Education is a major and important expense of an average Indian family. In addition to this, with different education options opening up abroad, the expenses of studies for those needing to seek after their education outside the nation has additionally gone up. It's insufficient to rely on the customary savings to finance your child's education. The best way to go about saving for your child's education is not when your child's heading off to the college, rather at least 10 years before so that your child can pursue whatever he/she may want to in terms of education.
- Calculate exactly how much you will need: Realizing the exact amount you will precisely need to finance the education of your child is not so easy to figure out. In any case, one can be prepared with a huge part if not the majority of the sum required for the education of your child. The most ideal approach to ascertain the rough sum of money that will be required is to see your current expenses so that you can equate these costs with the help of child education calculator or good accounting software. For example; if your child is 10 years old at present and you expect he/she will begin their higher education at the age of 21. Taking a normal expense of Rs 15,00,000 for a Master's Degree, you will be required to save some amount for the school fee expenses. Figure your objective as needs are, and in the event that you have more than one kid, you will have to calculate for both. Ensure that the investments you have done are enough surplus to deal with your child's education and your different needs later on.
- Select the right investment options: The goal is to save a good amount of equity. Although playing safe is necessary but a little risky investment venture can also be dealt with if you have enough experience to deal with them. Buying stocks is a great option. The investment options that give a good balance must be a priority while investing for your child's education. Investment options like that of PPF, tax-free bonds, and bank deposits are great options for the purpose of investing. Relying just on the bank deposits is tax inefficient and in case you fall in the tax bracket of 30 percent then you must go for income funds. Rather than being burdened each year with the interest, you will be liable to give the tax just at the season of withdrawal.
- Be safe in short term: In case you have to raise money in less than five years, you should depend on fixed salary sources, which are probably going to offer a rather lesser rate of return. In any case, the benefit is that they offer ensured returns and right security of capital. When we talk about the short term, these variables become essential. Despite the fact that fixed income ventures are genuinely safe, don't contribute your money in these indiscriminately. You must ensure that you have enough liquidity in case you are putting in money in the debt instruments. PPF is a good investment but avoid it if you need the money in less than five years. The best way to raise money if you have a time of fewer than five years is to opt for a personal loan, you can check personal loan interest rates online and apply. You can keep investing later so as to repay it.
- Endowment Child Plan: Although the endowment child plans pretty much work like ordinary endowment plans however they are explicitly custom fitted for the future of a child. Aside from being a good investment alternative, they likewise go about as an insurance option to give budgetary help to the family for the future of your child if the guardians suffer a lamentable demise. These insurance plans which are designed for the child's future ensure the parent who has to provide for the child rather than the child itself. Always remember to select those investment options that amount carefully and only because the insurance plan covers in case a death happens, this amount should in no case be the only source of liquid money that should be left for the family. It is important to ensure that there is a different term plan to take care of these things so that the money from this specific investment plan can be utilized for the education of a child.
- Diversify investment options: Much the same as you would for the regular personal finance while meaning to accomplish an objective like saving money for your child's education you must evaluate the amount you can contribute towards every investment option and see which possible option is the best for you. A single investment option might be sufficient for a few, while some people may want to test other investment options to lock in the ideal sum of money that needs to be saved. For example, if you will require funds for both the under graduation and post graduation then plan out the investments that have diverse maturity dates. You could likewise evaluate the amount you would require at a given period of time and contribute that sum in like manner. Opportune planning of funds will guarantee that you won't need to break into other savings to support the education of your child and the other way around. Plan well so you can remain ahead.
- Final review: The procedure of investment is never static, particularly in the event that you are contributing for the long term. There are different equity funds for different people with different time limits to save money. Nonetheless, five years before your objective, you should begin moving cash out of the equities for the safety of debt. Begin a methodical transfer plan from the equities to secure a short term debt fund. It is all the more necessary to act moderately while putting aside money for a vital objective that can't be delayed. Remember that the date of your child's admission is always fixed so you cannot delay saving for education purposes.
As inflation rates are unpredictable and keep rising, it can never be too soon for you to plan the education costs of your child. It is essential to have a good investment arrangement set up as postponing in the definition of the correct investment system could demonstrate negative to the future of your child. At the time when monetary changes are completely unpredictable, arranging early can give a specific measure of security against any unforeseen circumstances. Follow these smart methods given above to intelligently save for your child's education.