College education is considered by many as the stepping stone to a promising career. But it also comes at a heavy price tag.
As per data from Collegeduniya, the average fee for an engineering course is Rs 5-Rs15 lakh per annum, for a four-year long course. The average fees for medical colleges start from Rs 5 lakh rupees for government colleges and goes up to Rs 50,00,000 for private colleges. The fees for an MBA from top IIMs might cost Rs 30,00,000.
Moreover, education from top-rated foreign universities might cost five times as much, burning a huge hole in your pockets. But this does not mean that you should give up on the dreams of providing your children with the best education.
There are various ways through which you can save for your children’s education. Some have been listed down below
Mutual funds are a type of diverse investment that is handled by investment specialists like financial advisors. They allow individuals to participate in a diverse corpus of assets, including equities and bonds. The best part about investing in mutual funds is the fact that your money is handled by professionals and you do not have to devise investment strategies.
Sukanya Samridhi Yojana
Sukanya Samriddhi Account (Girl Child Prosperity Account) is an Indian government-sponsored savings initiative for female children. The project encourages parents to save for their daughter's future education.
SSY is a low-risk scheme that offers 7.6 per cent interest. SSY can be opted by parents who have a 10-year-old daughter and the funds can be withdrawn when the girl reaches 18 years of age.
Index funds are funds that mimic the composition of financial market indexes like Sensex and Nifty. Their objective is to replicate performance of a financial market index. Index funds incur fewer costs and charges than actively managed funds. Moreover, for a long-term perspective, there has been a constant uptrend in the returns of the index funds which makes them an ideal option for saving for your child’s education needs.
Experts also have similar opinions. Renu Maheshwari, Board Member, Association of Registered Investment Advisors (ARIA) said, "We recommend using equity mutual funds as a primary asset class if the goal is far away in future. For a girl child, we recommend using Sukanya Samriddhi Yojana along with equity."
In a bid to give your children a bright future, you should not compromise on your future financial independence. Ms Maheshwari is also of the same opinion. She says, "We usually advise clients not to fund education at the cost of retirement. If your savings cannot fund both the goals, then consider the education loan. Remember it is most important to have financial independence during retirement."
Savings and investments are not the only options to pay for your child’s education. Education loans are also an option to finance your child’s education. Education loans can be opted for Indian as well as foreign universities. They are provided by all major banks operating in India. The interest rates start from 6.85 per cent for a loan that can be paid back in 15 years.
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