A good education is resourceful for children in many ways. It helps your children to achieve financial stability, wisdom, and strength to deal with the life in general. The cost of higher education in India is increasing at a phenomenal pace. Considering the in-exorbitant rise in the prices of the higher education, the parents need to put a plan in place for saving money at the earliest.
The cost of education in India is rising exponentially. The premier business school Indian Institute of Management- Ahmedabad is charging a whopping Rs. 19.5 lakhs for the two-year course. This is four times greater than what the other prestigious B-schools charged in 2007.
The Indian Institute of Technology is also charging Rs. 2 lakhs for its engineering courses. This shows an unprecedented rise in the cost of the education in India. The experts predict that by 2030 the cost for the same education course will be more than 30 lakhs.
Planning
The investment choices and strategy you make will depend upon the type of educational courses you opt for your child. The target amount for future expenses needs to be set and planned accordingly. Once you have estimated the expenses, try to figure out how much would you require each month. You can assume a growth rate of 10 percent in educational expenses for your child and start saving accordingly.
Management of funds
This becomes important especially when you have two or more children. You can plan your savings for short term, medium term, and long-term according to the educational requirement of a child at different age level. For short-term goals investment options like stocks, bonds and savings certificates are the best. Equities are best for long-term investments.
Viable Investment Options
You can invest in the diversified equity mutual fund schemes. You can also start investing in SIP or in equity-linked savings schemes that will not only save money for your child’s educational expenses but also save tax.
ULIPs for children
Child ULIPs have the waiver of premium feature which could be beneficial for you especially when you are looking for long-term investment. This type of investment ensures you that your child could get the required amount at the desired age. You can invest in the equity fund option to get the maximum benefits over the long term.
PPF
You can invest in a public provident fund (PPF) account in the child’s name. This scheme is resourceful and flexible. It’s 15- year scheme that would help you create a tax-free corpus for your child. If you need funds for your children’s educational expenses then you withdraw partially any time after the sixth year.
The future of your children depends a lot on how you raise them. The cost of providing education is increasing significantly but if you manage to invest with an articulate sense of timing and resources available to you then you can gift your child a better future.
If you are really interested in giving your child a good upbringing and secured life, you need to organize yourself and your finances with intricate planning and determination. Creating the necessary ambiance for the growth of a child in terms of education and overall growth you must create necessary atmosphere. This atmosphere could be provided to the child by providing the best of the educational facilities and training. To do that, you have to start saving and investing now.
Disclaimer: Readers are advised to consult their tax advisor for detailed advice.
