The cost of a university degree now averages twenty-five million rupees in India and significantly more elsewhere. The costs encompass tuition, travel, supplies, reading material, and instructor time. That’s why it’s crucial to start saving for your kid’s future as soon as possible.
The money put aside at a young age might increase and serve as a foundation for a Child’s Education Plan. That is because a Child Plan allows you to save money, invest, and get life insurance.
It’s commonly said that if you start investing at a young age, you’ll have more opportunities to diversify your portfolio later. Mutual funds and stock market purchases might be suitable investments for parents because they produce larger returns over the long term (15–20 years).
Furthermore, saving early for your child’s future lessens the financial stress at the eleventh hour. Therefore, preparing for the child’s educational needs is preferable to making investments on the fly. Here are a few tips to follow for investing in a Child Plan.
Education Planning for Your Child
You’ll need to consider the following when setting up money for your kid’s college education through a Child Education Plan:
Establish a set amount to spend each month
Set a monthly savings goal and keep it in mind so that you can consistently put money away for the Child Education Plan.
Investing at a young age is optimal.
Putting money aside for a child’s college education is a long-term project. You should start saving for your child’s future as soon as possible after birth. In 2021, the average cost of international education was between 40 and 50 times as much as the MBA tuition of 18-20 million rupees.
Inflation could cause these costs to rise within the next decade. Investing early on in a Child’s Education Plan will reap the most rewards when your kids are of college age, so it’s essential to realize this now.
Avoid low-return investments at all costs.
High-cost inflation in the education industry has made it difficult for families to meet their children’s educational needs. Therefore, putting your money into a Child Plan that yields the best returns is crucial.
Child ULIP Plans
If you want to guarantee that your child receives the necessary amount at the appropriate age, investing through child ULIPs with the premium waiver function is the way to go. Parents can invest their children’s ULIPs in various equity funds for the highest long-term returns.
If you want to be sure that your kids are cared for no matter what happens, you should get a decent-term life insurance policy.
Planned Parenthood Fund for the Future of Our Children
The PPF is a tax-deferred investment plan for 15 years. Opening a Public Provident Fund (PPF) account in a child’s name is another option for saving for the child’s future schooling costs.
After six years, PPF allows for a partial withdrawal in an emergency. The identical account will be made available to the adult child once he or she makes contributions.
Always have a plan for the long term
Investors’ financial objectives may vary widely depending on their own situation. Various funds are available for investment, including gift funds and debt funds. Mutual fund and stock market investing require a longer time horizon than other types of investments.
Another type of Child Education Plan investment with a time limit is a gift to a child. By continuing to invest over extended periods, parents can reap the rewards of compound interest.
Consider the resources you’ve already put in.
Investments in the Personal Retirement Savings Account (PPS) or Fixed Deposits (FDs) will help you achieve your long-term financial objectives. You should also know how much more investment is needed to reach a goal.
Conclusion
Being a parent is challenging since it requires juggling many responsibilities at once. Half of a parent’s waking hours are spent fretting over whether or not their kid will be able to pursue his or her passion due to financial constraints. It’s never too early to start putting money away for a Child Plan, so do it right away!
