It’s important to invest in a child education plan to secure the future of your kid. Due to rising inflation, prices of everything including quality education are increasing. You need to start investing now to build a future corpus for your child. That’s because times are unpredictable and so is financial stability. You don’t know whether you will be able to spend money, say, for the next 10 years to help your child achieve his/her milestones.
When you consider investing in your child’s education, it’s better to know about certain mistakes that you should avoid. So, here’s a look.
Overlooking the Future Cost of Education
Whether you wish your child to pursue higher education in India or abroad, remember that education inflation is on the rise. Besides, overseas degrees are expected to be 10 times costlier than those in India. A kid’s present aspirations can help you plan for the future. In this case, make sure to consider the future cost of education by studying the expected rates of inflation in the coming years. You can even use a child education planner on the website of the insurance provider to calculate how much you should invest as per the future education cost and the corpus you aim at generating.
Underestimating Risk Appetite
You should consider how much risk you are willing to take. Just remember that with a higher risk, comes the potential to get more returns. Take into account how much you know about the market and how much money you can afford to invest in a child education plan. Consider whether you want to take no risk, moderate risk or high risk. The returns are expected to be directly proportional to that. If you wish to strike a balance, you can invest in a medium-risk option.
Choosing a Wrong Policy Term
The policy term plays an important role in your investment since it will grow during this period. Going for the wrong term can make you fall short of money to meet your goal. You should choose the tenure based on your child’s future needs or a specific milestone. For instance, if the funds are needed for your child’s higher studies 15 years later, the term should be around 15 years to get returns at the right time of need.
This goes for any kind of insurance or investment that you opt for. The earlier you start, the more time is available for your investment to grow. Plus premiums are expected to be lower. The same applies to a child education plan. For example, if you purchase a plan when your kid is just born, you can have enough time to grow a corpus for their higher studies. Comparatively, buying the plan when your child is a teenager will lead to the generation of fewer funds due to less time for investment.
Make sure to use a child education planner before investing in a plan and choose a reputed insurance provider in India to buy the plan from.