Indian parents have the reputation of being extra conscious when preparing to provide a secure future for their children. One of the primary ways of gifting a good future is to ensure quality education, which can empower children to plan their career the way they want it.
Research claims that the cost of education in India is on the rise, and it will continue to grow by leaps and bounds in the next 15-20 years. The increasing number of private institutions will provide training to everyone at a higher price. The challenge for an Indian parent is to decide whether they put their entire savings into their kids’ academics or hold onto some funds for a peaceful retirement life. A smart investor would strive to have a secure retirement life while not compromising on their child’s education.
Here’s how you can save money for your child’s education:
- Start Early
Most parents in our country think about education costs when it is too late. Such a thought can put a dent on lifetime savings. Here’s how to avoid it: book a fixed deposit (FD) 10 years before your child comes of age to pursue higher education. Upon the maturity of the FD, you will have an adequate amount of money to fund your children’s education.
If you want to plan for 15 years, there are multiple schemes like balanced mutual funds, PPF, government-backed savings schemes for a girl child, etc. Experts suggest that it is always better to start early and diversify your investments so that you do not have to worry when your kid wants to apply for an MS degree in one of the reputable institutions in countries outside of India.
- Choose Wisely and Play Safe
Most salaried professionals and business people are drifting towards mutual funds due to higher returns and more accessible liquidity. The issue with mutual funds is that they are highly volatile. You should understand that more reputable financial institutions should back even the safest investments. Simply put, you do not want to park your funds for a long term in a bank/NBFC, which might have a bad day sooner or later.
CRISIL, a rating agency, provides merits to existing financial institutions and allots rankings which can be used by an investor to determine the risk factor of a bank/NBFC. It would be best if you never allowed uncertainties to crop up when you zero down on a financial partner to invest your money. If you are a risk-averse investor, you might want to choose a bank/NBFC which provides the best FD interest rates. Fixed deposits are comparatively safer as the principal amount and interest rate is pre-defined and not affected by external factors.
Planning for a short term, diversifying your investment portfolio, and having goal-based investments are some of the different ways to have a fool-proof approach towards funding your child’s education. By doing this, you can secure your child’s future in an organized manner.