How to plan for Child Education Expenses!.
Providing for your child’s future is a goal that is dear to our heart. We like them to have a future that is brighter, bigger and better than our present.
The pace is extremely fast in education sector and so are the expenses associated with it. There are multiple choices and the spiraling cost makes a dent to the pockets. Parents are finding it difficult to meet the growing fees right from playgroup to higher education.
The assumed rate of inflation (say 8%) and the number of years in which we will need the money (say 15 years). An MBA that costs around 8 to 10 lakhs today would cost 32 to 35 lakhs 15 years later. It is very important for parents to put a plan in place to meet the high education expenses.
We do what it takes to get there. But are you doing enough?
If you invested Rs.5000 every month for 15 years @ 9% rate of interest you would have accumulated only Rs. 18 lakh. Still there would be a shortfall of Rs. 14 lakh!
The money you save should grow and simultaneously beat inflation. That is where equity investments come in.
As such, parents should invest systematically in 2 SIP’s of Mutual Funds for higher school and college expenses. If one starts early, then the amount to be invested in SIP also tends to be small which will not pinch the pocket. You can start investing in SIP in equity diversified mutual funds which will fulfill your requirements by the time your child reaches higher education. Also, you can infuse amount additionally to your SIP as a top-up as when there is a surplus at your end. This will add more value to your SIP.
For accumulating funds for an education goal, which is near term one can invest for 3 to 5 years and if the funds are required after 10 to 15 years one can invest on long term basis.
Last but not the least remember that the SIP’s are being accumulated for your child education expenses and do not deviate from the goal. Do not use them for other purposes. Attaining the education goal of the child is a cherished and memorable dream for parents.
Report by: Vidya Ashok
Certified NISM professional and Certified Goal Planning Specialist
Kairos Investment Centre
(For custom based advice and free consultation you may write to us on [email protected] or connect on 9769670884,whatsapp on 9594052799, url: www.kairosic.com).
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