Financial Planning for your child’s Education
Learn How to Invest in various instruments to create good corpus for children
Financial Planning: We all have a dream to provide a better life and education to our child. In fact, nowadays many parents start planning finances for future education and marriage expenses after the birth of their child. We all have dreams to fulfill like buying a car, house or touring to foreign countries etc. also to provide the best education to our children. There are different levels of financial Planning involved in achieving these goals. Making an investment portfolio to cater our future demands is a must for people having regular and fixed income. Many financial instruments available in banks and markets help us to plan finances for future needs.
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Craft a financial path or checklist to plan finances also assess the portfolio time to time
Investment or financial planning is not just putting your money into some assets or buying shares or opting an insurance scheme. It is rather a strategy to invest regularly and continuously towards your goals which you set while starting investing. Keep investing on a regular basis to create a fund which can provide you financial backup. Assess the investments frequently and keep your investments on track.
We will discuss how to take corrective measures to keep your portfolio on track and instruments available in India specifically to plan higher studies of your child.
Invest to achieve inevitable and defined goals
Plan your expenses like touring, replacement of car by considering different alternatives instead of spending money decided for investment. Do not skip the fixed installments for evitable expenses. You cannot push your child’s graduation, but you can delay replacing existing cars.
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Review your investment and see if you can increase it
Manage your portfolio risk appetite to provide you good returns to achieve your goals. Top up your portfolio when conditions are in favor. Review the volatility in investments and switch to better alternatives. Considering your child’s education, if you feel the amount at maturity will not be sufficient, think of increasing the investment.
Always try to find better alternative of investment, manage your portfolio better
Market is full of options; there is always a scope of choosing a better investment plan. Find out new ways or better alternatives which you might have missed while starting to invest. For example, when you started SIP the expected return was 11%, but you have explored another option which can provide you more return. Keep an open mind, you can choose to opt for an education loan which can also help you in filing tax returns or housing loan instead of breaking your deposits before maturity and losing money in penalties.
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Keep increasing amount you invest yearly
It happens that our income increases over the years, but investments are on the same track as it was years back. Revise your investments, plan according to your income. Step-up SIP is a good way to increase maturity amount.
Try to earn extra income or passive income
This works really well when you need more funds to achieve financial goals. Passive income can release your stress and help you in increasing your investment amount. Find out news sources of earning and ways to start passive income. Work together to earn more. Start earning from evening jobs or early morning work.
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Manage risk and rebalance your portfolio
Some investments, like market related investments and unsecured lending, are riskier than secured and fixed income investments. Regularly analyze the market risk and impact of market on your portfolio, rebalance to ensure your portfolio always reflects your risk, which is a function of factors like horizon, income, expenses, dependents, etc. When there is a swing in the economy, switch the investment from gold to equity and vice-versa.
Instrument available in market to achieve financial goals and make Financial Planning
Generally, we get to know about this by asking people surrounding us and do traditional investments like opening a fixed deposit or opting money back insurance policy. We should take utmost care while investing for future needs like a child’s education. Find out investment opportunities available in market –
- If you have a girl child, Sukanya Samriddhi Yojana is a best known risk free and tax-free investment scheme.
- Mutual Fund SIP, there is a flood of mutual funds in the market, choose the right one which suits you and take expert’s advice.
- Public Provident Fund, if you are looking for risk free return investment in this scheme.
- Equity market Investments, it is considered a riskier option. While choosing this for future planning do take advice from experts.
- Currency Trading, you can get advantage of currency swapping. You can buy USD or any currency online through the authorized brokers.
- Buy Metals, you can buy any metal online and keep in your D-mat account. Don’t just invest in gold and silver, you can buy copper, Zink, Lead, Gases, Crops etc. from commodity exchanges.
- Childcare plans, companies and banks in India offer childcare plans which provide good returns to create a good fund.
- Real Estate, fixed assets like property have always been a good option to invest for the future, exploring areas where you can safely invest in property.
You should always diversify your portfolio instead of putting all your money in one instrument. Analyze market conditions and choose the best suitable option as per your situation and financials.
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