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How to Build an Education Fund for your Child?

dateKnowledge Centre Team dateApril 29, 2021 views291 Views
How to Build an Education Fund for your Child?

It is quite natural for parents to want the best for their little ones. Among all other things, a good education is something that every parent aspires their child to pursue. However, with growing times, the cost of education is also skyrocketing. Ensure a secure educational path for your child’s needs to begin as early as possible. You can shell out a portion of your savings and invest it in your child saving plan for education. These child insurance plans make sure that you can afford top-notch institutions and quality of education for your child without cutting down your expenses.

How to Build the Corpus for your Child’s Education?

The fee required for a good education may seem daunting right now, but you have years to match the numbers. It is better to spend your time to understand how you can invest your money in saving plans to secure your child’s educational needs in the future. Here are the points that you should keep in mind.

1. Choice of Investment

Your investment plan should ensure that you get a considerable interest in your savings. While fixed deposits are considered to be the safest option, their interest rate is not more than 5%. For a higher interest rate and better returns, you can try equity-oriented funds.

2. Type of Equity-Oriented Funds

Depending upon the number of years you have till your child enters college, you can choose the type of mutual fund to invest in. If you have less than 5 years, choose the plans that provide a large percentage of returns.

3. Amount of Investment

The amount you invest depends on the expected fee of the course as well as the years you have to save. If you start early, the monthly SIP amount will be lower and more affordable. You can calculate the SIP as per the expected returns that you will get from your investment.

Click here to use - Investment Calculator

How much should you Save for your Child’s Education?

In the last 10 years, the cost of education has doubled when one looks at top-tier institutions. A regular course of B.Tech, which cost around Rs.3.6 lakhs in 2019, now amounts to Rs.10 lakhs. A similar trend pattern can be seen in other courses as well, including popular choices such as MBBS, MBA, etc.

While deciding how much you need to save for your child’s education, you will first need an estimate of how much the cost of these professional courses will be in the coming 10 years. If one takes the average that the fees are rising by 10% a year:

Course Expected Fees in 5 years Expected Fees in 10 years Expected Fees in 15 years
B.Tech INR 16.5 lakhs INR 30 lakhs INR 41.7 lakhs
MBA INR 30 lakhs INR 49.2 lakhs INR 79.3 lakhs
MBBS INR 40 lakhs INR 64 lakhs INR 1.4 crore

3 Saving Tips for your Child’s Education Fund

As the standard of living rises, it affects the decision about where you send your children for higher education. To keep up with the lifestyle, time, and demands of education, it becomes paramount for a child to get the best education.

Having said that, the big question that will worry parents is whether they will be able to fund the higher education of their child. In short, they can; only with prior planning and walking in the right way. Let us list some way in which you can make it possible:

1. Start Saving Early

It is the most obvious and reliable approach. Planning for your kid's education is a long-term financial goal; thus, the right time to do so is when he or she is born. Let's assume that they will go to college when they are 18.

This implies that you have nearly sixteen to seventeen years to build a proper amount of funds to meet all the educational requirements. With the power of compound growth, your small savings will turn into a significant amount of money.

Find out the right time to invest in a child plan.

2. Assess the Future Cost of Education

The cost of higher education becomes expensive with inflation. Currently, the average rate of inflation is 13%. Assuming the rate remains the same, you can calculate the course fee.

Thus, while you calculate the funding needs, it is advisable to assess education costs in the future. This will help you have a rough idea about the monthly savings you need to put towards it.

3. Choosing the Correct Plan

An early start isn't sufficient to grow a significant amount of money. Since child's education is a long-term goal, and with inflation prevalent, it is essential to invest in a proper plan. It will not only provide an inflation-beating return but also has less risk. The right way to approach a child saving plan for education is opting for a Child Insurance Plan available.

These are a few things you need to consider before you begin investing. Now, a proper and reliable child insurance plan will yield the fund you expect. Before discussing various types of plans, let us know what they exactly are and why you should invest in them.

How can Canara HSBC Oriental Bank of Commerce Life Insurance help you?

Canara HSBC Oriental Bank of Commerce Life Insurance offers several child saving plans. These plans are created to ensure that the future needs, education aspirations, and financial situation of the parents are taken into account. No one plan can fit all the families. Thus, these varied plans are provided so that the parents can affirm the educational goals of their child. Given below are some of them:

1. Invest 4G Plan

Invest 4G Plan is a unit Linked Individual Life Insurance Savings Plan. The users can customize the plan according to their changing requirements and goals. The plan allows you total control over your insurance needs and savings with an unmatched combination of Portfolio Management Options and flexibilities.

ULIPs for planning your retirement

2. Smart Junior Plan

Smart Junior Plan is an exclusive investment option for your child's education needs. It is an individual Non-linked Par Life Insurance Savings cum Protection Plan which will fulfil your child's future education needs regardless of your presence. You can align your child's educational milestones with the guaranteed payouts during the last five years of the policy.

3. Guaranteed Income4Life Plan

Guaranteed Income4Life Plan by Canara HSBC Oriental Bank of Commerce Life is a non-linked, non-participating individual life insurance savings cum protection plan. It not only offers guaranteed benefits but also regular incomes for taking care of both long-term and short-term financial goals. It is an easily customizable plan which allows the user with flexible premium/terms option so that the plan resonates with the individual's needs and stages.

4. Guaranteed Savings Plan

Guaranteed Savings Plan offers guaranteed benefits and the flexibility to choose your savings horizon. Thus, you can tailor your policy that best suits your financial goals and requirements by following a few steps.

These were a few children saving plans that will help secure your child's educational requirements. Do proper research and start investing for a better and secure future for your child. Choosing the best child saving plan can help you remain worry-less as your child grows up and chooses his path.

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