Hello Readers!

Education, rather say best education is the first step towards a successful life, and parents today’s priority is, to give the best education to their child. Parents, go for many options like taking loans, selling their plots, saving money in the savings account and many more things to give the best education to their child, but instead of this all, are they truly able to give the best education to their child?

The increasing competition in the education sector has been increasing the worth of best education, in a vast mode. Right from the primary to secondary to higher education, the increasing fee structure and costs related to education are making it difficult for the parents to withstand these costs.

A survey study carried out by, National Sample Survey Office (NSSO), between 2008 and 2014, says that cost of providing education in private institutions in 2014 was about 11 times that in government schools, while the cost of higher education from a private institution is about three times that in one run by the government. 

Survey roughly estimated, that, on an annual basis the education inflation is about 10-12 percent. If we assume the least increase in inflation per annum by 8%, estimation clearly calculates that if an engineering course that costs Rs 6 lakh at present will cost around Rs 20 lakhs after 16 years. Similarly, if an MBA course that costs around 10 lakhs, would costs around 34 lakhs after 16 years. 

Now, you can easily, determine, how this increasing inflation in education sector, is going to make it difficult for a normal parent, to give best higher education to their child, in the coming future, but you must not worry if your child still has some 6 to 8 years, in their higher education.

You can prepare yourself, to tackle, the problem created by the increasing inflation in the education sector. Today a parent needs to prepare a perfect plan for his child’s higher education, at the time when they start their primary education. They have many options where they can preserve money for their child’s education like they can save money in their savings account, can invest in FDs, they can save money in the post office, and many more.

Before placing their money in any investing structure, the parent needs to analyze the different investing structures, and then place their money, so that their financial goal, that is, the best education for their child is achieved.

If you ask any financial planner, he would suggest you much-investing structures, but when it comes to beat the inflation rate, they will advise you, to invest in mutual funds, as mutual fund investments, leads the investing sector, due to its many unique features like, good returns over long investment tenure, different investing funds as per investors objectives requirement and many more.

Introduction of SIP (Systematic Investment Plan), in mutual funds, has made an investment in mutual funds easier, through a disciplined investment. SIP has connected people from the middle and lower sections of our society with mutual fund investments. 

Following points will help you understand, how to prepare an investment plan through mutual fund investments, that will help you avail the best education to your child:

1. Put a plan in place: The very first step, analyze, at least 2-3 career options, like engineering, MBA, Mass Communication and more, then find out the present cost of these courses. Consider average inflation of 8% per annum, for the number of years after which the child would require funds. Now calculate how much funds you need to accumulate, for your child’s best education. As you have calculated, how much you need to accumulate, now its time to meet a financial advisor. They will help you select the mutual fund, that will help you attain your financial goal.
2. Essentials: Analyze your investment tenure, if you have enough time like 10-15 years, in your child’s higher education, focus your investment in EQUITY FUNDS. Equity Funds can also be the best choice if you have 5-8 years, as your investment tenure. If you have a short investment tenure, that is up to three years, its better you invest in DEBT FUNDS.

Long-term investments in equity have delivered higher inflation-adjusted returns than any other asset class such as debt, gold or real estate.

1. Portfolio Diversification: It’s the matter of your child’s education, so never concentrate on a single fund. Invest in more that one fund, like you, can divide your savings into two parts, invest the small part in Debt funds, and the bigger part in Equity funds. This will help you build a strong wealth creation for your child.
2. Choose SIP: Go with SIP investment in mutual funds, as it will help you earn a good return on your investment, and also it assures a low risk on your investment. Rupee Cost Averaging also helps you buy more units when the market is low.

Suppose a person, whose child is 10 years old, most probably after 8 years the child would get his higher education. The person analyzed the current cost of an Engineering course at present that around Rs 6 lakh. The person calculated an average inflation increase of 8% per annum for 8 years and calculated that he will require around 12 lakhs. The person started investing in mutual funds through SIP investment. He started investing Rs 7500 per month in a mutual fund, at a 12% rate of return for 8 years. The following figure shows his approximate returns at the time of his child’s admission in engineering college:

You can clearly see, the data in the figure depicts that, through a mutual fund investment, the person will be able to accumulate the required amount for his child’s education.

As of now, you are aware with the fact, why professional suggest mutual fund investment, a best investing option for your child’s education, so don’t wait, meet a financial advisor today only, grab a best investment plan for your child’s education, start your investment, and secure a best education for your child.

You can also contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Best mutual funds for child’s education plan, based on its past three years performance:

#As per 11 September 2019 

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).