Why Plan Early For Children Education :-
















All Mom & Dad work hard to give best education to their Child....

We just have to face the fact that in today’s challenging life scenario, raising children have become more expensive, but not impossible and some of the factors of that are :

1. Rising Inflation
2. Heavy Increment in Education Prices
3. Change In Life Style

I still remember those days of schools & colleges where the fees in the past were around Rs. 3000 to Rs. 5000 for studying through bachelor’s degree or maximum 50,000 – 1,00,000 for an MBA Degree.

Forget about the Barbie Dolls, A Dingo for your kid, or a Cost of Video games, this are now necessity, the education Fees for playschool alone is costing 50,000 to 1,00,000 per year. Tough to understand but it’s a fact now a days. And mind it as here we are talking about some serious kind of money for most of the people of India, to be precise, the average income of an Indian individual is less than Rs. 45,000 per annum. Most of the parents come to know the importance of Education Planning when the kids actually demand the money to go to school or college.

Everything includes cost as Now the scenario has changed, Education level, Facilities like Studying through internet, online education, all electronics & gadgets have entered into the field of education, Overseas University have brought the state of the art technologies, from which kids / students can study sitting at home on the computer or via video conferencing. Now schools and colleges provide the forms online, which has reduced the cost of the school and colleges, but as education industry is rising at tremendous pace.

From Luxury to Necessity: Why we need to Invest?

As India is one of the fastest growing economy across the world & almost 25% of the population is between the age of 25-35, the life style changes are very frequent as people are having more disposable income, they wants to own a house, luxurious car, a vacation abroad have become necessity for the people, same for their kids (going to school in a brand new car / a laptop / Air-conditioned schools & colleges ) such aspirations and dreams have emerged seeing the flow of income on regular basis, the same scenario happens in every growing economy (as reported in United States Of America in 1980), The Internet cost incur as the technology has taken place in such a way that kids are desperate to be on social network talking and discussing their home work and managing group discussion and sharing notes on the internet, before 10 years we have never thought this will happen after a decade, such things. Parents are willing to send their child abroad for schooling now a days which costs more than Rs. 15,00,000 to Rs. 20,00,000 today. The same will cost Rs. 20,00,000 to 26,00,000 if I take a nominal 6% Inflation (Education Cost in India has increased in excess of 10% Every year)

YOUR Kids Education - Three simple ways to Plan It :-



1. Start Early - Let your money Work for Your Kids :

Investing Early can boost your child education Kitty in a significant manner , i.e. if one invest Rs. 1000 starting today for next 5 years will grow to Rs. 89,688. The same amount if started 5 years early can bring 2,78,657 to the table. It’s just the simple compounding effect which works more as you stay more in the fund.

2. Top Up Your Investments : Best for your Child's Education kitty

We get bonuses, extra incomes, gifts on kids birthdays – just add that to the kitty, so that you can reach to your kids education goal early than you have planned. People in general think that Rs. 10,000 Top up investment will not make huge difference, but let me bring to your kind notice that Rs. 10000 Invested for 15 Years will become Rs. 81,370 @ 15% CAGR & if one top up his/her kitty as and when they get extra money, the goal will get completed sooner than you have planned.

3. Invest in a Product which can earn more returns than prevailing inflation rate:-

Little tough to understand, If Inflation is 8%, & FD Rate is 6% for a year Rs. 100 Invested in an FD will be worth Rs. 106 & Inflation is 8% ,means the thing you were getting at Price of Rs. 100 before a year is now worth Rs. 108 & your money has grown by 6% to Rs.106 Only. Still short of Rs.2, this in some years will bring down your purchasing power & capital too. One should earn at least more than inflation rate. Study shows that Gold has marginally outperformed Inflation & Equity has beaten Inflation with far better margins in long run.


- Manan Mankad

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Comments

  1. Dear Mr Manan,
    The article is really good and provides a good insight for starting investments. But I am confused. I have got a postal recurring of 6000/- pm. since last 8 years. But the way amount is growing there - it is question whether i will achieve my goal or not. I know SIP in Mutual fund but it is risky.
    So if you have something i am interested pls guide.
    Vaibhav

    ReplyDelete
  2. Dear Vaibhav,
    its really great to know that you have planned atleast something for your kids,
    you will be aware that Post Recurring is giving taxable return,
    Options for your Investments can be :
    1) Safe Option : Put aside the amount In PPF as PPF is under EEE Plan ( non taxable while investing, interest is tax free & maturity is also tax free)

    2) Mutual Fund SIP- as you have talked about risk, risk is there even when you invest into bank FD or Post (the risk of Inflation) the same is explained in the posted article, there are schemes of good mutual fund companies which has performed excellently well in the past, 10 years plus of an investment has grown over 20 % year on year basis, if you feel risk and not comfortable with Volatile investments, you can just start as low as 100 rs. monthly in an sip, over the period of time you will have faith & you will understand by yourself that its not Risky as people around talks.

    it is difficult to achieve an education goal as education expenses in india in growing at a pace of 11.5% every year, one should earn atleast more than that to fulfill the dreams, its possible with an sip in a good diversify flagship equity schemes,

    Happy Investing,

    Manan Mankad
    Owner @ msquare

    ReplyDelete
  3. Good One.... can you also suggest some good product from life insurance or mutual fund basket. my kid is 3 years old and he is about to enter the education world..
    Jigar Parekh

    ReplyDelete
  4. Dear Mr. Parekh,
    1) A Term Plan For you
    2) A Child Education Plan with atleast 60% equity allocation (i.e mutual fund sip)
    3) even you can invest in ELSS for taking care of various needs for education as every installments of ELSS sip will mature monthly.

    Happy Investing,
    Manan Mankad
    Owner @ msquare

    ReplyDelete
  5. Hello Mr. Manan

    Article is really good and well explained. I like to know about my kids. I have 2 kids (1 is 5 years old and 2nd is 8 months), how can I plan for their education from now so when they grown up, I will have good amount of money for their education. For now I can take risk, so what will be your advice direct stock or mutual funds? Can you guide me for that?

    Tejas Sagar

    ReplyDelete
  6. hi Mr. Tejas,
    thank you very much for going through my article,
    you can start an sip into Diversified Equity Funds, you have plenty of time for your kids education & i really appreciate that you have shown interest in investing into mutual fund, you just have to do little homework that how much will be todays cost for your children's education, so that we will be able to calculate the amount for that. one more thing i would like to brief you is whenever you have lumpsum amount just dump it into your kids SIP account so that you will reach your goals even before the set date.

    Happy Investing,

    Manan Mankad
    Owner @ m2(money.manage)
    www.mananmankad.com

    ReplyDelete
  7. I really appreciate that you have shown interest in investing into mutual fund, you just have to do little homework that how much will be todays cost for your children's education, so that we will be able to calculate the amount for that.

    ReplyDelete
  8. Good information... Planning for children's education is lead for their career so we need to make sure each step which we take.
    Financial advisor in Chennai
    Best Financial Planners in India
    Financial planner near me

    ReplyDelete
  9. You can open a account in Islamic bank account for this Mashreq Alislami is the best bank in UAE.

    ReplyDelete

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