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How To Choose An Effective Child Education Investment Plan

By Author: Avnish Meheta
Total Articles: 1

With parents getting more apprehensive about the education expense of their children, keeping in mind how these expenses are on the rise, several investment plans are being introduced with an aim to ease out this pain.

These plans not only offer insurance but also promise some additional safety comfort for the education of your child. However, most of the times, you may not have the least bit of an idea when it comes to deciding on an effective investment plan for your child’s education.

1.Decide the Cost of Education: Since the cost of education is skyrocketing, this is one of the primary factors that you must sort out. Whether it is a government school or a private one, depending on the type of education you’d want your child to have, try to figure out the basic cost. Once you’ve got an idea, you can then figure out the total expense that you’d need to give your child the basic education.

2.Account for Inflation: While you may think that what you are going to invest today might be sufficient for your child, however, the future is uncertain. Sudden inflation in the economy can directly impact your purchasing power. Most of the times, people do consider the rate like 6-7%, however, with a rapid increase in the cost of education, you must keep at least 10% as the rate of inflation to be on the safe side. In the end, if there would be a sudden increase in the cost, you wouldn’t have to be dependent on any loan.

3.Choose Between SIP & Lump Sum: Knowing how you are going to invest the money will help you manage your other expenses seamlessly. To facilitate the entire investment scenario, you have two options, either you can invest through a Systematic Investment Plan (SIP) or give a lump sum amount. While the former lets you pay periodically, with the latter option, you’d have to give a certain amount altogether. So, think and then choose.

4.Choose the Right Investment Fund: Once you are done with knowing whether SIP would be perfect for you or lump-sum, then you can move forward with navigating through different investment funds. Keep in mind that whatever you are selecting should be sufficient enough to meet the needs of your child while generating an adequate return.

5.Keep Checking Back: If you think that once you have settled down the child education investment plan from every aspect, your work is done, you might be wrong. Once your investment has begun, you can sit back and relax for 2 to 3 years. However, after that, you’d have to start reviewing your portfolio every year. Even if you don’t feel this activity to be important, it can surely provide you with an upper-hand while the equity market falls.

In the right perception, no plan would be best or worst. On the contrary, the appropriate one will depend on your requirement. So, follow these steps and get your hands on the adequate plan for your child’s education.

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