How to Plan for your Child’s Education
Want your child to get the best education ? Then, start planning for it now. Know how to plan for your child’s education & take that step
While planning for child’s education, the first step is to correctly calculate the target amount.
Here, we need to calculate the amount with adjusting the inflation. Also, first you need to see how much you can save monthly according to your current financial position. So, we can have a practical approach towards the corpus accumulation and not just estimate any random amount.
Then we will take the rate of inflation into consideration. After that we will take an estimated rate of return.
Only after adjusting the inflation and on that amount when we take the estimated rate of return, then we will get the real amount.
Now, when it comes to the investment part. There are many child funds available. For example,
You can do SIP in child funds of various AMCs like HDFC, UTI, ICICI etc.
You can deploy your funds in other options as well like Sukanya Samriddhi Yojana, PPF etc. but if you consider child education goals, then SIP in mutual funds is the best option. As mutual funds are inflation beating instruments. And mutual funds give more returns in the long term.
Most of the child mutual funds work like balanced funds in which 60% is invested in equity and 40% in debt. Before investing in a child fund, it is important to know the terms of that scheme. Like in some schemes the amount can be redeemed when your child turns 18 yrs of age.
But, it is not necessary that you park all your savings in a child fund only for this goal. You can also choose, with the help of finance experts, other funds like Balanced Advantage Funds and other funds where the fund managers adjust the investment allocation in equity and debt according to the market conditions.
So, it is wise to start a mutual fund SIP in which you can get consistent returns to achieve your goal.
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