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Am I Investing Right for My Child’s Education

As a parent, you want the best of everything for your child. However, to ensure this now and in the future, investing in your child’s education is a must. To provide the best education for your child, you will need to save up for the same.

However, it is important to remember that just saving for your child’s education is not enough, and combating inflation is necessary too. To do this, you must invest smartly, as soon as possible. Take a look at how to invest correctly for your child’s future.

Two things to keep in mind when investing

  • Start investing earlier than you think you need to, so you can ease the strain on your monthly cash outflow.
  • Choose investments keeping their maturity date in mind. This will ensure that the funds are available when you need them.

Instruments you can consider for your child’s future

Real estate

If you are able to invest well in advance and have a good number of years before you actually need the funds, consider investing in real estate. With the rising real estate prices in India, you are likely to make a tidy sum in a few years. Additionally, if you do not want to sell the investment, you can choose to lease out your property and save the rent received for your child’s education or invest this amount. Consider purchasing properties in top localities to make the most of this option.

Public Provident Fund (PPF)

Similarly, if you have several years before your child will need the amount for higher education, consider a PPF: a secure, government-backed investment. A PPF has a lock-in period of 15 years and offers tax deductions under Section 80C too. The limit of investment per year is Rs.1.5 lakh, and it offers interest of 7.6% at present.

Post Office Recurring Deposit

A great choice for long-term saving, the post office recurring deposit helps you save for your child’s education by putting away money on a regular basis. However, it is important to remember that the entire amount is taxable. So, while this can be a component in your strategy, don’t park all your savings for your child’s future here.

Fixed deposit

Investing in a fixed deposit can give you high and guaranteed returns. You can choose to invest in a Fixed Deposit from Bajaj Finance to maximise your returns and gain up to 8.40% interest with an additional interest of 0.25% upon renewal.

When you choose an FD for a child such as the one offered by Bajaj Finance, you can breathe easy as it carries high stability ratings from both ICRA and CRISIL.

 

You can also use an FD calculator to weigh the returns that various FD interest rates, tenors and amounts offer.

Equity Linked Saving Scheme

With ELSS, you can enjoy an interest rate of up to 18.8% approximately, and gain high returns over just a 5-year period. It is also the only type of mutual funds that you can use to avail tax exemptions under Section 80C, and has just a 3-year lock-in period.

Sukanya Samriddhi Yojana

This is another government scheme created to help ensure financial security for the girl child. It offers you an interest rate of 8.1% with tax-free returns and tax exemptions under Section 80C. However, this scheme is only available if you have a daughter below the age of 9 years. It also has a lock-in period of 21 years. However, once your daughter turns 18 years old, you can withdraw 50% of the amount to finance her education.

So, choose from the above short-term and long-term investment options to find the right mix that will allow you to comfortably finance your child’s education.

What do you think?

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Written by aman khanna

 

 

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  1. I am immensely grateful for the fact that my education cost virtually nothing – state schools from ages 5 to 17, then university at a time when the UK government paid all the fees and even gave you a grant for living costs that included travel costs from home. Needless to say, today’s students are not so lucky.

    Of course, people living in Third World countries were never so fortunate, and I have every sympathy with people who struggle to afford even the most rudimentary education.

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