The best jobs go to the most qualified people. This liner means much more in today’s hypercompetitive world that has millions of well-qualified people entering the workforce each year. To remain ahead, candidates constantly upgrade themselves with better skills, the latest qualifications, and training programs. With increasing awareness about the importance of education, this number is only set to increase over the decades. And getting quality education means investing money. Either people buy child insurance plans or they opt for education loans.
An undergraduate degree may no longer suffice to demonstrate deep expertise in the chosen field. Industry practitioners are going one step ahead of a master’s degree and opting for the intensive PhD program. As a parent, you must draw a child education plan to support him/her until s/he attains a post-graduate degree at a University of repute.
Higher education has to be planned more meticulously because this is the stage at which your child will opt for super-specialization and this will define his core niche/expertise. Following some of these broad guidelines could help you make a wise choice.
1. Look for the Right Courses
Your son/daughter wants to study MTech in Avionics. You will have to look at Universities/Engineering Colleges offering this specialization. If it is not available in your city, is your son/daughter willing to relocate to that particular city for 2 years? What are the additional costs of living there? If the course is undecided, you must explore online, visit Education Fairs and Admission Seminars to get a gist of what is offered.
2. Look for the Right Institutions
Rankings, albeit not a perfect yardstick, do give a fair idea to shortlist colleges and Universities. Different agencies assess colleges and Universities on different parameters such as teaching, R & D, infrastructure, campus placements, class size, Net Promoter Scores (NPS), etc.
Institutions that figure in one list may not figure in another because each list has its focus area (public universities, deemed universities, technical colleges, B-Schools, etc) and also based on the college’s interest to disclose details and participate. NAAC, NIRF are some of the government-backed ratings in India.
The quality of the institution signals brilliance creates a positive perception and increases acceptance. This opens many doors more quickly for the candidate. In healthcare, the doctor’s alma mater gives the initial confidence to trust his/her ability to deal with human life. After all, would you like to risk your life in the hands of a doctor who graduated from an unknown college on a remote island?
3. Calculate Fees and Other Expenses
Fees vary basis the course, the institution, and the location. For example, the cost of living in New Delhi will be higher than that in Nashik. An MTech in Computer Science could be costlier than an MTech in Engineering Management. Plan to the best extent possible and also factor in your budget. Bank loans are possible only when you provide collateral of almost 140% of the value of the loan. Moreover, there is an upper cap on the amount you can avail of.
4. Define your Goal
Goals should not be generic especially when finances are involved. Makes sure you chart out a goal that is Specific, Measurable, Attainable, Realistic, and Time-Bound (SMART)
Being specific with the education goal would mean you can define the discipline of the study and possibly the location as well. The cost of your goal in the next step may vary accordingly:
- Engineering, Medical, Administration,
- Type of Institution, for example, government-backed, private, etc.
- Top Indian institutions or foreign
- If foreign which country
Once you have defined the goal specifically, your area of search for a number becomes narrow. For example, The current cost of such programs (MTech, MS, MBA) is in the range of Rs.15 Lakhs to Rs. 35 Lakhs in India. For a top foreign institution, it could go up to Rs. 40 – 50 lakhs in current cost.
In 15 years, factoring in inflation, these courses would cost in the range of Rs. 30 Lakhs to Rs. 70 Lakhs. You can work backwards to save or invest to reach this figure.
Your child wants to study MBA at a top private American University. S/he has great grades in school and will surely (all prep tests are indicating this) ace the GMAT. The chances of securing admission seem very much plausible.
Realistic is rather simple to understand. For example, you should not expect your child to become a spaceship pilot with a degree in liberal arts. So, realistic would mean your goal has to be aligned with your child’s acumen and ambitions.
You must invest and realize your financial goal within 10 years. Your child needs the money then, not afterwards. So, investments have to be laser-focused.
5. Select the Right Child Plans for Investment
Defining your financial goal the SMART way gives you a clear picture of how much you need and when. Thus, you can start saving accordingly. The investment options, however, will depend on your risk appetite:
- Aggressive Investment Options
- Safe Investment Options
- Guaranteed Investment Options
Child Insurance Plans for Aggressive Investors
Invest 4G and Smart Junior Plan, offered by Canara HSBC Oriental Bank of Commerce Life Insurance, are some of the most flexible and efficient investment options for aggressively growing your money. These plans allow you to invest in a mix of equity and debt instruments so that you can take advantage of market movements and benefit from equity growth.
The plans have many features to help you benefit from the market growth, even when you are not following the markets continuously:
- The auto funds rebalancing feature moves your money across various funds, every quarter, as per your defined allocations.
- The policy also allows partial, systematic, and milestone-based withdrawals to meet any unexpected expenses and have a systematic flow of income to pay fees, etc.
- Wealth boosters and other bonus for long-term investors for better portfolio growth
- Protect your goal with the premium protection option, where the insurer will pay the remaining premiums on your behalf in the case of your early demise.
- The staggered pay out schedule in the last four years of the plan, so that money is available when your child needs it.
Child Insurance Plans for Safe Investors
You may want to safeguard your goal, not only from the uncertainties of life but also from the uncertainties of financial markets. You can invest in any of the following:
- Debt fund options in Invest 4G or Smart Junior ULIP plans
- Guaranteed Savings Plan
Guaranteed Savings Plan, offer guaranteed maturity value. So, you can be sure to receive a specific sum of money at maturity when you start the plan. While the debt fund option of ULIP plans may not guarantee a rate of return, it does offer stable growth to your portfolio. Debt funds are far more stable than equity funds and will offer steady growth to your invested money.
Investment in insurance policies gives you the comprehensive benefit of investment, insurance cover, and tax deduction. The life cover assures you that your family will still educate the child, as planned, if, unfortunately, you are not around then.