Introduction
A child’s education is one of the major expenses of everyone’s household and you know the educational fees are going to get higher only in the future. Well, not only education, the standard of living is on a rise as well for children, which only means you have a lot of expenses coming your way with minimal scope of savings. In order to meet all these expenses, you must start investing in mutual funds. You must have investment goals as per your requirements for which you need to have a vague idea of how much amount you will be needing for your kid’s education that can easily be calculated using online tools such as a child education calculator.
Now the big question is, how should you start with investment for your child’s education. This is why we have put together a few tips for you on how to build funds for your kid.
- Start early- An early start has to be the first step for investment. Obviously, the sooner you start investing, the more you will be able to save. In addition to that, the power of compounding will work in your favour to increase your wealth. Since this is going to be a long term investment fund, you will be able to yield great returns.
- Pick the right option- There are several types of mutual funds available in the market but you can’t just go and invest in any of the schemes blindly. Read as much as you can or take the help of professionals to understand the market as well as the scheme. Gain an understanding of top mutual funds in India since it all depends upon the kind of choice you make for investment. Consider every aspect such as time horizon, returns, other features, etc. and then choose the right investment plan.
- Review your portfolio- Don’t forget to review your portfolio every year. You need to check if your investment goal is the same or not, i.e., whether there is any rise in the fee or living standard as these are non-static aspects. This will help you understand whether your portfolio will be able to meet your expected goals in the future or not. If this does not match, you need to raise the investment amount. For instance, you can step up via SIPs or systematic investment plans.
- Custodial accounts- One of the great ways to save for your child’s education is to open a custodial account. A custodial account allows you to save money e which can only be used for a minor child. You will be able to invest your money in the account in any possible manner depending upon your preference as the custodian of the account without worrying about any tax consequences. After a certain period, the child will be the owner of the account and can use tea investments as per his desires.
Conclusion
A child’s education should not be affected in any case. Your duty does not stop at investing only, in fact, you also need to understand that it is a long term commitment and you cannot withdraw any amount until you reach your investment goal. You must plan ahead of time to save enough for your child’s education. Even if you are a bit late, it does not matter. The investment is going to help you only in the future. So, be an early bird and start investing.
