To create a fund for a child’s education, invest early.
To create a fund for a child’s education, invest early.
According to the findings of a research compiled by the Ministry of Statistics, the area of education saw the most rapid rate of inflation between the years 2012 and 2020. The inflation rate for food and beverage items was 9.62%, while the inflation rate for medical services was 8%. In comparison to these two, the inflation rate for education was the greatest, coming in at 10%.
In recent years, the cost of education in India has skyrocketed, particularly at the university level. The tuition for an engineering programme might cost anywhere from 12 to 20 lakh rupees, while the tuition for a medical programme can cost anywhere from 30 lakh to 1 crore rupees. And the expense of management classes might be higher of 25 lakh rupees.
These are the costs that are now being incurred, and if you are preparing for your child’s education 15 years from now, then you need to begin planning and saving for it as soon as possible.
According to the findings of a research compiled by the Ministry of Statistics, the area of education saw the most rapid rate of inflation between the years 2012 and 2020. The inflation rate for food and beverage items was 9.62%, while the inflation rate for medical services was 8%. In comparison to these two, the inflation rate for education was the greatest, coming in at 10%.
When it comes to your child’s education, you may expect to rack up a variety of costs before he or she graduates from high school or college. Every year, there is a rise in the tuition rates, and the cost of transportation is also a consideration.
You also need to factor in the cost of living if you decide to pursue your education in a place that is not your hometown. Therefore, the cost of education is not just determined by the tuition that an institution charges for its courses.
Get an early start.
For a Price, Investment Advisor Amit Kukreja believes that providing children with opportunities for higher education should be a priority for parents. It is not enough to only save money for this purpose; you also need to make investments. The more time and attention you put into this investment, the higher the potential rewards will be. If an investor has more than eight to ten years to invest, then, in such a time frame, mutual funds typically have a track record of yearly returns of twelve to fourteen percent. For this reason, Amit advises investors to put their money into equities and debt mutual funds.
Pick the bank account.
Gain an understanding of how you should pick mutual funds based on the amount of time you have available. You should put your money into debt mutual funds and balanced advantage funds if you have fewer than five years to invest. Large-cap mutual funds and index funds are appropriate investments if there is a time horizon of between seven and 10 years. In addition to big caps, multi cap and flexi cap funds are viable alternatives to consider when the investment horizon is up to ten years.
If you start a systematic investment plan (SIP) with 10,000 rupees per month and assume it would earn a return of 12 percent, you will have deposited a total of 6 lakh rupees in your account after five years. Your return will come to 8,24,864 rupees, which means you will make a profit of 2,24,864 rupees. If, however, you invest the same ten thousand dollars every year for ten years, your entire investment amount will be twelve lakh rupees, and your total return will be twenty-three thousand, two hundred ninety-one rupees. Because of this, you may anticipate a greater return of 11,23,391 rupees.
Consequently, it is essential to begin investing in the child at an earlier age so that you may amass a sizeable corpus and outpace inflation. This can be accomplished by beginning investment earlier.
