Financial decisions cannot be limited to opening bank accounts. You have to consider wealth accumulation for a comfortable future. One of the biggest expenses you might face is your child’s education cost. To ensure that children have a bright future, you might want to enrol them in the best institutions; and that can cost a lot especially if it’s abroad.
Keeping in mind the rising cost of education and average inflation rate, it is a good idea to start planning now. Here are some ways to build funds for your child’s higher education.
Tip#1 Consider the Bank’s Savings Interest Rates
The first step you might want to take is looking for the best savings account. Let your income accumulate interest so that you have a higher potential to save for further investments. Thus, look for a bank with the best savings interest rates.
Tip# 2 Choose the Right Options to Generate Wealth
Just an early start might not be enough. You need to invest in the right options to get optimised returns. Decisions need to be based on your income level, the number of kids, their age, and the time left for your retirement. Also, consider other financial goals before zeroing on a specific option.
Some options you might consider:
- Term Insurance Policies– If you want substantially longer coverage, accidental death benefit, and lump-sum pay-out to family in case of an eventuality. Apart from covering terminal illnesses, they also provide tax benefits.
- Equity Funds– When you have 16-18 years left before your child leaves for college, equity funds could be an option. An appropriate amount of exposure is required to counter the high inflation rate.
- Investment-Linked Insurance- For twin benefits of financial protection and wealth accumulation. You can have flexibility in premium payments and a diverse range of funds to allocate your savings into.
Tip#3 Apply for a Personal Loan
If you have opened a savings account online already, consider applying for a personal loan to your bank. You can obtain a substantial amount and competitive interest rates if you have a good credit score. Personal loans do not require collateral and can be approved in a very short time with minimal documentation upload.
Tip#4 Consider Fixed Income Investments for Short Term
If you have a short-term horizon, fixed income options might be good for guaranteed returns. A fixed deposit with higher interest rates is a good option for a risk-free investment. Senior citizens can further avail themselves of higher rates.
Tip#5 Review your Investments Periodically
Your future goals might change. Moreover, inflation impacts two vital elements of children’s education – tuition fees and living costs. Any of the two can increase at a faster than expected rate. With every salary increment, consider raising the investment amount. Monitor the portfolio to see it is performing as per your financial goals.
Remember that as your living standards rise through the years, your decisions regarding your child’s future education will change. Plan and consult an expert if you have to. Whether you consider opening a bank account or a recurring deposit, do so after careful research.