In the ever-inflating economic scenario, your child’s education is a yet another thing to worry about. Yes! If you have not planned it right, then you can be in a big mess.
In 2018, a student has to pay 19.5 lakh for a 2-year management course from IIM (Indian Institute of Management), Ahmedabad in India. Even the engineering branch at IITs (Indian Institute of Technology) have increased their fee from INR 90,000/- to 2 lakhs per annum. This surely does describe the scenario for your child’s education in the coming years.
With time, the rates of schools and colleges will go high. And if your child wishes to pursue a degree from a foreign university then you would end up in a bad shape, unless you plan it well in advance.
How Can You Overcome This Problem?
Here is an insight on child education plan, as per the age-group. Best child plan one time investment where your child’s education funds can be saved well in advance.
Age Group 0-7 Years
For children between age group 0 to 7 years, your available time horizon is 10 to 17 years. The Best child plan one time investment options or simply the best investment options during this period include:
- Fixed Income Structure
- Balanced and Debt Funds
You can capitalize more in equities to overcome the skyrocketing education costs. In the last few years, equities have provided an annual return of 12%. The percentage of return is definitely high. However, it is advised to buy equities via mutual funds route because the market is really volatile in the case of equities. For remaining investment options, you can consider mutual funds, and PPF. For girl child, you can also consider investing in Sukanya Samriddhi.
This is a good way to start your child education plan. Also consider Child education plan calculator, policybazaar child plan, LIC child education plan, LIC child education plan premium calculator while planning the perfect plan for your child’s future educational needs.
Age Group 8-12 Years
For children between age group 8 to 12 years, your available time horizon is 5 to 9 years. The Best child plan one time investment options or simply the best investment options during this period include:
- Monthly income plans of mutual funds
- Balanced and hybrid funds
- Stocks and equities
At this stage, the best thing for parents is to open a recurring deposit until the time of their child’s high school or until the child is ready to go to college. In this way, parents can end up saving for their Child education plan more than they would ever do.
Another great idea would’ve been to open a fixed deposit account. But in case of a fixed deposit, if the interest earned on the principal amount is more than INR 10,000/- per annum, then you would have to pay tax on it.
Age Group 13-16 Years
For children between age group 13 to 16 years, your available time horizon is 1 to 4 years. The Best child plan one time investment options or simply the best investment options during this period include:
- Monthly income plans of mutual funds
- Instruments with a fixed income like short-term debt funds and recurring deposits
For parents of kids age 13 to 16 (or teenage kids), the primary focus of parents should be to focus more on capital protection.
One must use Child education plan calculator to check if the Child education plan is going just as planned and nothing has been missed.
Start Early to Generate More Returns
You should start planning for your child’s education and future the moment you become a parent. With the high surge in price these days, it is difficult to say what the economic conditions are tomorrow after-all.
In case of future education, if you start investing and saving early for your child then you would be in a better position tomorrow. Also, the interest rate on most of the savings or deposits is compounded annually. So the earlier you start saving, the better it is.
For instance, if you start saving INR 10,000/- every month for your child’s future education at the age of 30, when your child is 10 years of age, then you would be able to save approximately 28 lakhs in the next 10 years. That is, when your child turns 20, you would have 28 lakhs in your account for your child’s education. However, if you begin to invest the same sum at the age of thirty-five, then you would not be able to get this kind of money in your account. You would only be entitled to approximately 8.97 lakhs in return for your investment. This is a classic example to show how compound interest is calculated on your investments.
While planning your Child education plan always consider checking Child education plan calculator and LIC child education plan.