Figure out how much money you need for study abroad and start saving regularly.
Most Indian families prioritize giving their children the best education possible. It is in high demand to study at top universities and institutions abroad. Entry into Ivy League institutions is difficult given the competition and high prize money involved. In this case, the parents must provide for the constitution of a pedagogical corpus for the education abroad of their child. That’s how you do it.
Saving and investing for your child’s international education
Determine the cost of international studies and start saving regularly.
Most Indian families attach great importance to providing their children with the best education available. Top universities and institutions from other countries are in high demand. Admission to Ivy League colleges is difficult considering the competitiveness and high costs involved. In this case, parents should plan to create an educational corpus for their child’s study abroad in educationally enriched destinations. Here’s how:
Check the prices charged by major institutions for some of the courses available today. The cost of education in Canada, on the other hand, includes both the fees charged by universities for academic intakes and the cost of living. The costs are amortized over the duration of the study and are subject to inflation. According to experts, when evaluating the cost, one must take into account about 4% inflation and about 3% currency depreciation. The former is an estimate of the increase in course fees and living expenses, while the latter is the rate at which the rupee has historically lost value against the US dollar.
Your child’s educational corpus figures vary by country, college, and program of study. “Inflation is a silent assassin.” “It’s better to plan ahead because education inflation can dramatically increase the cost over time,” says Eela Dubey, co-founder of EduFund.
Read also : How to plan your children’s education in Canada?
Invest regularly
If you get the right quote and enough time, you’ll be off to a good start. The more time you have, the less money you have to invest each month.
If you have 15 years to save the aforementioned Rs 43 lakhs and expect a 15% rate of return on your investments, you should invest Rs 6,352 every month.
Your good chances are to invest in stocks.
The numbers look steep. But don’t lose hope. You could start saving gradually and gradually increase your investment to make up for a shortfall. Scholarships, tuition waivers and school loans are also available in certain situations, which can be advantageous.
“Systematic Investment Plans (SIPS) in well-managed diversified equity mutual funds are the best method to save regularly and produce long-term returns that comfortably outpace inflation,” says Gajendra Kothari, Managing Director and CEO of Etica Wealth Management. Investing in dollar-denominated assets such as diversified index funds tracking foreign indices such as the Nasdaq 100 and S&P 500 is one of the best ways to manage currency risk, he adds.
Despite the current volatility in equity markets around the world, the long-term numbers look promising. The Nifty 50 and Nasdaq 100 indices have returned 14.46% and 20.93% respectively over the past 15 years ending May 31, 2022.
Avoid looking for themes and sectors that have performed well in the past when investing in stocks. Don’t avoid stocks because stock markets have become volatile. It makes sense to stick to the plan rather than trying to time the market.
“There is no need to invest in foreign stocks if your allocation to domestic stocks is beneficial.” “You can keep some of your debt allocations in gold because gold is a solid hedge against a rising US currency,” says Feroze Azeez, deputy managing director of Anand Rathi Wealth.
Read also : Benefits of Pursuing Higher Education Abroad
Keep your focus on the goal.
While exposure to equities, both domestic and foreign, offers the possibility of significant gains, it also comes with volatility. This implies that you need to keep track of the wallet. As you get closer to your goal, you’ll need to shift more money into debt assets, which pay less than stocks but are less volatile. According to Kothari, the best debt investment alternative is a well-managed debt mutual fund.
For debt allocation, conservative investors may consider Fixed Deposits (FD). For the little girl, an existing Sukanya Samriddhi account can be used for debt investments for education funding, as long as you are willing to accept the liquidity limits that come with it.
You need to keep an eye on tuition fees and how they change over time. Your inflation and currency depreciation assumptions should be evaluated regularly. If there is a gap, it is better to increase your investments.
While all of these periodic investments and assessments should help you reach your goal of college funding for your child, don’t overlook the unpredictability of life. Buy adequate term life insurance early in life. It ensures that your child’s educational goals are met even when you are not present.
Although student loans are available, investing in your child’s education is a wise decision. It allows you to avoid touching pension funds that cannot be financed otherwise.
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source url: https://www.aptechstudyabroad.com/blogs/how-to-save-and-invest-for-your-child-international-education
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