65% of the parent’s spent over a half of their yearly income of their child education and
extra co-curricular activities – ASSOCHEM REPORTS 2017
Secure Your Child’s Financial Future with a proper, customized Investment Plan
The arrival of a child brings in a lot of happiness. At the same time it also brings along many responsibilities. All of us are responsible when it comes to our children, but uncertainty could collapse the financial health of a family any time. It is sensible to save money for the children’s future and keep them financially secure even during our absence. So steps must be taken to ensure that this does not just end up in a dream.
As parent we may not control of our child dreams. The can be to become a rocket scientist or the next ‘Indian Idol’. We can never know what fuels their imagination and what plans do they make for themselves.
As parents, all we can do is back their dreams & provide financial support whenever needed. This is why we have to start planning early for our kids.
Critical Goals for Parents
Parent’s Dilemma
Rising Cost
Innumerable career option
Are we saving enough to fulfill their dreams?
The most apparent financial hit for child education financing
Before you start punching in your calculators, Four Questions to Ask Yourself :
You need to start off by setting the target date for your child’s education plan. I feel the average age when a child goes for Higher education can be taken as 20 or 22. You need to fix your target age depending on your expectation and circumstances.
Example:
Accountancy and Management
- 3 Year for a Degree
- 1 more year for Honors
Engineering
- 4 Year Course
Medical
- The MBBS is a 5.5 years course (4.5 years academic education + 1 year mandatory internship)
- The MD program duration is 3 years after MBBS.
Please find an illustration below of how education expenses could rise with passing time due to inflation:
Inflation of estimated 10% per annum has yet to be taken into consideration.
In this step where every investor has different levels of risk-taking ability and knowledge, it’s important to depend on these factors. These factors would let you choose different investment arenas so that you can generate good returns through it. Below table will provide you some idea about products available with their features.
Our wealth coaches are highly trained to guide you in developing proper child education or marriage planning considering all related & considerable factors like inflation, adequate insurance coverage for bread-earner, risk appetite etc.
Not all insurance policies are the same. If you intend to save for your child’s education using insurance, be aware of what type of polices you are buying. Just because a policy acquires surrender value over time does not mean it is a “savings plan” and most certainly, not a savings plan for the purpose of your child’s education needs.
Why not consider a “Structured Education Plan”?
If you are not into investing or are time-challenged to manage the finances and savings for your child’s education, you can consider buying a “Structured Education Plan” designed by our wealth coaches.
Generally, these plans are designed to make a provision of cash payouts at yearly intervals when the child begins higher education (e.g. age 19, 20 and 21 and so on). Some plans can even payout earlier when the child starts primary school with additional insurance features packaged in such as waiving of premiums should the parent be disabled while saving for the child’s education.
Mutual funds for child needs
Stick with diversified equity mutual fund schemes. Start SIP in 2-4 equity-oriented mutual fund schemes with a mix of large-cap and mid-cap funds too. Keep adding additional funds received by children on birthdays or gifts from grandparents to the same mutual fund folio. One may even invest through equity-linked saving schemes that will not only save for child needs but also save tax. As and when the child needs funds for education purpose, redeem as per requirements.
It’s better to plan and to take well researched investment decision than an emotional decision.
Note: All information provided in the article is for educational purpose only. Views & opinions expressed in the article are not of the company and don’t affect any official policy or position of any other agency, organization. They don’t constitute any professional advice or service.