Financial Planning For Child Education With Mutual Fund

According to the reports of NSSS (National Sample Survey Office), the expenditure for general education has increased by 175% while professional education rose by 96%. In simple words, annual education inflation range is in 10%-12% which is much higher than the general inflation. Therefore at present, the first and foremost priority of any parents should be investment planning for a child’s future education. In India, there are thousands of fund house available for Financial Planning For Child Education. Therefore, you need to be very sure about your requirement and risk-taking capacity during the planning. Through today’s article, you will get a proper detail view regarding what you should do and shouldn’t do in the planning.

Beneficial Sides of Financial Planning For Child Education

First of all, one thing should be clear to you all that don’t rush into making an investment decision. You must have a very clear idea in your mind about your doings. I able to jot down some of the beneficial sides on the Financial Planning For Child Education.

Early Planning Can Minimize the Risk

Starts financial planning for your child’s education as soon as possible. Early planning not only minimizes the risk but also lead you to great profitable return. The more early you start to invest, the more secure your child’s financial future will be. Besides the above points, there is also another benefit of the early investment. If you invest early, you can start with the small amount for a long term. Therefore, early planning is the safest way to secure a child’s future.

Choose Investment Which Compounded Annually 

As I have stated above that there are thousands of fund house and investment plans available in India. Choose wisely and set a goal before investment. It is advisable to choose an investment plan with compounding benefits. Besides increasing the return amount, compounding investment plan helps to increase the amount within a short to mid-term period.

Save Tax Through Your Child Investment Planning

Besides your child’s investment planning, you can save tax through the process. There are many plans available in the market by which you can get income tax benefits. In this way, you can fulfill your goal in both ways and save more. Example: suppose you invest 2 lakhs in the equity-linked savings or ELSS scheme, there you can get up to 1.50 lakh income tax benefit.

Investment Can Make Your Financial Life More Discipline

An indiscipline financial life can lead you towards an unsecured future. All of the parents want a secured and tension-free life for their family. The only way to lead this life is to make your financial life more disciplined by investment. Save more and don’t be a  spendthrift. The more you save, the more relaxed life you will get.

Beat the Inflation By Long-Term Investment

At the beginning of my article, I mentioned a data related to the growing inflation rate. The one and the only way to beat the inflation rate is to invest in a long-term fund. During the calculation of return, it is important to include the inflation rate prior to investment. You don’t have to invest a lump sum amount, invest small amount but regularly.

Example:

Suppose you want to secure your child’s future by 2038. Then it is advisable to starts investment from now because only 5 years delay can make a huge difference in your portfolio. The example is given below. (here, in this given example, we take 12% return per annum)

financial planning for child education

Top Five Financial Planning For Child Education With Mutual Fund

Here, are the lists of top five investment plans which have the capability to give a high return.

Monthly Income Plan (MIP)

The MIP is basically a debt mutual fund scheme which invests a small 15 to 25% part in equities. Therefore, it acts as a hybrid scheme. The plan offers regular income (half-yearly, quarterly, monthly) payout but due to the presence of equity, the return can be volatile.

Systematic Investment Plan (SIP)

The name of the scheme itself interprets its subject. You can start investing here with very small sums of money every month. According to the scheme, your money will be deducted regularly every month in a disciplined manner. You can choose your scheme period according to your capability. By this systematic investment plan, your financial life can go in a secured way.

Systematic Withdrawal Plan (SWP)

It is exactly the opposite of SIP. Here, you can withdraw a specific amount at a pre-determined time intervals (Monthly, quarterly, half-yearly, annually). Unlike SIP, Systematic Withdrawal Plan allows investors with a specific amount of payout at a certain interval of time.

Systematic Transfer Plan (STP)

In this scheme, investors have to invest a lump sum amount in one scheme. Then they need to transfer or switch a pre-defined amount into another scheme. According to your choice, a specific amount will be transferred every month on a particular date.

Fixed Maturity Plan (FMP)

The plan belongs to close-ended debt mutual fund category. It has a fixed maturity period from one month to five years. This particular fund invests only in investments whose duration is matched to the maturity period.

Conclusion

However, take decision carefully and wisely while making Financial Planning For Child Education. Starts to save money for your child as soon as possible. It will secure the educational as well as the personal life. The more you discipline about the financial planning, the more relaxed your life will be in the future.

Now, I am going to interpret another trick by which you can save more money for investment. If you invest in mutual funds directly through online, a lot of money can be saved. A link of Zerodha Coin is given below. Zerodha coin is a platform that lets you buy mutual funds online. By using this online process, investors don’t have to pay extra commission. You can directly buy it from asset management companies. CLICK HERE TO JOIN ZERODHA COIN

Ankita is a graduate in English language and she has also done her MBA from the Calcutta University. She has a high knack in the stock markets. An experienced stock market content writer Ankita is also trading on her own account. Ankita is also preparing for the NISM Research Analyst Series XV examination seriously.



Categories: Investing, Mutual Funds

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