The Right Time To Start Planning

In India, there is an ideal age for everything – from starting school to starting a career; from getting married to having children. When it comes to planning and investing for your child’s education - what is the ideal age to start? The minute he is born? The day he starts school? Once he starts showing an inclination towards a certain field? Just before he graduates from high school?

The answer to this question is surprisingly simple – start early, invest long.

Let’s go through the journeys of 3 parents who invested for their child's education at different ages:

The No-Stress Approach

Arushi Agarwal, a Financial Planner started a SIP to fund her son’s higher education the day he began Pre-School at age 3. Her goal - raise enough funds to fund an Engineering Degree. She invested in long-term schemes that had assets allocated in equity and debt, ensuring that her returns beat inflation.

Her early start meant she could start small, gradually increasing her investing as her income increased. Her long-term approach also helped her take advantage of volatility in the market.

The Dream Based Approach

Sachin Sinha, a Marketing Executive started to invest for his daughter’s education when she started Secondary School and started to show an interest in Engineering.

His goal - raise enough funds to send his daughter to a well-reputed Engineering program in India. He started 7 years after Arushi Agarwal but choose similar investments to reduce volatility while beating inflation.

His slightly later start meant - his investment was larger to ensure that he raise sufficient funds in a shorter period of time.

The Short-Term Aggressive Approach

Rahul Khanna, a Shop Owner started to invest for his son’s education much later compared to Arushi Agarwal and Sachin Sinha due to other financial obligations.

With only 4 years before his son starts the B. Tech program at IITM Chennai, he chose investment options that provided stable returns while delivering slightly above inflation returns.

His late start meant - his investment was a significantly large to ensure that he raise sufficient funds in a short period of time.

As you can see, Arushi Agarwal, Sachin Sinha and Rahul Khanna have the same goal - send their child to a well-reputed Engineering College in India. The target amount was the same `12.11# lakhs. The only difference was ‘Investment Duration’.

Arushi Agarwal invested a small sum - `2,500/Month* for 15 years. Sachin Sinha invested a slightly larger amount - `7,700/Month* for 8 years. And Rahul Khanna invested `19,850/Month* for 4 years.

Each parent accumulated the targeted amount by the time their child turned 18. However, the amount they invested differed significantly. Arushi Agarwal invested `4.5 lakhs, Sachin Sinha invested `7.39 lakhs and Rahul Khanna invested `9.52 lakhs.

As you can see, based on each of these parent’s journey’s – it’s easy to infer that there isn’t an ideal age to start investing - the sooner you start, the smoother your journey.

Don’t know how much to invest?

Calculate how much you will need to provide an excellent education for your child based on his/her age, the assumed field of study, the investment rate of return and the rise of tuition cost based on the inflation rate.

Begin now and secure a bright future for your child.

*On the assumption of ‘0’ current savings/investment **Rate of Return: 12% ***Inflation rate: 10% # The complete tuition cost is based on the current tuition for Indian Institute of Technology Madras- [IITM], Chennai – Rs. 3.81 lakh.