How to save and invest for your child’s foreign education goals

Summary: Providing their children with the best education is a top priority for every parent. Here’s how you can save and invest to ensure your child's future education goals. Read on.

16 Feb 2023 by Team FinFIRST

family of 3 having fun using laptop at home.

Apply Now

As a parent, you strive hard to provide the best facilities to your child. Apart from clothing, shelter, and food, you ensure that your offspring gets the best education throughout their learning years. After completing their primary studies, you would want your child to pursue their higher education at a top-ranked foreign university or college. However, for that, you will need to plan meticulously.

To send your child to study overseas, you will need a large sum of money. Apart from the hefty foreign education fees, the cost of living in countries like the USA, England, and Australia is significantly higher than in India.

Therefore, you must start investing at the earliest to build a corpus for your child’s international education. Here is how you can do so.

Estimate the approximate corpus size

Before starting your investment for child education, you will need to determine the approximate size of the corpus that you may need. This will help you calculate how much you should invest every month to create that much corpus.

To determine your corpus size, check the total fees charged by top international universities for some well-known courses today. Then, factor in the inflation to calculate how much you will require when your child becomes eligible for higher education.

For example, suppose a post-graduation course in the US costs Rs 1.5 crores today. Now, assuming that your child will enrol for the same course after 15 years, the corpus that you will need at that time would be around Rs 4 crores.

Bank accepted collaterals for unsecured Education Loans

How to pay off your Education Loans quickly?

Invest regularly and in a disciplined manner

After you have calculated the corpus that you will need, it’s time to start investing for your child’s education. However, it will require regular and disciplined investing on your behalf to accumulate that much corpus within the specified time frame.

For example, if you wish to create a corpus of Rs 4 crores in 15 years, you will need to invest somewhere around Rs 60,000 per month (assuming you will get 15% returns on your investment). The best way to ensure disciplined investing is to start a Systematic Investment Plan (SIP).

Equities are your best option

Equities are your best bet when you want to invest for the long term. It has been historically observed that equity instruments provide the best returns in the long term. The two most common equity instruments in India are mutual funds and shares. If you want to gain inflation-beating returns on your investments, you should invest in these instruments.

However, you need to remember that these are market-linked instruments and their performance may vary as per the current market scenario. You should also be aware of the risks before selecting a mutual fund or stock for your investment.

To conclude

Now that you know how to invest for your child’s higher education, you should be able to make well-informed decisions. It’s crucial to stay focused on your target and opt for the investment instrument best suited to your financial requirement.

If you want, you can also apply for an Education Loan with IDFC FIRST Bank to ensure that the lack of funds never deters your child from pursuing their dreams.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.