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In 2016, IITs increased the fees from ₹ 90,000 to ₹ 2 lakh per year. The cost of education increases by 10% annually, parents should create an education fund. Expert Tushar Bope offers 8-step plan.
Child education scheme
In 2016, IITs increased their fees from ₹ 90,000 to ₹ 2 lakhs per year, which means more than double the cost for students and parents. In general, education cost, for both schools and colleges, increases by 10% per year.
If the rising cost is a reality, then another amazing truth is that every parent wants to give the best education to their child. To balance these two realities, parents need to create a dedicated education corpus and financially prepared for their child’s needs.
The expert shares a step-by-step approach to help secure your child’s educational future. You just need to get answers to questions:
Step 1: What is your time horizon?
How long do you have before starting your child for higher education. This timeline will be a major factor when preparing an investment strategy. If your child is currently 3 years old, for example, and expected to start a college at the age of 18, you have a 15 -year investment horizon. In these 15 years, you will also have school expenses, coaching classes and other expenses. Factor also. Create a full education trip for your child starting now.
Step 2: What will be the future cost of education?
As mentioned before the average education inflation, it removes the interest rates offered by traditional investment options. This is important for the project that when your child reaches college age, what expenses will be seen. If the price of IITs to BTech is 10%, in 15 years, 10% annual inflation rate, the cost will increase by about ₹ 30 lakhs. This estimate gives you the goal you need to achieve.
Step 3: What is your current financial situation?
Do this simple practice and evaluate your existing savings, investment and assets that you have already dedicated to your child’s education. This amount will tell you how much you need to save to meet the target. Make it perfectly that you do not use these funds for any other reason.
Step 4: What are your specific financial goals?
Now when you know how much funds you have in the present, how much you need, and how much time you have in your hand, you can set your financial goals to meet your child’s education requirements. Include your child in the discussion and define what kind of education you are imagining, whether it is a professional course in India or studying abroad. Be specific and add every detail. The education journey you made earlier will help you cover all aspects.
Step 5: Have you selected the right investment equipment?
A single stream of investment never gives stable returns due to the instability of markets. A diverse portfolio with a mixture of debt and equity balances the profit in long -term. Select your investment path that justifies your time with horizon and risk hunger. If your time is longer, invest more in mutual funds such as market-based returns as they provide high returns. Date instruments such as fixed deposits are considered better for a short period. It is advisable to consult your financial advisor to create the most suitable portfolio to meet your goals.
Step 6: What will be your monthly investment requirements?
Now that the portfolio is ready, the next step is to determine how much you need to invest regularly to meet your future education cost target. You have to invest the best rules of the thumb before you spend. Keep the required amount separate to invest at the beginning of the month, then go about spending at your monthly expense.
Step 7: Are you and your child safe from the uncertainties of life?
Life is uncertain. Always keep an insurance so that your child’s goal set by you is safe in terms of being somewhat inaccessible. Unit Linked Insurance Plan and Child Education Plan are the best options for you as they ensure that death benefits are intact and premiums are paid.
Step 8: Do you regularly review your plan and adjust?
This is a basic. With the help of your financial advisor, re -look at your financial plans from time to time and adjust to changes in income, expenses and educational aspirations. If the cost of education increases rapidly than anticipated, you may need to increase your investment amount. Similarly, if your income increases, be sure to invest more.
The more time you have better returns, you will bite. Delay in investment will only increase financial burden. I cannot insist how important the initial investment is. But, if you do not have long horizons or there is an immediate need for money, then education loan is your best friend. With a long period of attractive interest rates, the duration of the remaining and the loan repayment, an education loan ensures that your child does not miss the best opportunities in life.
It is written by the co-founder of Tushar Bopche, Invest4edu.
The ideas expressed in this article are of the author and do not represent the attitude of this publication.
