1. Higher education cost is increasing at nearly double the general inflation rate.
2. As a thumb rule, one should estimate it will increase by one-sixth annually, so the same course will cost about 8 times in the next 15 years, i.e. possibly at a higher rate than annual salary increase rate too.
3. Hence, a long-term growth-oriented financial plan is needed from child's early age (say 5 years), without taking too much risk at the same time.
4. Firstly, the parent should buy a pure term insurance policy of a substantial amount and equal to years left for child's target course, say 50 lakh cover for 15 years, to safeguard against worst case situation of he or she not being there.
5. Thereafter, he or she can afford to take a calculated risk and invest in a multi-cap fund through a step-up SIP for the entire term aimed at child's target course.
6. Finally, one needs to preserve accumulated corpus from sudden market fall at time of need, by gradually shifting it to a debt fund 2-3 years before its need.
7. To meet total course cost (E&OE):-
2. As a thumb rule, one should estimate it will increase by one-sixth annually, so the same course will cost about 8 times in the next 15 years, i.e. possibly at a higher rate than annual salary increase rate too.
3. Hence, a long-term growth-oriented financial plan is needed from child's early age (say 5 years), without taking too much risk at the same time.
4. Firstly, the parent should buy a pure term insurance policy of a substantial amount and equal to years left for child's target course, say 50 lakh cover for 15 years, to safeguard against worst case situation of he or she not being there.
5. Thereafter, he or she can afford to take a calculated risk and invest in a multi-cap fund through a step-up SIP for the entire term aimed at child's target course.
6. Finally, one needs to preserve accumulated corpus from sudden market fall at time of need, by gradually shifting it to a debt fund 2-3 years before its need.
7. To meet total course cost (E&OE):-
a) 4-yr B.Tech: 2018-0.25 cr; 2030-0.75 cr
- 22,000 SIP @13% CAGR for 12 years.
- 22,000 SIP @13% CAGR for 12 years.
b) 2-yr MBA: 2018-0.40 cr; 2033-1.6 cr
- 29,000 SIP @13% CAGR for 15 years.
- 29,000 SIP @13% CAGR for 15 years.
c) 5-yr MBBS: 2018-0.40 cr; 2030-1.25 cr
- 36,000 SIP @13% CAGR for 12 years.
- 36,000 SIP @13% CAGR for 12 years.
d) 2-yr MD: 2018-0.45 cr; 2033-1.93 cr
- 36,000 SIP @13% CAGR for 15 years.
- 36,000 SIP @13% CAGR for 15 years.