
At the end of every financial year, we often hear people talking about tax ...
With the ever rising school fees, educational expenses have hit the roof. Parents are ready to even compromise on a lot of their expenses like EMI’s for the sake of their child’s admission in a branded school. There is a trend of around 10% inflation on the child’s current education. Thus, to meet the expenses and the demands and peer competition, there needs to be a plan well in advance.
Immediate School Expenses: So to beat the inflation of around 10% in a short time, just for school fees or admission, there are very few options Bank Fixed Deposits or Recurring Deposits or Debt Funds. This is because, 2-3 years is a very short time for investing in the market for average returns. Hence play safe by investing more for these yearly expenses.
Future Educational Planning: Now, when you need to plan for the child’s future expenses, keeping in mind your dreams, the child’s expectations and your abilities, there needs to be a proper plan well in advance. If you start early, then you can reap the benefits of the Power of Compounding as well. This simply means that the earlier you invest, the larger your money can potentially become because of the Compound Interest that accumulates on the entire fund. Also, when you plan, please do keep Future Value of Money and Inflation in mind.
So, the basic tips to plan for your child’s future expenses would be:
Thus, by following the simple steps and choosing a portfolio mix with diversified asset classes according to your risk appetite, it would be a cake walk for you to plan for your child’s future educational expenses. However, you need to constantly check and ensure that you are on the right track! All the best!
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