Child Education Investment Plan
What is Child Education Planning?
A Child Education Plan is a systematic way of planning the course of your investments in view of the fund requirements for your child's higher education. It is a necessity these days if you want to give your child a bright future.
Depending on the amount of money needed and the time frame available, one can invest in a lump sum or in systematic installments, whichever suits your needs and lifestyle for best investment for child education. So, Child Education Investment Plan are flexible plans where you can plan according to your specific needs.
Why is planning for your child’s education required?
While long-term average retail inflation is 4–7%, that for the Child Education Plan is a whopping 11–13% year over year. We live in a continuously changing world, and I am sure you agree with us on that. In the past, planning was not considered necessary, and you could get through without a child's education being planned. However, the situation has changed, and education costs have risen more than anything else in recent years.
Let's learn by example. The two-year postgraduate fee at IIM Ahmedabad for the 2019–2021 batch was Rs. 23,00,000 and for the same course for the 2007–09 batch, it was Rs. 4,30,000. The premier educational institution has increased by nearly 435 percent in the last 12 years! So, in 12 years, there has been a 435 percent increase, which is far from low.
Imagine, if the education inflation continues to grow at this rate, who knows what amount will be required to meet your child’s educational expenses. This scenario is not just for higher educational institutions; the same trend is being observed for undergraduate courses as well. That’s why it’s better to invest in a child education plan.
As a parent, you should plan for your child’s education as early as possible; otherwise, it will result in chaos when you are searching for the best courses and best institutes. The last resort will be an education loan and you know better the interest rates and everything. So, instead of wasting money on loan interest, hire the best investment services that can enroll you in the best Child Education Plan.
For your ward’s Child Education Plan, you might have some confusion, like:
- Will I be able to afford my child’s entire education?
- What will happen if something happens to me?
- Do I currently earn and save enough to fund the expenses of my child’s college?
These confusions get minimized with proper planning, which is best done when you enroll in the Best Child Education Plan, and who better than WC Securities Pvt. Ltd. to assist in that?
Why is it critical to locate the best Child Education Plan?
- It prepares you for unforeseen circumstances.
- It prepares you for inflation.
- It saves you from taking an education loan.
- It gives peace of mind that you are already planning for your child’s education, which is a costly affair.
The ABCs of Child Education Plans
For parents, it's essential to give our children a promising future. Fuelling their education is one of the essential aspects for this journey. The Child Education Investment Plan is a financial way to secure your child's future studies. It will serve as a protection net, so that when the right time comes round educational costs won't be a burden. Peruse the specially selected collections, explore thought-provoking blogs and take your baby one step closer to ensuring their best tomorrow! Visit the curated collections and delve into all kinds of insightful information, prepare a better tomorrow for your little one.
Benefits of Early Investment in Child Education
The earlier you start with the best investment plan for child future the better it is. The target corpus can be achieved by investing in smaller amounts, thanks to the power of compounding in child education plan.
With power of compounding, you can earn interest on your Child Education Investment Plan, which gets multiplies with time. The longer you hold, the greater the amount because interest received is not on purchase value of investments but on total value of your investments.
For ex, if you invested Rs. 100. By month end, you receive 5% interest.
Total value of investment: Rs. 105.
In the next month if you receive 10%, it will be on Rs. 105 and not on Rs. 100. Hence by the end of second month, your total investment will be Rs. 115.5.
Assumptions:
- Fund requirement when the child is: 18 years of age
- Duration of higher education: 2 years
- Cost per year as of today: Rs. 10,00,000 per annum
- Existing savings: Nil
- Expected rate of return: 12% (this will vary as per risk profile and time period, for illustration purpose it is assumed to e 12% throughout)
- Expected Inflation Rate: 11.5% (as per historic data)
Hence, earlier you start saving the better it is.
How to Go About the Best Child Education Investment Plan?
Case 1. Time period in hand: 15 to 18 years approx.
You have a good time period in hand to invest for your child’s education for keep the best investment plan for child future and gain from the power of compounding. While investing, do remember to keep the inflation to 10% to 12%.
Case 2: Time period in hand: 10 to 12 years approx.
Y10 to 12 years is a decent time period. Keep 70% in the starting years in equity and decrease the allocation in equity as you move closer to your goal.
You can also increase the investment amount by certain percentage every year. By topping up, you can choose to bridge the gap between the goal amount required and current scenario.
Case 3: Time period in hand 5 years approx.
Since you have a shorter time period, avoid illiquid investments. Also, keep less than 10% in equity. If you have already invested for your child’s education, gradually start shifting the amount to debt, to avoid the volatility.
If you started in it fresh, go for debt mutual funds and/ or FDs.
You can check the Child Education Investment Plan amount required here.
Following table shows the benefits of starting early investments in child education.
| Child Education Planning Table | |||
| Child Age | Amount Required At The Start Of The College | Investment Option | |
| SIP Amount Required | Lumpsum Required | ||
| 1 | ₹ 13,458,080.00 | ₹ 21,565.00 | ₹ 1,960,093.00 |
| 5 | ₹ 8,707,303.00 | ₹ 24,333.00 | ₹ 1,995,489.00 |
| 10 | ₹ 5,052,535.00 | ₹ 32,177.00 | ₹ 2,040,634.00 |
| 15 | ₹ 2,931,804.00 | ₹ 68,056.00 | ₹ 2,086,800.00 |
Key Features of Child Education Plans
The main key benefits of Child Education Plan are:
Lump-Sum Benefits
The plan has the lump-sum benefits for your children in case of any unfortunate event like under the policy term.
This provides the assurance that your child’s education fund is not stopped or compromised and the children can continue their education without any financial troubles.
Partial Troubles
You also get the many flexible scenarios in withdrawals too. You have the option to withdraw your money from the plan after 5 years.
This can still provide for the educational milestones, like admission fees, education trips and tuition fees, etc.
Waiver of the premium
With the child plan, you can secure the future of your child without the disruption of premium payments. Under circumstances of untimely death, the insurance company will undertake the responsibility of premiums that were left. This helps in ensuring that policy is active and your children won’t have to compromise their educational goals.
Tax benefits
As the policy holder you get tax rebates under the section 10(10D) under the Income Tax Act. This directly means that the premiums deposited will be liable for tax deductions, thus helping in reductions of tax liability.
Life Cover
The top reasons for the child plan as it’s the best investment plan for child future is the life cover aspect. That means that if some kind unforeseen situation happens during the policy term, a predetermined amount will be provided to the child. This ensures that the child’s education is not disrupted at any point of time because of financial constraints.
Benefits of Investing in child Education Plan
Future Security: By choosing the child education investment plan you ensure your child’s educational future, even if you are absent in that future. This provides a sense of security and peacefulness towards the children’s future.
Disciplined savings: These plans provide a sense of systematic investment thus providing the best investment for child education over years.
Financial Protection: During the situation of your untimely or unfortunate demise. The amount decided will be paid to your family under immediate payout and the future premium payments are directly waived off thus ensuring that the policy serves the child without burdening them.
Flexibility: The Child plans provide flexibility in payments. This means that your children get the funds during important educational milestones like college education.
High Returns: These plans come with benefits under insurance and investments and they become the best investment for child future. By choosing these child education plan you get better returns than traditional savings.
Tax benefits: These investment plans can help in direct tax deductions. This means you can get tax benefits and save money while you invest in the plan.
Tailored solutions: You must choose a plan that is perfect according to your financial capabilities and thus helps your child’s education needs.
Inflation Shield: Due to inflation, the cost of education is rising at a rapid pace. Thus the child education investment plan will safeguard your child for the future education fees and amounts.