Outlook Money
Most parents now focus on their children’s higher education, but financial challenges and a few wrong decisions can result in insufficient funds that are hard to recover later.
Higher education funding requires long-term planning, which can often last 16-20 years. Postponing investments decreases the power of compounding, so you will have to contribute much more later to reach the same goal.
Investing without align it with a clear financial goal may not be enough. Your monthly contributions should match with the total amount needed for your child’s education.
Education costs will rise over time. A course costing Rs 10 lakh today could exceed Rs 27 lakh in 20 years if inflation averages 5 per cent annually.
Tuition fees are only one part of the total expenses. Accommodation, food, and lifestyle costs should also be included in your education funding plan.
As higher education funding needs a long period, traditional, low-return investments may not keep pace with long-term goals. Growth-oriented assets like equities or equity mutual funds are better suited for funding higher education.