As education costs surge, parents must tackle education inflation, which outpaces general inflation rates. Courses like engineering and MBBS in India can cost millions while studying abroad can exceed Rs 1 crore. This blog explores investment strategies to secure children’s future amidst skyrocketing education expenses.
Investment Strategies to Beat Education Inflation
1. Seeking the Right Investment
The ideal investment should provide returns above inflation, align with long-term goals, offer tax efficiency, and ensure liquidity when required.
2. Assessing Cashback Plans Life
insurance-linked investment plans with periodic cashback can fund different stages of your child’s education. However, consider the annual rate of return and potential limitations
3. Separating Life Insurance and Investment
To achieve both targets effectively, consider separate life insurance coverage to secure your family’s future and invest in education-related ventures separately.
4. Parameters for Investment
Strategize investments based on educational goals, approximate expenses, education inflation, and the time available to arrange the necessary funds.
5. Balancing Mutual Funds and Government Schemes
Opt for a balanced mix of mutual funds and government schemes to achieve inflation-beating returns, liquidity, and tax benefits.
6. Index Funds and ELSS
Consider investing in index funds like Nifty50 and Sensex, which have delivered around 12% returns per annum. High-risk tolerance investors can also explore active mutual funds and Equity Linked Savings Scheme (ELSS).
7. Sukanya Samridhi Yojana and Provident Fund
For those averse to stock markets, explore other options like Sukanya Samridhi Yojana and provident fund.
8. Balancing Debt and Equity Investments
Given that debt investments may not keep pace with education inflation, combine sensible debt and equity instruments to meet your needs effectively.
Summing it up
Plan ahead for rising education costs with smart investments. Regularly review your financial strategy to adapt to changing goals. Beat education inflation with prudent planning and well-chosen investments for a financially secure future.
