Saving enough money for their child's higher education may be difficult for many people due to rising inflation. , they. They might be able to accomplish this with some careful planning and strategic investments.
For many parents, saving money for their child's higher education needs is undoubtedly a crucial task and so is the situation of a person who is saving money for their own higher education. Planning for higher education entails carefully allocating funds over a period of time—at least 7-8 years—while taking into account a variety of other factors.
"An investment in knowledge pays the best interest," said Benjamin Franklin once. In this article, we will provide you with some tips and strategies you can use while saving for your or your child's higher education. So, let's start!
You should always keep in mind the following fundamental guidelines to safeguard your future in the long run:
Here are some recommendations for investments and savings that will help you prepare for your child's better future that can also secure their higher education costs:
A massive undertaking like this requires early investments. Giving your money the power of compounding is the key. For those of you who are unfamiliar with the phrase, it refers to the process of investing an asset's earnings in order to produce future earnings.
Since India's education inflation rate is so high, compounding must be used to your advantage over a longer time frame. A later start can jeopardize your child's academic objectives in addition to producing a smaller corpus.
The time horizon is the fixed point in the future at which a particular process is expected to end. In the case of higher education, you can calculate the number of years your child will need to finish his or her studies and plan your investments accordingly. The longer your planning horizon, the easier it is to plan and invest.
The first step in protecting your family is to take care of yourself. When we say "protecting yourself," we mean insuring against unforeseen events. Even if you are not around to cover their expenses, your life insurance will support your child's future and higher education.
Because your goal is long-term, so should your investment. Investing in Systematic Investment Plans is the best option (SIPs). A SIP is simply a tool that allows you to invest in a mutual fund scheme on a regular basis. It instills financial discipline and aids in the achievement of long-term goals. Tax-free bonds, Public Provident Fund (PPF), bank deposits, or even insurance company-provided child plans could be an additional saving option.
Now, you might not have made advance plans and your time horizon might be shorter than five years. In that case, your main source of investment will have to be fixed income securities, which are probably going to have a lower rate of return.
These, however, provide capital safety and returns that are guaranteed. Very important given the circumstances. PPF is a wise investment choice, but it is not suggested if you require the money in less than five years. Investments with fixed income are generally safe and a good idea.
Knowing how much your child's education will cost in the future will help you plan your investments and prevent you from having a significant financial burden down the road. Each person's cost of education is unique. It depends on various things, including, courses that your child might be interested in admission to a government or private university exposure to education on a national or international scale.
Although the market offers a variety of investment options, Mutual Funds are the most lucrative product. Mutual Funds have the highest returns if you compare them to public provident funds, bank deposits, gold, real estate, etc. Your educational goals are very important. As a result, it is advised that you use Mutual Funds to build wealth. You won't be able to make any impromptu plans as a result.
Savings can be split into two categories: Discretionary and Essential. Discretionary Savings Accounts are those that are motivated by a personal objective. These could be for a specific vehicle, home, getaway, or another item on your wish list. On the other hand, Essential Savings Accounts are set aside for unavoidable events. These consist of your emergency savings, retirement savings, and if you have kids, a higher education fund for their education.
To sum up, postponing the goals of your discretionary funds won't have much of an impact on the welfare of your family, but you won't be able to do so with the objectives of your essential funds. A hospital bill, your retirement, or your children's higher education cannot be delayed.
You can’t accumulate a hefty amount in a month, a year or at a time. Go for a slow and steady attitude instead of an all-in.
You need to adopt a systematic approach. By now, you must have guessed it already. Opt for a Systematic Investment Plan (SIP). SIP empowers you to make investing a habit and provides you with accomplished goals if followed in a disciplined manner.
To conclude, we can say – Mutual Funds Sahi Hai! Thus, if you intend to accumulate wealth for your higher education. While you are free to choose other options, you will surely come back to mutual funds owing to their capability of beating inflation consistently.
By adopting the strategies mentioned above, there is a good chance that you will be able to save enough to provide yourself with the best higher education.