Since you want to ensure that you can give your children the best of everything, planning for their education is an absolute must. While you can’t predict whether they will want to become politicians, doctors or painters, what you can do is ensure that you have the finances ready, so that they can pursue the course that they want to once they complete their schooling.
Since higher education is expensive, more so if your children want to study abroad, it is never too early to start planning how you will meet this expense. Think of it in the same way you would consider choosing investment options to finance your retirement. The earlier you start, the higher is the amount that you will be able to generate.
There are various investment options that you can consider, to fund their education such as PPF, stocks, real estate or even an FD for your child. The latter is the simplest, most secure option. Besides, FD interest rates are high, and you can use an Fixed deposit calculator to see in advance what your returns will be on maturity.
To understand how to invest for your child’s higher education, take a look at this handy checklist.
- Invest smartly
You should start saving early for your child’s education, and invest in instruments that offer compounding. For instance, when you choose a cumulative FD, the interest will compound year on year and offer you a much higher amount on maturity. Investing in SIPs offers you a similar benefit. So, if you start investing in such instruments as soon as your children are born, you will be able to pay for your children’s higher education comfortably.
- Create a balanced investment mix
To earn better returns it is important to decide how much money you should invest in which instrument and for how long. This will ensure that you can maximise the amount that you are investing. To do this, you must invest in a mix of high- and low-risk investments. The former will offer you better returns while the latter will provide security to your portfolio. You can choose high-risk options such as shares and mutual funds and add security and stability by way of an FD for your child.
Also, remember that investing is important as compared to parking it in a savings account, as it offers much higher returns than the latter. Other reasons why an FD is better than a savings account is because of its flexibility, tax benefits, etc. Compare FD interest rates from different financial institutes and select the one that gives you maximum returns. Bajaj Finance’s Fixed Deposit, for instance, offers interest of up to 8.75% and you can choose a tenor of your choice. If need be, you can also take a loan against your FD.
- Consider the increasing cost of education
Education expenses are increasing steadily, and so, to ensure that your finances grow correspondingly, it is important to invest in instruments that will offer returns that beat inflation. Only then will you be able to pay for your children’s higher education in full, without having to rely on other sources of finance.
If you follow these pointers, you will be able to rest assured that you have the ability to support your children’s academic inclinations no matter what they are, without worrying about the cost.