Planning For Your Child's Education With Mutual Funds
Dalal Street Investment Journal|September 28, 2020
Planning For Your Child's Education With Mutual Funds
As your child grows older and there comes a need to pay for acquiring a profession-targeted degree, you have the option of either taking an education loan or using your investments in mutual funds to cover it. The question is about which is a better choice

Indian parents spend a lot of time looking out for the best of everything for their children. The environment that kids are exposed to today is drastically different from the one that you might have experienced in your childhood times. That said, in today’s times kids have a plethora of opportunities available while the world is getting increasingly competitive. Hence, all parents want their children to develop holistically to get ready for challenges of the future. Education remains one of the best ways to face such challenges and hence no parent wants to compromise on that front.

In fact, there are four major financial fears in one’s life and being able to provide the best education to their child is one of them. Further, as it is a need and not a want, it is one such financial goal which cannot be deferred to any future date. Therefore, no parent would like to go wrong with it irrespective of his or her financial situation. As such, proper planning for your child’s education is important. Even if you don’t have kids at present, it makes more sense to dedicate some part of your savings to their education in order to be prepared with the funds when required. It’s simple: the earlier you start the lesser you would need to save.

However, another school of thought believes that children should take accountability of their own education.

This is done by opting for an education loan through which children would pay for themselves, making them more responsible. Whichever way you go, by planning your child’s education through savings and investments will ensure you at least have a choice left with you. Further, you can have peaceful sleep knowing that your child’s education is taken care of. It is here that proper analysis and planning is called for.

Need Analysis

Need analysis would help you understand how much ballpark amount you would require for your child’s education aspirations. This amount accounts for inflation. The image alongside shows an example of how it can be done.

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September 28, 2020