One of the biggest responsibilities you can have as a parent is to provide the right education to your child. But with the rising costs of education, providing the best education to your children can prove to be a difficult task. In fact, there has been an incredible increase of 175%in the average annual private expenditure for general education from 2008 to 2014, according to information provided by the National Sample Survey of India.
Therefore, to ensure that your child gets the best education, it is a good idea to start planning early. There are a number of options that can help you provide your child with the best education, such as fixed deposits, and equity mutual funds. Here are some tips to help you achieve your goals:
School Education:
The expenses in the early years of your child’s education would not be that high. They would most probably be limited to just the bus and school fees. These are generally paid on a quarterly basis. Once your child reaches higher classes, they might also need tuitions. These expenses could be manageable with the amount in your savings account.
Higher Education:
A savings account can help you deal with the early years of your child’s education. But since they can only provide an interest of up to around 7%, they fall short when it comes to higher education. Higher education can pose as one of the biggest financial burdens on a parent. In fact, the average cost of getting an MBA degree in India, is estimated to rise up to ₹60 lakhs by 2025, according to a report by Times Graduates.
A great way of preparing for your child’s education can be by investing in mutual funds. They offer the chance of providing higher returns than traditional investments such as savings accounts and fixed deposits. Although, it must be remembered that they are dependent on the market conditions and the returns are not fixed.
Types of Mutual Funds to Check-Out:
You can go for equity mutual funds, which offers the chance of earning substantial returns. Equity investments put your money in stocks of companies with good return potential. An advantage of investing in mutual funds is that all your investments are taken care of by expert fund managers.
Investing in Equity Linked Saving Schemes (ELSS) can also prove to be a great option. In the long run, there is a high potential for stocks providing high returns. Another advantage with equity mutual funds is that your investment is diversified. Managers will put your money in a number of companies across all market capitalisations.
However, equity investments are risky. If your risk appetite is low, you could opt for debt funds or hybrid funds.
How to Invest?
You can invest in equity savings funds by means of Systematic Investment Plans or SIP. SIPs provide you with the flexibility of making small regular payments instead of lump-sum investments. This makes budgeting around them incredibly easy. You can start from as low as ₹500.
With so many options available these days, saving up for the long term future of your child is possible. However, make sure to do complete market research and go through all the terms and conditions before investing.
