Savings for your kids education: Insurance is ideal
Education is very expensive in our country. Parents start saving the money before the birth of a childfor their kid's education. It is the dream of every parent to secure their children's future, especially in the field of education.
EDUCATION IS a very expensive proposition in our country. Parents start saving the money before the birth of a child for their kid’s education. It is the dream of every parent to secure their children’s future, especially in the field of education. Even the higher education specially professional courses has become very expensive. The costs are skyrocketing. The good old days of government scholarships & support is practically over. Besides, with inflation, the cost of education will only increase further. Over the next five years, the cost of professional courses is likely to grow at anywhere between 10-15 per cent annually.
In cities with rising salary levels and double income families with proper educational planning, few parents are keen on spending for quality education. But it is very unfortunate that rest of the people, specially the rural population has not realized the importance and benefits of proper and timely educational planning. This is all because of lack of awareness, low income, huge debits, improper financial planning and lack of need based investment solutions. It is very important that parents start saving for their children’s education as soon as possible, even as early as the day the child is born. An engineering or management course was priced around Rs 1 lakh in 1990. It went up to Rs 3 lakh in 2000. In 2020, even at a low compounded annual rate of 10 per cent, the cost could be as high as Rs 20 lakh. Savings for the child’s education has become essential. And today there are multiple options available to achieve this, fixed deposits, mutual funds, insurance schemes and many other instruments. The best way to plan for the children’s education is to set goals, and right asset allocation. Saving for children’s education is not just a matter of waiting for the investments to mature. One needs to spend some time to monitor the growth of money and switch to safer options. Today in the competitive market a number of child insurance plans are touted in the market as the right vehicles for funding a child’s education. Many plans lack flexibility & do not provide wholesome solutions. One has to select very carefully. If anyone wants to take the insurance route, there are options of endowment and unit- linked insurance plans. There are several child plans from that cover both the child and parent. The latter option is better. Because there is no need for the child to have a cover because he does not have any liabilities and dependents. There are a lot of choices. There are some policies that give double benefits. For example, there are schemes that allow savings for two children with one plan. Apart from investing in insurance polices, I would like to share some better investment options. Always prefer safe investment with less risk factor, may be less return , but still the plan should be helpful to provide some financial security during any financial need in future. * Investing in mutual funds & equity market for long term, here one can expect higher return that may also include higher risk factors. * Child Career Plan from LIC of India, HDFC Children’s Plan, Birla Childrens Dream Plan, Aviva, Kotak, SBI & few other related plans specially designed to meet the rising educational and other needs of growing children. * Opening PPF & RD Accounts. Gains around 8 %, for five to fifteen years. Returns are low, but risk free * Small savings schemes, though the interest rates are low, they still make sense as a risk free investment. Please keep in mind, always invest an appropriate amount systematically at regular intervals in various investment options. ’’All days are not same. Save for a rainy day. When you don’t work, savings will work for you.’’ If you know any useful educational polices in please share with us. Thanks in advance.
In cities with rising salary levels and double income families with proper educational planning, few parents are keen on spending for quality education. But it is very unfortunate that rest of the people, specially the rural population has not realized the importance and benefits of proper and timely educational planning. This is all because of lack of awareness, low income, huge debits, improper financial planning and lack of need based investment solutions. It is very important that parents start saving for their children’s education as soon as possible, even as early as the day the child is born. An engineering or management course was priced around Rs 1 lakh in 1990. It went up to Rs 3 lakh in 2000. In 2020, even at a low compounded annual rate of 10 per cent, the cost could be as high as Rs 20 lakh. Savings for the child’s education has become essential. And today there are multiple options available to achieve this, fixed deposits, mutual funds, insurance schemes and many other instruments. The best way to plan for the children’s education is to set goals, and right asset allocation. Saving for children’s education is not just a matter of waiting for the investments to mature. One needs to spend some time to monitor the growth of money and switch to safer options. Today in the competitive market a number of child insurance plans are touted in the market as the right vehicles for funding a child’s education. Many plans lack flexibility & do not provide wholesome solutions. One has to select very carefully. If anyone wants to take the insurance route, there are options of endowment and unit- linked insurance plans. There are several child plans from that cover both the child and parent. The latter option is better. Because there is no need for the child to have a cover because he does not have any liabilities and dependents. There are a lot of choices. There are some policies that give double benefits. For example, there are schemes that allow savings for two children with one plan. Apart from investing in insurance polices, I would like to share some better investment options. Always prefer safe investment with less risk factor, may be less return , but still the plan should be helpful to provide some financial security during any financial need in future. * Investing in mutual funds & equity market for long term, here one can expect higher return that may also include higher risk factors. * Child Career Plan from LIC of India, HDFC Children’s Plan, Birla Childrens Dream Plan, Aviva, Kotak, SBI & few other related plans specially designed to meet the rising educational and other needs of growing children. * Opening PPF & RD Accounts. Gains around 8 %, for five to fifteen years. Returns are low, but risk free * Small savings schemes, though the interest rates are low, they still make sense as a risk free investment. Please keep in mind, always invest an appropriate amount systematically at regular intervals in various investment options. ’’All days are not same. Save for a rainy day. When you don’t work, savings will work for you.’’ If you know any useful educational polices in please share with us. Thanks in advance.
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