In this ever-increasing world of rising costs and rising inflation, the cost of education is becoming expensive with every passing day from primary to secondary to higher studies. Thereby, it is essential to plan for it early by investing in investment avenues such as a mutual fund for your child. Mutual Fund schemes have potential to provide long term risk and inflation-adjusted returns. If you have some other goal in mind, the process and factors influencing the investment remain the same.
If you consider below three steps diligently, it will help you to be closer to achieving your financial goal.
- Gather Adequate Information and Estimate Costs
You may not immediately know your child’s career ambition 15 or 20 years down the line but getting a rough idea of what your child’s education in the future would be, is to consider to start planning a mutual fund for your child’s future goal. Higher education in top reputed institutions across India is expensive and studies abroad being much more.
At the same time, you also need to factor in the inflation rate (rise in costs) while calculating the future costs of their education. Let’s take an example: If you are looking at an MBA education which costs Rs. 25 lakhs today. 15 years from today, @ 6% annual inflation, fees would cost Rs. 59,91,395 lakhs. When you come to think about this amount as a whole, many people may not be financially ready to prepare a corpus for their kids’ future needs.
- Consider Investing in Equity Mutual Funds for your child future goal
Just saving money for your child’s education may not be enough. You need to let your money invested for the long run. Coping better with inflation could involve investing in instruments that have a moderately higher risk. Equity mutual funds could be one such Mutual fund for your child that has potential to provide long term risk adjusted return.
- Start Early and Invest consistently via Equity SIPs
One of the smart decisions any parent could take is to start saving early. Starting early gives you the benefit of the power of compounding and helps generate wealth from your mutual fund for your child. If you haven’t yet invested in equity mutual funds for your child’s education, then you can start your mutual fund investment via SIPs because SIP investing in equity mutual funds inculcate a sense of discipline and develop a long-term approach thus helping you the opportunity to accomplish your long-term life goals like your children’s education.
The main objective is to help you plan with a mutual fund for your child’s education goal so that he/she does not face any hurdles when it comes to paying fees or accomplishing any other dream. While economic fluctuations are unpredictable, planning early through a mutual fund for your child can help In achieving your goal.
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