How To Plan For Child Education
Updated On Jul 14, 2022
Table of Contents
Every parent wants to provide the best education to their child even in their absence. For making it possible they leave no stone unturned. It is a major investment that should be made wisely after considering various important factors that can affect the decision.
Education is quite expensive nowadays. A good education helps to secure the career of your child. You do not want that your child suffers and compromises his or her dreams due to some unfortunate event. That is why you should prefer buying a child education plan so that the insurance company takes care of higher studies of the child. Many people do not understand the value of a child education plan and they realize it when it is too late. You should buy the best child education plan for the future educational requirements of your child as early as possible. You should do a lot of research before selecting a child education plan so that you can get the best education plan as per your requirement.
Here is a 4-Point Checklist That Will Keep You On the Right Track
Prepare a Roadmap
Many parents fail to plan for the higher education of their children. Every parent wants to fulfill all the dreams of their child even in their absence. The dreams can only be fulfilled by doing the proper planning. First, it is important that parents should be aware of their goals. Once they know about their goals it would be easy for them to meet their goals. They should plan how they will achieve their goals. They will have to prepare a roadmap by laying out the goal date, the amount required to meet the goal, and other parameters. It is not possible to achieve a goal until and unless you know about it. So basically first you should realize your goals then you should do the planning to achieve those goals. A roadmap gives you a clear idea about where you have to go and how. Make sure that you understand the future educational requirements of your child and then you make plans ahead to fulfill all those requirements.
Don’t Ignore Inflation
Most people make this mistake as they ignore the impact of inflation on the value of the goal amount in the future. Education is already expensive and in the coming time, it is going to be more expensive. So it is important that parents consider the future value of an education, not the present value of education. What is the profit of investing if it is not going to fulfill your requirements for which you invested? You will have to take additional educational loans if you fail to understand the impact of inflation on the value of the goal amount in the future. An amount that seems adequate today may prove to be inadequate in the future when the goal date arrives. That is why it is important that whenever you are charting out the amount required to meet the goal, you consider the impact of inflation on this value in the future. A wrong goal amount can cost you a lot as you will have to make additional efforts and expenses if inflation is not considered properly. So the key is to not ignore the impact of inflation on the value of the goal amount in the future.
Select the Tool Carefully
The next step is to decide which tool you are going to invest in. Parents should choose the tools wisely after considering various important factors. If there is a time in the education of your child let's say five years or more then you should invest in SIPs in aggressive mid-cap funds and small-cap funds without considering your risk tolerance. Do not forget the fact that if an investment involves huge risk then it also promised good and higher returns. In the end, volatility is in your favor over the long tenure. In order to create wealth for the long-term goals, you should prefer investing in SIPs. On the other hand, fixed income instruments and fixed deposits provide linear growth. These are good investment options as they help you from the up and downs of the market. You can also buy a child education plan for securing the higher education of your child. You should choose that child education plan which has dual benefits including saving and protection. Investing in a child’s education plan is an important decision that should be done wisely. The benefits of investing in a child education plan are that you get a life cover as well as it provides a cover for the education requirements of your child. You should do a lot of research before selecting a child education plan so that you can buy the best child education plan present in the market according to your requirement.
Protect Your Goal Correctly
You should appoint a person whom you can trust as an appointee. An appointee is the one who will receive, invest, and deploy the sum assured in your absence. So make sure that you choose an appointee wisely in order to protect your goal. You should draft your will in which the sole purpose of your investment should be clearly mentioned. It is important that you protect your goal correctly so that your child can fulfill his or her dreams.
Conclusion
A child education plan takes care of the higher education of your child. Every parent wants to provide the best education to their child which is why they prefer buying a child education plan. Life is very uncertain; no one knows what is going to happen next. That is why people plan in advance as they do not want that their child has to compromise with their dreams. You can also invest in a systematic investment plan as it is a good investment option for the long term. The risk involved with this option is higher but you cannot ignore the fact that the higher the risk is, the higher the returns are. That is why it is worth investing in a systematic investment plan.
Also read: Child Insurance Plans - Canara Bank
