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We all value our children’s education. It is a large financial commitment and one that you need to start planning for early, considering you will have to fund it for around 20 years. Among India’s emerging affluent especially, financing their children’s future education is the number one goal for saving money. There are a number of questions you might have about finding the right funding option.
Should you borrow an education loan, or think about scholarships or some other form of financial aid? Should you create a separate account and start saving? And which plan should you go with? To complicate matters, rising education costs and inflation could mean that your savings may not be enough by the time your child goes to college. Standard Chartered offers other possibilities to ensure your family’s learning needs are covered.
Your first instinct might be to go for a lump sum investment plan. While this could be helpful, timing is important when making lump sum investments. The entry and exit levels play a major role in determining the overall returns. Unless you have the knowledge and expertise to time the market, you could end up with less than desired returns. This could leave you with insufficient savings by the time your child starts college.
On the other hand, if you systematically invest in a fund on a regular basis, you can overcome the need to having to guess the markets. The Systematic Investment Plan (SIP) allows you to do this by averaging out the effects of market swings on your investments over the long term. Based on your investment horizon and required returns, you can plan your SIP amount well in advance to leverage the power of compounding. What’s more, with the latest market insights, you can also capture market opportunities and utilise them to grow your wealth. So when the time comes for you to use these funds for your child, you would have saved exactly as you planned.
Another way to finance your child’s education is by taking out loans against your investment assets like securities. Loan Against Securities is an overdraft facility secured against your investment portfolio. It can be used against approved shares, mutual funds, and bonds. This loan can be used for any personal or business purposes, including funding your child’s education. And you need to start paying interest only once the loan is utilised.When it comes to financing your child’s education, you don’t have to restrict yourself to standard ways of funding.By starting early and making your investments work hard for you, you and your family can enjoy the benefits of a good education, free of financial worries.
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