Your Child Deserves the Very Best. Here's How You Can Save For Their Education

 

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

While education is a necessary expense, it can be financially draining, and this holds particularly true if you have more than one child. Education, however, can transform the way your child sees and engages with the world. The returns on investment an education provides are enormous. As a parent, it is natural to want your child to enjoy the best opportunities available. That being said, education – especially higher education can be an expensive pursuit to follow through with. Inflation has only made these expenses more pronounced. Added to the fact that millennials are able to save far less than the generation prior to their due to increasing expenses and consumerism prevailing, indicates the need to be fiscally prudent.

Know How to start saving for child education:

Start Saving Early

Consider funding higher education for your child to be a long-term financial goal. By investing early in child education plan, you get a head start and are required to make smaller contributions each month to your corpus.

The longer you wait to begin saving, the greater amount of money you will have to contribute each month. This in turn may hinder your risk tolerance levels. Therefore, it is easier to generate larger sums by starting to save early on as opposed to later in life.

Viable Investments Options for Child Education

Equities for your Child Education

– The time you have prior to your child needing to go to college, can help determine what investment opportunity is most beneficial to you. Provided you have 15 to 18 years to spare, equity funds are a good investment opportunity as their volatility in returns flattens out across such a long timeframe.

If you have a high level of risk tolerance, equities can be as high as 75%. The value of such high equities lies in their ability to counter the high rates of inflation.

Stocks and Bonds for your Child Education

– If you have a shorter time frame to save – take for instance 5 to 9 years, your risk tolerance will be lower, which would make investing in a mix of stocks and bonds more viable.

Mutual Funds for your Child Education

– Those providing monthly investment plans are good investments if your risk tolerance is particularly low. This is owed to the fact that they are less volatile as only 15 to 20% of their corpus is placed in equities.

The lower level of volatility however means lower rates of return.

Short-term Debt Funds for your Child Education

– In the event, you only have 1 to 4 years to save, capital protection is of utmost importance and risks can’t afford to be taken. At this point, you should ideally have no more than 10 to 15% of your equity exposed.

Funds should be transferred from an equity fund to a short-term debt fund to reduce the risks your money is exposed to and better safeguards it.

Conclusion

Education expenses are on the rise and aren’t likely to dip any time soon. The earlier you start saving, the less you need to worry about in the future. HDFC Life Click 2 Wealth is a unit-linked life insurance plan which provides valuable financial protection to you and your family. By availing of this plan, you can help secure your child’s education in the future by availing of the premium waiver plan.

ARN: ED/10/21/25905