1. Parents should know that the price of higher education in India increases at a much faster rate than the general rise in prices, i.e. inflation, and is sometimes nearly double the rate.
2. As a thumb rule, we should keep in mind that the cost of higher education would go up by about one-sixth every year.
3. It means that the same course will cost about 6-7 times in the next 15 years.
4. Therefore, we need a long-term financial plan for higher education that can rise at the rate of 16% or more, for 15 years, and with not too much risk.
5. The best solution is to plan very early in the child's life, with a robust plan that will withstand the worst case situation too.
6. Start with the main earning parent buying a pure online term life insurance policy, for at least 6-7 times of the target course's present cost), and equal to the years (15 or more) left for the child to go for that specialized course, to ensure that there is no interruption in case of the parent's earlier demise.
7. Thereafter, start disciplined long-term Systematic Investment Plans (SIPs) in diversified equity mutual funds.
8. Before 2-3 years when the funds would be needed by the child, Systematic Transfer Plans (STPs) could be done from the corpus to less volatile short-term debt funds.
9. In case you still fall short marginally, opt for an education loan for a convenient amount with an Equated Monthly Investment (EMI) holiday, so that the child starts paying it after getting a job (with tax benefits).
10. Remember to individually apply the entire procedure to provide higher education to BOTH the BOY and GIRL child, by clearly earmarking your corpus in different sets of term policies and funds as required by the target courses.
2. As a thumb rule, we should keep in mind that the cost of higher education would go up by about one-sixth every year.
3. It means that the same course will cost about 6-7 times in the next 15 years.
4. Therefore, we need a long-term financial plan for higher education that can rise at the rate of 16% or more, for 15 years, and with not too much risk.
5. The best solution is to plan very early in the child's life, with a robust plan that will withstand the worst case situation too.
6. Start with the main earning parent buying a pure online term life insurance policy, for at least 6-7 times of the target course's present cost), and equal to the years (15 or more) left for the child to go for that specialized course, to ensure that there is no interruption in case of the parent's earlier demise.
7. Thereafter, start disciplined long-term Systematic Investment Plans (SIPs) in diversified equity mutual funds.
8. Before 2-3 years when the funds would be needed by the child, Systematic Transfer Plans (STPs) could be done from the corpus to less volatile short-term debt funds.
9. In case you still fall short marginally, opt for an education loan for a convenient amount with an Equated Monthly Investment (EMI) holiday, so that the child starts paying it after getting a job (with tax benefits).
10. Remember to individually apply the entire procedure to provide higher education to BOTH the BOY and GIRL child, by clearly earmarking your corpus in different sets of term policies and funds as required by the target courses.