The subject of savings for kid’s education is quite common. Every parent thinks they have saved enough or have planned to save enough to meet this unavoidable need. However, this need serious introspection and timely modifications for achievement of real goal.
Earlier days when we used to study, the key aspiration was to complete graduation. Those who come from evolved family background use to aspire for becoming engineer, doctor, civil servant, teacher or chartered accountant. Apart from these we barely hear about perusing any other profession. In early 20’s MBA become a carrier aspiration for many.
In this digital era kids are advanced and their outlook has gone up multi folds. Now a day kids know what many parents or adults are even not aware, they follow latest trends in everything and aspire to build their carriers in many ways. They want to take risk in their life, they aspire to go to places and explore new things. Domestic and international carrier avenues have opened up. Kids wish to become pilots, scientists, sports man, musician, fashion designer, astronaut, producers, business man and what not. Their imagination has gone far beyond and why not, after all we are in an era where everything is in our hand inside our mobile. World is evolving.
Most of us used to study in government schools/colleges, few lucky ones had the privilege of private schools. Our school fees used to be in few thousand but now it runs to few lakhs in a year. Our entire 4-year engineering fees used to be less than a lakh but the same thing now is at 8-10 lakh or even more. Fees to be a doctor or peruse MBA used to be less but now if you need a seat in a private college it runs to 20-50 lakhs or even more. We wanted to study within India but your kids would aspire for abroad, so imagine the fees and other expenses.
How will you get funds for all these ? Yes, you must be thinking of saving money from your income regularly. That’s good but you have to invest it such a way that it gives you higher returns on your savings. Some of us must have started Fixed Deposits or Recurring Deposits. But these investments will give you single digit returns and post-tax with inflation the returns will not be lucrative. Then what’s the way out. You must consider these options :
- Equity Mutual Funds as the option and define a time horizon. Keep contributing your surplus whenever market corrects and give you opportunity, otherwise you can also invest fixed amount via SIP. Chose growth option to keep growing your money. Over a horizon of anything above 3-5 years you may expect double digit returns. 75-80% of your monthly surplus you may invest in mutual funds. Hold on to your mutual fund investment till you need funds for the purpose.
- you can also select a good Child Plan to park your remaining money and keep growing that. Child plan will give you assured decent return and also will payback money at certain intervals to take care of your ongoing needs. Here, you may not have the option of staying invested post maturity period. So, if it matures do not spend the funds but hold for the purpose.
Every other expense can be postponed but not education and health. Plan well in advance to give your child the best.