“If there must be trouble, let it be in my day so that my child may have peace” – Thomas Paine.
As rightly stated by Mr Paine (a famous English-American political activist, author, political theorist and revolutionary), this is what every parent wishes for. It’s the dream of every parent’s to facilitate the best possible upbringing for their child/children and assure the best of future for them.
When your baby is just learning to smile and grasp your finger, university education may seem too far away even to contemplate.
As a parent, you not only want your child to have a sound education, but also celebrations on important occasions for your little one, not to mention a grand wedding. Apart from the challenges of education, which is for the child to grapple with, parents have their own hurdles to overcome i.e. sharply rising cost of education.
But for every dream to be realised we have to cross the bridge of multiple realities. In order to fulfil these desires, it is imperative that you #DoyourHomework towards planning for your financial goals. And for a proper approach, we need to take into account all the realities of the times in which we are living in.
Highest Need that need maximum attention and planning from parents (especially modern day parents) are- Higher education. Are you saving for your daughter’s education? Financial planners say it is best to define your goals and segregate the investment for each goal. Funding for your child/children’s education is one of the valuable gifts you can give them and it is possible for you to do it in the most uncompromising way.
Now comes the scariest part, According to Axis Mutual Fund – Education costs, which constitute nearly 46% of the total expense on a child, are growing at a worrying pace of 20-25% per year. This overall figure may seem intimidating and terrible but with careful planning, early savings along with realistic and practical investment approach, it doesn’t seem to be that difficult to achieve. If you want to fund your child’s education, you’ll need to amass a large amount of money.
But are Indians choosing the right options when investing for their children? Here’s the bad news. An overwhelming majority is opting for low-yield instruments. Almost 45% of the respondents in our survey said they invest in the Public Provident Fund (PPF) and fixed deposits for their children. Another 38% have invested in traditional insurance policies. Starting early and consistency in savings are the two key factors in achieving your child’s successful future planning.
How to achieve the objective
The proper and correct strategic approach will help you reduce your risks and put you at higher risks with a probability of higher returns. Every individual has a different risk appetite. Equities are certainly a great option for creating wealth over the long term. The best way to start is with a mix of savings in government securities and investments in mutual funds and primary equity markets. This mix of savings and investments gives a reasonable degree of safety (capital protection) and also enables you to take decent risks by investing other half in higher-risk-higher-returns equity class.
The sooner you sow these seeds of savings and investments, better are the chances of your money growing into a big enough tree to provide for the future needs of your child/children. You may feel overwhelmed by these suggestions, but you don’t have to begin all this at once. If you are the parent of a young child, it may be hard to feel the urgency of looking into his adult future. However, the sooner you begin to think in terms of preparing him to be an adult who is as independent as possible and connected to his community, the better off he will be when the transition is actually made.
If you are the parent of an older child, you are probably aware of how quickly time moves on. Share your knowledge with others who are just beginning to look at the future. If you have not begun to plan, do so now.