Every parent wants to give a good education to their children. For this, they compromise their dreams and needs and manage the money for the education of children. With this, most parents dream of sending their children to study abroad, but studying abroad is expensive. Achieving this goal by parents can be difficult. To achieve this goal, they have to accumulate a large capital and make a good investment plan and increase money through investment. So through this post we are going to tell you about 5 steps, by following which you can manage your finances and send your child to study abroad.
1. Estimate the total cost of abroad
Before making any type of investment plan, you should estimate the total expenses incurred while studying abroad. When calculating total expenses you should consider tuition fees as well as overall costs. While estimating the total expenditure, you should include the following expenses:
- Travel expenses
- living expenses
- Tuition fees
- Personal expenses
The above factors will help you make a rough estimate of the total fund you will need to teach your child abroad. Since the cost of education also varies in different countries, you should consider these as important factors. For example, the cost of living in the UK is higher than the expenses in the US. If you want that you do not have a shortage of money while sending the child abroad, then you should prepare a budget roughly by estimating the total expenditure.
2. Decide where and how to receive money
After spending budget, your next step should be to decide how you can manage this expense. For this you can have two options, which depend on the time. If your child is young, you have enough time, but if your child is about to complete schooling, you have limited time. If your child is around 5 years of age, you can consider investment options such as mutual funds or PPF through SIP (SIP). This option can help you build a fund by systematically depositing your money until your child grows up. Since studying abroad is expensive, it would be prudent to plan and start work on it as soon as possible. But if your child is about to complete school and wants to go abroad to study in a few years, you can get funds through education loan. Most lenders approve about 85% of the course fee, plus you have to take care of margin money and other costs.
3. Start investing as soon as possible
The best way to meet any goal in the future is to start investing as soon as possible. Since you want money for your child’s education and give him the freedom to choose the best universities without financial constraints, you should start investing as soon as possible. You can choose any of the various investment options according to your risk appetite. Almost every investment option can help you for long term investment. The more you delay, the less good options will become. For example, the estimated cost is around Rs 50 lakh and if your child is 5 years old, then you will have 13 years to make the necessary funds. For this you can choose aggressive investment options like Equity Mutual Fund through SIP, which can help you to build a fund with 12% return. Now consider an alternative situation, assuming your child is 12 years old and is about to complete schooling in the next few years. In this case you will have an investment horizon of 6 years and limited investment options. Thus if you choose to invest through SIP for 6 years, you will have to make a huge monthly payment to get the desired fund.
4. Keep reviewing investment from time to time
Even after doing all this, your work will not end yet. You will have to periodically review your investment and see if it is performing as per your expectations. Since there is market risk in investing mutual funds, you should keep an eye on them to find out the underperforming funds. If you monitor regularly, you can replace low or poorly performing funds with better performers. You can also compare the performance of your mutual fund by comparing it with the benchmark indices. It is very important to review the investment periodically to earn maximum profit.
5. Shift the accumulated funds to a lower risk option when the target is reached
It is a long term investment plan. If you get closer to your goal, you should consider transferring your accumulated money to lower risk options. For example, assuming your investment horizon was 15 years and you are just 2-3 years away from reaching your goal, you might consider transferring the accumulated funds to short-term FDs or debt mutual funds, as these are higher levels Provide liquidity and safety. Or you can consider investing in savings accounts, which offer good interest rates with liquidity.