meet.
So, what should they be doing in such a situation?
Here is how you can make sure that your child’s future needs are met with the best child future plan is an easy and planned manner. It’s not only limited to education, child investment plans are suitable for parents who want to ensure that their child doesn’t have to think twice before taking up his dreams – be it education, marriage, and every other key milestone in his/her life.
Skyrocketing Education Costs in India
One of the major expenses that parents need to plan for their child is education. So let’s take into consideration how the cost of education is rising in India. In the past ten years, inflation has been ranging from 4 to 8%. While the government defined inflation for the last 10 years has been in the 4-8% range, and the cost of education has increased in double digits in these years.
For instance, the fees charged by a premier MBA institute in India is nearly Rs.19 lakhs, which was Rs, 4.5 lakhs in the class of 2010. This shows that there has been an average increase of 12% every year in the past 10 years.
And if we look at the fees of B.tech Institutes it has increased to Rs. 10 lakhs from Rs. 3.6 lakhs in a span of ten years. This shows that the fees of these instituted increase at the rate of 10% every year. Even the fees of MBBS Institutes rose by 10% every year.
Increase in Education Fee from 2010-2020
Name of the Course
Fees in 2010 (in ₹)
Fees in 2020 (in ₹)
Annual Growth in 10 years (%)
M.B.B.S ( in Pvt. colleges)
Clearly, there has been a constant rise in the education fee every year and as parents, you may be worried about giving your children the best education. With timely planning, you can ensure that your children do not have to give up on their dreams due to a shortage of funds.
Moreover, it ensures that you don’t have to jeopardize your personal financial stability to fund your children’s future financial needs. You can consider taking loans but the interest rate is so high that you end up paying more than double. Therefore, it makes sense to invest in an appropriate child investment plan to ensure that your child’s future liabilities are met and with child insurance, you can ensure financial security in case of your untimely demise. Here is how you can strategize to invest for your child’s secured future.
The first step is to list down your goals, like the course your child will like to pursue and its fees. It will help you determine the amount that you need to save every month or ever year and the total that you can afford apart from your routine expenses. If you do not want to pay interest on education loans you can invest in advance for your child. This way you will not have to cut down your own expenses including medical expenses and even retirement.
Factor in the Inflation Quotient
The strategy is simple while selecting the best child investment plan to take inflation into consideration. Education inflation results in a significant increase in the cost of education every year. To be able to meet the education expenses it is imperative that you start saving early and also take into consideration the time factor. If you plan to send your child abroad to study then you need to consider the fluctuations in the money exchange rate. And all these limitations can be overcome with a consistent and effective investment strategy.
Different Child Investment Options
While conventional investment products like FDs may not work to meet such exorbitant educational fees, You can opt for policies that offer maturity benefit to your child when he requires money to pay for higher education. It helps in guiding your child towards money management and inculcates the habit of saving from childhood. It is recommended to teach your kids regarding basic financial planning and engaging them in the process. When in you put money in a child investment plan you need to evaluate its features, benefits, risks, and limitations before zeroing it down
HDFC child plans are designed for parents who want to save for their child Academic expenses, and other specific goals like higher education or marriage, etc. it can help meet all the miscellaneous expenses, which otherwise can be difficult to meet.
Long Story Short
Time is the essence. Do start early- as soon as possible. You can always start when your child is born, as it gives you a window of 15-18 years. And you have the desired corpus as soon as your child is ready for his important milestones in life. And even in your untimely demise, the child can pursue his/her dreams without financial worries. Basically, if you have a longer investment period you can benefit from the compounded growth. The sooner you start investing, it becomes easier for you to fund your financial goal because of the longer time duration that you give yourself to achieve it.
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