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Use sips to meet child’s higher education costs
Published On , 24 Jul 2018 By ET Wealth
SIPS IN Equity FUNDS COULD CREATE LARGE CORPUS OVER LONG TERM WHICH COULD ALSO BE USED TO MEET EXPENSES FOR CHILD’S WEDDING
In India, securing a child’s future through good education is one of the top priorities for parents. Next on their agenda is taking care of the expenses for the child’s marriage. Since a child gets several years before he/she needs a large chunk of money for higher education or marriage, parents should look at systematic investment plan (SIP) in Equity funds for building a large corpus.
Select one or two Equity fund(s) from a good fund house with a track record of several years
Have a good idea about when your child could go for higher education and when he/she could get married
Fill up the application form (s), ECS mandate(s) for fund transfer and the SIP mandate(s) for the fund
Don’t touch these funds unless under extreme conditions
Review fund performance regularly and if required rebalance the portfolio
Consider consulting a financial planner/advisor
While calculating cost of higher education, it’s important to remember that in India, the long term average annual inflation rate for education cost is about 8-10%. And the rate of inflation for costs of wedding has been 10-12%.
There are calculators on the net which could give 2 you an estimate about these costs.
Be realistic about returns you expect 3 from the funds you invest in.
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