Child Education Investment Plan to Start Saving for your Child’s Bright Future
With the rising costs of education, it is now imperative for every parent to start saving and investing for their child’s future as early in life as possible. Some of the best investment plans for child’s education are discussed in this post.
As a father, mother, or someone who plans to have a family in future, one of your biggest responsibilities is to ensure that your child gets the best education and can pursue any field of choice. But the education cost in India is increasing much faster than the inflation.
As a result, it is essential for parents not just to start saving but investing for their child’s education as early in life as possible. Fortunately, there are now several investment options in India with the help of which parents can start saving for their child’s future.
Some of the top options include-
Public Provident Fund or PPF is one of the oldest long-term investment options in India. The investment is backed by the government and investors get to earn handsome interest on their investment. Moreover, the interest earned is fully tax exempted.
Available for a maximum of 15 years, PPF allows you to invest up to INR. 1.5 lakhs in a year. The current interest rate offered in PPF is 7.6%.
- Bank Deposit
Another traditional go-to investment option in India is Fixed Deposits or FDs. Banks and finance companies in India offer excellent interest rates on FDs, allowing you to generate handsome returns on your investment without any risk.
However, a significant drawback of FD is the fact that most banks and finance companies only offer FDs of up to 5 years. There are only a few that offer 10-year FDs.
- Gold ETF
As compared to investing in physical gold, gold ETFs are a better option as they do not involve any risk of theft or locker charges. You can start by investing small amounts every month and build a considerable corpus within 10-15 years.
While gold has been able to beat many asset classes in the past, its price has been somewhat stagnant in the past few years. Also, you’re required to pay capital gains tax when you want to sell the ETF.
- Stock Market
Increasing number of new investors now invest in the stock market to save for their child’s future. But investing in stock markets directly requires a good amount of knowledge about how the market works.
Needless to say, it is one of the riskiest forms of investment, and new investors are advised to start small, learn how the market works, and only then invest a larger amount.
- SIP in Mutual Funds
Most of the child education investment plan discussed above require you to have a sizable amount of money to start investing. But with SIP in mutual funds, you can start investing with as little as INR. 1,000.
This allows you to start saving and investing for your child’s future sooner than other options which require a lump sum amount. Moreover, there are now many different types of mutual funds to suit every investor and objective.
While there are now many different ways to start saving and investing for your child’s education, a parent should very carefully analyse the options to make the right decision. The rapidly increasing cost of education in India means that parents now need to start saving for their child’s future as early as their late 20s or early 30s.
SIP in mutual funds is the most flexible investment option that allows you to start your investment with a minimum amount in the fund of your choice. Try to know more about how SIP works and its other benefits to start investing as soon as possible and ensure that your child receives the best education.