How to plan your child education now and stay stress free- A must read for all !

Hi All,

Today I am going to discuss something very important which is actually a financial planning we all must plan well in advance.

Well, there are different ways to invest but we prefer investing in equity market through mutual funds as they can give us great returns as compared to bank FD's and other insurance schemes. 

You may go through my previous blog on how investments in equity mutual funds can give you better returns.

Link is below

https://investology1.blogspot.com/2018/10/where-to-invest-bank-fixed-deposits.html

One more reason why we prefer equity mutual funds is this that child education is a long term goal and investments in equity mutual funds are known for stellar returns.

Now, it is really easy to choose any mutual fund and start the SIP ( monthly amount ) today and can plan for your child education.

But take care of below points while selecting the right mutual fund for you.

• .All mutual funds have two plans-Direct & Regular.
• Always go for Direct plan in mutual fund as direct plan does not involve any intermediary and all your money gets invested 
• Direct plans also have low expense ratio than Regular plans , hence you pay less for them and invested value gets increased.
• Preferably, go for large cap funds as they are less prone to risks.
• Stay away from hybrid plans as they charge you more .
• You may also start a SIP in NIFTY funds which have the lowest expense ratio . Since it has lowest commission involved, hence none of the mutual fund distributor sells it.

Now, once all these parameters are decided, the next job is to decide on the amount you need to invest, i.e. SIP amount and for how how many years you need to continue with SIP.

So, preferably you may check your child age and check in how many years he or she would be required funds for his/her higher education.

SIP amount you may decide basis your income criteria and how much you are willing to contribute every month.

You may check online there are several calculators which will tell you about the amount you can save and the future value of your saved amount every month.

Let me give you an example.

Suppose your child is just born and imagine you need funds till the time he or she will turn 25. This means that you have 25 years or 25*12 months to do savings. Suppose you are investing 5000 per month and we are planning at 15 % annual return .

You will be surprised to know the amount will be 1.6 crore. Yes, this is true and this is the power of compounding.

So, it makes sense to start the savings and investment as soon as possible and relax. But there is a word of caution. Stay invested and do not exit when markets are down as in a longer run, you will be always benefitted.

If you still need any assistance on planning your child's future education or any further issue regarding investments, you may send me a mail for a personal discussion at hina.gupta19@gmail.com

Thanks