Investing in Your Child's Education: A Financial Guide
Education inflation in India is rising at 10-12% annually. Here is a roadmap to financially plan for your child's future.
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Investing in Your Child's Education: A Financial Guide
The cost of education in India is skyrocketing. From elite private schools to higher education abroad, the numbers can be daunting. But with early planning, it's manageable.
The Reality Check
Education inflation is estimated at 10-12%, significantly higher than general consumer inflation. A course costing ₹10 Lakhs today will cost approx ₹31 Lakhs in 10 years.Instruments to Consider
1. Sukanya Samriddhi Yojana (SSY)
- Best for: Girl child.
- Returns: High, government-backed tax-free interest.
- Use: Marriage or Education.
2. Public Provident Fund (PPF)
- Best for: Long-term safe accumulation.
- Lock-in: 15 years, aligns well with a newborn's college timeline.
3. Mutual Funds (SIP)
- Best for: Beating inflation.
- Strategy: Equity mutual funds for goals > 7 years away.
- Risk: Moderate to High, but best potential returns.
4. Education Loans
Don't be afraid of them. They instill responsibility in the child and come with tax benefits (Section 80E) for the parent paying interest.Strategies
- Start Early: The power of compounding is your best friend.
- Step-up SIPs: Increase your investment as your income grows.
- Separate Goals: Don't mix retirement funds with education funds.
