5 Effective Investment Strategies to Fund your Child's Education

While it’s getting increasingly harder to get a good job even after a good education, the price of education, especially higher education, is rising unabated in the country. But it is not just the cost of higher education that has increased, even providing decent primary and secondary school education to a child costs a bomb.

According to a survey, 65% of parents spend 50% of their yearly income on a child’s school education and extracurricular activities. By the time their child becomes a teenager and graduates from school, the majority of parents have already spent Rs. 18-20 lakh on education. Therefore, it’s equally important to factor the current education costs when you start investment plans for a child.

The statistics are very alarming when it comes to higher education in India. Below is a sample.

The State of Higher Education in India

Source: IndiaSpend

Making a timely investment in a ULIP Child Plan can effectively help in funding your child’s higher education aspirations. Bajaj Allianz ULIPs available on Bajaj Markets allows you to save for your child’s future by investing in top-rated ULIP funds with returns as high as up to 25% over a 5-year period.

If you are worried about the rising costs of higher education for your children, don’t worry! Instead, use these 5 effective investment strategies to shape their dreams.

Five ways to build a robust Child Plan

Start as early as possible

You need a substantial amount of time to create a sizable corpus that takes care of all the higher education expenses. You must start making investment plans for your child as soon as he/she is born or not later by 2 years.

Your child will be in college by the time he is 18 years old, and if you start by the age of 2, you can build a considerable child education fund by that age using the magic of compounding.

Factor inflation

You must factor the growing cost of inflation when you invest in a Child Plan. Your investment goal shouldn’t be based on current costs of higher education but of the future – probably 10-15 years from now based on your child’s current age.

If your child wants to study in a good medical college in India after 10 years, it will cost you around Rs. 55 lakh to complete a 5-year MBBS degree. An engineering degree will cost you around Rs. 15-20 lakh and an MBA degree around 27 lakh.

Don’t sacrifice returns for the sake of security

You must be a bit aggressive in your investment outlook to accumulate a sizable fund for your child’s education by the time when it’s needed. Therefore, a ULIP Child Plan makes sense compared to a PPF, traditional insurance plan or FD or any debt fund. With ULIPs you can switch funds according to market movements and maintain a balance between equity and debt funds to optimize your investments.

Bajaj Allianz ULIPs available on Bajaj Markets offer free unlimited switching of funds and has one of the lowest cost structures. You can enjoy various ULIP benefits, such as zero allocation charges and return of mortality charges. Additionally, you can benefit from loyalty additions and returns enhancers to further increase your child’s education fund.

Diversify when required

Learn to diversify when your investment is not yielding results or if you are putting too much at risk. While your goal is to build a significant corpus, you should be aware of your risk appetite before investing. In a volatile market, limit your exposure to equities and spread your risk by investing in debt instruments.

Get life protection

Buying a term life insurance is the most valuable thing that you can do for your child’s future. In the unfortunate event of your death, the death benefit will ensure that your family has enough to carry on and as well as pay for your child’s further education.

Therefore, starting early, calculating the corpus that you need, deciding the investment horizon, and diversification are some of the things that will help you effectively fund your child’s education and give him a secure future.

To know more on ULIP investments in depth, you can check out these blogs:

• Fund Switching in ULIP
• ULIP vs PPF
• ULIP vs ELSS

“Bajaj Markets, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Bajaj Markets, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Bajaj Markets App.”