Each parent has lots of dreams on there kids. There are always keen on the future of them by providing maximum education to get the best future. It is time to think the cost and finance requirements to provide them the required higher education in the future.
There is no secret; the future cost of higher education will be more costly than present. To meet such situation, parent should plan early and do the necessary investment on right instruments that have ability to grow with time.
As a proud parents, certain early action will help to ease the future finance requirement for there children’s higher education. Here are some well studied but simple steps you can follow to attain this goal.
1. Always start the plan early. It is a better idea to start the planning for finance for higher education from school itself.
2. Always invest in the instruments that have ability to grow your money with time. Equities are the very best asset class by having this ability.
3. When creating the portfolio for such goal, it should be well diversified and should include such investment that will work for you in a better way.
4. For such goal, along with a well balanced equity portfolio, a or two best debt instruments also required to spice up and balance your portfolio. While selecting any debt instruments, always consider a produce have guarantee and backed by government.
5. Identify your selected debt instrument, as mentioned above, is giving the compounded interest rate to your money. In India, Public Provident Fund (PPF) is the best choice to fulfill the debt instruments requirement in a higher education portfolio.
6. Do not invest in the debt instruments such as Bank deposits or company deposits which do not provide compounded interest rate to your money and does not have the ability to beat inflation. In other meaning, such fixed interest rate investments never give you the benefit by growing your money along with time. So avoid such.
7. If you would like to invest in the equities directly, buy the best and hold for long term. It required lots of research to identify the best companies to invest. You have better option to contact and get assistance from a well reputed and experienced personal financial planner.
8. Mutual funds are another option to invest in the equities. In my own research and opinion, systematic subscription of well performing Diversified mutual fund schemes and index funds are best candidates for meet such goals.
9. You can add the Exchange Traded index Funds (ETF) to your portfolio by purchasing the same regularly and systematically using your trading account to keep as the part of your portfolio. This will be an excellent option because, ETF have the ability to grow your money along with time.
10. Real estate investment is a best option as an investment instruments for such goal. It has the ability to beat the inflation as well as ability to yield huge returns in long term.
Bonus Point: Always remember to not dip into such investments when you have temporary money requirements.
You should have well awareness when exactly you need money for your kid and take care to make all the investment as this time span.
For equity investments, the yield depends on the investment time span or term. If your investment term is too long, the yield will be too high. Other way, the investment term is short, the yield also will be short.