Why Do You Need To Plan For Children Education & Marriage?
All Mom & Dad work hard to give the best education to their Child….
We just have to face the fact that in today’s challenging life scenario, raising children has become more expensive, but not impossible and some of the factors of that are :
1. Rising Inflation
2. Heavy Increment in Education Prices
3. Change In Lifestyle
I still remember those days of schools & colleges where the fees in the past were around Rs. 3000 to Rs. 5000 for studying through a bachelor’s degree or maximum 50,000 – 1,00,000 for an MBA Degree.
Forget about the Barbie Dolls, A Dingo for your kid, or a Cost of Video games, this is now a necessity, the education Fees for playschool alone is costing 50,000 to 1,00,000 per year. Tough to understand but it’s a fact nowadays. And mind it as here we are talking about some serious kind of money for most of the people of India, to be precise, the average income of an Indian individual is less than Rs. 45,000 per annum. Most of the parents come to know the importance of Education Planning when the kids actually demand the money to go to school or college.
Everything includes cost as Now the scenario has changed, Education level, Facilities like Studying through the internet, online education, all electronics & gadgets have entered into the field of education, Overseas University has brought the state of the art technologies, from which kids/students can study sitting at home on the computer or via video conferencing. Now schools and colleges provide the forms online, which has reduced the cost of the school and colleges, but as the education industry is rising at a tremendous pace.
From Luxury to Necessity: Why we need to Invest?
As India is one of the fastest-growing economy across the world & almost 25% of the population is between the age of 25-35, the lifestyle changes are very frequent as people are having more disposable income, they want to own a house, luxurious car, a vacation abroad have become a necessity for the people, same for their kids (going to school in a brand new car / a laptop / Air-conditioned schools & colleges ) such aspirations and dreams have emerged seeing the flow of income on regular basis, the same scenario happens in every growing economy (as reported in the United States Of America in 1980), The Internet cost incurs as the technology has taken place in such a way that kids are desperate to be on social network talking and discussing their homework and managing group discussion and sharing notes on the internet, before 10 years we have never thought this will happen after a decade, such things. Parents are willing to send their children abroad for schooling nowadays which costs more than Rs. 15,00,000 to Rs. 20,00,000 today. The same will cost Rs. 20,00,000 to 26,00,000 if I take a nominal 6% Inflation (Education Cost in India has increased in excess of 10% Every year)
YOUR Kids Education – Three simple ways to Plan It:-
1. Start Early – Let your money Work for Your Kids :
Investing Early can boost your child’s education Kitty in a significant manner, i.e. if one invests Rs. 1000 starting today for the next 5 years will grow to Rs. 89,688. The same amount if started 5 years early can bring 2,78,657 to the table. It’s just the simple compounding effect which works more as you stay more in the fund.
2. Top Up Your Investments :
We get bonuses, extra incomes, gifts on kids birthdays – just add that to the kitty, so that you can reach to your kid’s education goal early then you have planned. People, in general, think that Rs. 10,000 Top-up investment will not make a huge difference, but let me bring to your kind notice that Rs. 10000 Invested for 15 Years will become Rs. 81,370 @ 15% CAGR & if one top up his/her kitty as and when they get extra money, the goal will get completed sooner than you have planned.
3. Invest in a Product which can earn more returns than prevailing inflation rate:-
Little tough to understand, If Inflation is 8%, FD Rate is 6% for a year, Rs. 100 Invested in an FD will be worth Rs. 106 and Inflation is 8% ,means the thing you were getting at Price of Rs. 100 before a year is now worth Rs. 108 and your money has grown by 6% to Rs.106 Only. Still short of Rs.2, this in some years will bring down your purchasing power and capital too. One should earn at least more than the inflation rate. Study shows that Gold has marginally outperformed Inflation ; Equity has beaten Inflation with far better margins in the long run.
