The Buyt Desk
The cost of education is increasing every year, and the education inflation is much higher than household inflation, however, when it comes to saving for a child’s higher education, most parents plan it keeping the present education cost in mind.
The experts say, at present, the rate of education inflation is higher than household inflation. And this will keep increasing with the same proportion in the coming years as well. It is going to rise in most countries that are the prestigious destination for higher studies.
Like many parents, if you are also planning for your child’s higher education with prevailing education costs in mind, you may face a shortfall in funds.
The question is, how can you save for your child’s higher education? Here are the tips which will help you save enough corpus for your child education.
Start Early –Like any other savings plan, your child education plan also calls for early action. The earlier you start, the more corpus you will be able to accumulate.
Prepare The Road-Map – The road-map will help you plan for your child’s higher education. E.g. If you will start planning when your child is three years old, you will have 15 years in hand to save. So, more time, and you can start with a small amount. Plan the tenure this way.
After the tenure planning, the next step is research on the cost of education. Do not forget to add the 6% inflation in that cost. So, the engineering cost, which is 6 lakhs per annum at present, might rise to 13-14 lakhs annum after 15 years.
Invest On The Right Scheme – Pick up the product that assures a higher ROI on your investment. It is wise to pick products that offer a higher rate of interest than the inflation rate. It will help you reach your targets early.
Calculate How Much You Can Save Every Month – Now that you have the plan, you need to set aside the amount required to attain your goal.
Review Your Portfolio – Once your portfolio is in place, the next step is to track it. You need to gauge the performance of both how your wealth is growing and the cost of your child’s higher education as anticipated. Regular monitoring will help you take the required action on time.
You can take the help of safe FDs, PPF or medium to high-risk mutual funds and SIP to invest. The secured investment plans like FD offers assured returns but less in comparison to other products. PPF is also an excellent product, but it will block your amount. Thus, investing in SIP and mutual funds is the option you can count on as these offer interest up to 15% as well, more than the inflation rate.
