to collect money for child education

POSTED BY krishh ON February 8, 2012 11:50 am COMMENTS (3)

Hello,
First of all kindly clear my doubt regarding mutual fund as if i want to invest in MF for 10years through SIP may i need to pay till 10 years?
secondly my daughter is now in KG II i want money from standard 10th for higher education so how can i achieve this?
Third shall I invest in real estate?

Right now im having two endowment plan of LIC for which i pay 1100/- pm and opened PPF A/c

thanx nd regards

3 replies on this article “to collect money for child education”

  1. BanyanFA says:

    Hi Krishh,
    There are a couple of articles floating around Child Plans which are being sold by Insurance Companies to market their investment products. What ever you do, please make an informed decision.

    Regards
    BFA

  2. Dear Krishh, here are the answers for your query.

    1. You do have the liberty for your SIPs to start or stop or redeem any time. No compulsion is there to continue till 10Y or the chosen period.

    2. Start investing now. Invest regularly. Try not to stop in between. Try to increase your investing rate as & when your cashflow permits. The small sums invested today ‘ll become a big corpus tomorrow after 10Y. The size of the corpus ‘ll depend upon 2 things – basic money invested by you & the return generated on this money over the years.

    3. Do you mean, investing in real estate for child future planning? No the answer is a plain no. The initial investment is very big & the end result is not so tax friendly as well as has it’s own shares of problems like no growth at all, property is encroached upon by some one else……

    4. Which policies are you investing in. Please name these policies.

    Thanks

    Ashal

  3. BanyanFA says:

    Hi Krishh,
    SIPs are very flexible products. You can start, stop & liquidate at any time. If you start a SIP for 10 years, it does not mean that you need to contribute to the SIP for 10 years. This is a big advantage of SIP versus Insurance Policy investment product. This flexibility is often misused by investors who tend to stop SIP even when they find minor cashflow issues – this ruins the entire financial planning for them.

    If your daughter is still in KG, then you have a good 10 years horizon to invest your funds into SIP. It all depends upon how much investment funds you have and requires financial planning to arrive at a good investment mix.

    May I ask the following questions in order to arrive at a mix :

    1. Are you salaried employee?
    2. How much do you invest into PPF per year ?
    3. Do you have a Term Insurance ? If yes, how much is the sum assured on the policy ?
    4. How much investable surplus do you have every month.

    Real estate are best investment option for getting long term return. However it doesn’t come cheap and results in a significant amount being blocked. Further if you end up living in the property purchased by you, then it becomes a dead asset

    Regards
    BFA

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