Every parent wants the best for their child, especially when it comes to education. But with higher education costs rising at 10-12% annually, traditional savings are no longer enough.
The Reality of Education Inflation
If you rely on FDs returning 6-7%, you will actually lose purchasing power. You need an investment that beats inflation.
Why Mutual Funds?
Equity mutual funds are the ideal vehicle for long-term goals like a child's education (which is usually 10-18 years away). They can generate inflation-beating returns, helping you build a corpus that matches the future cost of education.
Step-by-Step Guide
1. Calculate the Future Cost
Don't plan for today's fees. Estimate what the course will cost when your child turns 18 or 21. Use a financial calculator or consult an advisor.
2. Start SIPs Early
Time is your best friend. Starting when your child is born gives you 18 years of compounding. Even a small monthly SIP can grow into a substantial amount.
3. Create a Dedicated Portfolio
Keep your child's education fund separate from your retirement or car fund. This ensures you don't dip into it for other expenses.
4. De-risk as the Goal Approaches
When your child is 3-4 years away from college, start shifting money from equity to safer debt funds to protect gains from market volatility.
Conclusion
Your child's dreams shouldn't come with a debt burden. With smart planning and disciplined investing in mutual funds, you can fully fund their education without stress.