The best strategies to put money down for your child's future
Education is a passport to freedom and the key to opening the globe. If you’re like the majority of parents, you want your child to attend a prestigious university. At the same time, paying for college is likely to be one of your most pressing financial issues. It’s natural for parents to want the best for their children: the best education, the best opportunities in life, and so on. But, as you can see, education is one of the most valuable presents you can give your children.
Indians have a strong belief that education is everything, and we want our children to attend the best schools in their chosen fields. Despite the fact that education is a top priority for parents, finances are a huge concern. They spend a considerable chunk of their savings to ensure that their children receive the greatest education possible. Even the top universities, whether in India or overseas, have a cost. Higher education frequently comes with a costly price tag due to the influence of growing inflation rates.
Financial Planning
As a result, a financial strategy for achieving this aim is critical. If you already have children, it’s best to start planning as soon as possible. Particularly if you want your child to attend prestigious schools and study overseas. You should start planning as soon as possible because the cost of college continues to climb. The situation is different with millennial parents. Millennials save an average of 11% of their salary, which is much less than the suggested 30% of income; after all, expenses are an expense. Given the ever-increasing expenses and splurges made on lifestyle, travel, and other things, it is difficult for millennials to save a larger portion of their earnings.
Begin investing as soon as possible.
An early start is insufficient. To earn the best profits, parents must invest wisely. If you have 15-18 years until your child starts college, equities funds should be your first choice. The volatility of returns is flattened down over such a lengthy period. If you have a high-risk appetite, you can allocate as much as 75% of your portfolio to equities. To combat the high rate of education inflation, a high level of equity is required. One should start saving early (regardless of the SIP amount or the size of the corpus) so that if one’s aspirations alter tomorrow; one can use a loan as a plan B to bridge the gap.
As a parent, you have the choice of looking for a better way to invest your money in a plan that will pay off in the future. Delaying your investment, investing in the wrong plan, or putting your money in the bank may not result in the intended corpus. A wise parent would begin investing in Mutual Funds on a regular basis.
Withdrawal Strategy
The investment process is never static, especially when it comes to long-term investments. For people with a 12- to 15-year investing horizon, we recommend equity funds. However, five years before your target date, you should begin moving money from equities to debt for safety. Begin transferring money from your stock fund to a short-term debt fund in a systematic manner (average maturity of 1-3 years). Rego underlines the importance of being cautious when saving for a critical objective that cannot be postponed. Keep in mind that your child’s college acceptance date is set in stone.
