In a family, where both the partners are employed, sending their children abroad for a higher education is a dream come true situation for many parents. However, with inflation increasing, attaining this goal as essential as it may be is now considered to be a larger-than-life goal. Consider this: fees for the prestigious management degree abroad are around 1 crore including accommodation and tuition expenses. Money saving plan is designed specifically to help parents meet this larger-than-life goal for their child. In this, one gets the insurance coverage that can protect their child in their absence as well as help them save funds that can be used for their education. In this article, we have listed down five compelling reasons that can convince you to invest in one of the money saving plan as part of your child’s education portfolio.
- Education cost is increasing day by day: It is a well-known fact that education inflation is on a steep rise. If you look around the world, tuition fees at the world’s leading universities have been on an upward trend of 5% each year in recent years. Money saving plans allow you to invest in equity markets. Equity market returns are one of the most reliable ways to outperform inflation in the cost of your financial goal.
- There is Uncertainty in the Future Work Environment: It has become a global phenomenon that with the advent of technological developments, human roles have started to get replaced with it. The extent of these replacements, however, remains unknown. One thing is evident from the progress made thus far: higher education merely sets the way for future learning demands. Future professionals will need to constantly upgrade and learn new professional skills in order to have a secure career and advance consistently. Entrepreneurship is another job path that has emerged as a result of increased mechanization. It is very profitable to turn the high-demand concept into a profitable enterprise. However, it can be financially stressful, especially in the first few years of operation, but it is also rewarding. As a parent, you can plan for these uncertainties related to your child’s career by buying a money saving plan. You can use a savings calculator to know the amount you need to park aside. Essentially, the savings calculator helps you calculate the monthly investment one needs to make in order to achieve the financial aim one has set.
- Helps your child prevent Uncertainty in Life: Life, like the future of one’s work, is unclear. Your untimely death poses a threat to your child’s and family’s dreams. Fortunately, you may protect their financial security with the help of money saving plan that comes with an insurance element or you can protect your child’s aspirations individually also. Child education plans allow you to continue investing in the intended aim even after you, unfortunately, pass away. For example, if your goal is to save Rs. 50 lakhs over the next 20 years, a child plan will ensure that the money is available to the child even if you do not live to see it. The insurer continues to invest on your behalf until maturity, just as if you were still living.
Thus, choosing a money saving plan ensures that your child receives the financial support he or she needs to complete his or her education.
- Ensures you do not have to take an education loan: Given the income of an average family and the inflation, taking an education loan may appear to be a more logical solution for achieving higher education goals and due to the fact, it comes with tax benefits. Whether or not you receive tax benefits, you must still pay interest on the education loan. Furthermore, given the unpredictability of employment and income following college, your child may enter the job market with a significant burden. Taking a money saving plan may ensure that even if you have to take a loan amount, you keep the borrowing cost low. Take the help of a savings calculator to know how much you would be required to park.
- Promote entrepreneurship: Raising funding is one of the most difficult challenges that entrepreneurs face today, and this is unlikely to alter in the future. Inventors and exceptional young minds frequently wind up giving up a significant portion of their ownership stake in the company in exchange for additional funding. Consider supporting your child’s entrepreneurial goals from the start. Their route to financial independence would be shortened by that much. Furthermore, all of this might contribute to the family’s wealth.
How Do I Start Investing in a Child Plan?
You can begin investing in a child education plan by choosing any money saving plan. Follow the steps below to begin investing in your child’s future.
Estimate your goal’s value: The amount you will need when your child begins higher school. For the same, you can use a savings calculator. A handy tool that one can use anytime and anywhere to estimate the amount you should save
How much can you invest now?
- View the plan page of the insurance.
- Complete the application and verify the premium you are ready to
- Select the mode of premium payment; if you are salaried, you can choose the monthly mode.
- Choose the premium payment terms and benefits.
- Make sure you select the ‘Goal Protection Option’. This choice ensures that the intended investment continues even if you are not present.
At last,
When allocating your annual premium, you can choose between debt and equity funds based on your risk tolerance and the number of years until the target. If your goal is more than ten years away and you are an ambitious investor, you can invest up to 100% in equity. If you have less time to reach your goal, reduce your equity exposure. You can utilize automatic portfolio rebalancing strategies to manage risk when market conditions change. The methods operate automatically based on predefined parameters.
