Planning for your child’s higher education? Plan smart and plan early! Start an SIP today!
Today, it is every parents’ dream to see their child succeed in life after attending top universities of the world. When it comes to higher education of their kids, be bachelor’s level or graduate level, no parent wants to leave any stone unturned in making sure that she or he gets the best education possible. Top ranking colleges and universities world over are something every parent and kid lusts over. Getting admission alone is a massive undertaking and then paying the high fees, and working hard for the duration of the course takes huge toll on both the parents and their kids. Now imagine, your child gets an offer of admission from an Ivy League college, she worked really hard to reach that stage, you too put in a tremendous amount of effort in providing her the perfect study environment, but, what if, at the last moment, you realize that the cost of education there has ballooned a lot (due to foreign exchange rate or some other macro condition) and sending your child to that university has become prohibitively expensive? It just breaks your heart to think about such a scenario, doesn’t it?
One year’s tuition fee in some colleges can be almost 30-35 lac INR! Even public universities abroad cost a bomb, setting you back by almost 20 lac INR every year of the course. Then comes the cost of living, accommodation, food, travel, visa fee… the list goes on and on. You also need to factor in the inflation over the course of your kid’s stay abroad and depreciation, if any, in the INR. No doubt, the total cost of a four year degree course from either Europe or the US, can cost you upwards of 1 crore INR.
Here are a few sample costs per annum of study in different countries:USA: 35-40 lakhs | Singapore: 18-24 lakhs | Canada: 18 – 24 lakhs | The Netherlands: 20 – 25 lakhs | Australia: 24 – 28 lakhs | United Kingdom: 24 – 28 lakhs
8.8% is the depreciation in the INR versus the US Dollar in the past one year.
Now, after realizing that such high costs can be a big hindrance in the higher education of their kids, many of you parents must be wondering what can be done and what is the best course of action to prepare for this massive expense. For one, investing early can be of great help! Ones who start investing early in a systematic manner can leverage the power of compounding and enjoy a great surplus of corpus in the future. Second important thing is picking the right investment plan. Third important thing is discipline! One who makes it a habit of making disciplined, long term investments reaps big benefits in the future. Traditional investment avenues such as PPF and bank deposits can protect capital and offer assured returns, but they are more useful if the horizon of investment is short-term. For long term goals like education, retirement etc., Systematic Investment Plans or “SIPs” can go a long way in making you a disciplined investor.
Today, Systematic Investment Plan, or “SIP,” is gaining tremendous popularity among investors from all walks of life. And why shouldn’t it? After all, SIP offers so many benefits, chief among them:
- Convenience - SIP is a convenient method that can help create wealth. Using this tool, you can invest as little as Rs. 500 on a monthly or quarterly basis. It does not disrupt your household budget.
- Flexibility - You also have the flexibility of choosing your investment amount. The only rule - the investment amount should be in multiples of 500, i.e. when investing, you can invest Rs. 500, Rs. 1000, Rs. 1500, Rs. 2000 and so on. This style of investing turns dreamers into disciplined investors.
- The Power of Compounding - The rule for compounding is simple - the sooner you start investing, the more time your money has to grow.
|Investment Amt.||Starting Age||Investment Period||Amt. at the age of 60|
|Person A||1000 pm||30||30||30,80,973|
|Person B||1000 pm||35||25||17,02,207|
- Rupee Cost Averaging - SIP uses Rupee Cost Averaging. Here, the number of units acquired per month varies based on market fluctuations. So, if the market is down you get more units and if the market is up you get less. This minimises the effect of market volatility on your investments.
See? How convenient and smart an SIP investment is! An SIP can help parents a lot in terms of financial security and growth, if they choose to remain disciplined in their investment habits and pick the right investment plan. A Systematic Investment Plan offers so many benefits and makes it simple and easy for investors to diversify their risk and be more disciplined with their investment habits. Be it for their kids’ careers, their higher education plans, their international travel plans, or their retirement plans, an SIP can help a lot in maintaining an orderly and systematic approach to wealth creation and financial security.
Once you have a list of your goals and a date by when you want to achieve them, you have to ask yourself - are you on track to achieve each of them?
Yes! Maybe? No!
If your answer was ‘Yes’. Congratulations!
If your answer was ‘Maybe’ or ‘No’, do not worry, you can get back on track using our SIP calculators here
Congratulations! You’re going to live beyond 90! 😃
But, that means a retirement period of more than 30 years! 😳