Invest for Your Child: It is every parent’s dream that their child gets a good education. But good education is becoming increasingly expensive. In such a situation, it is important to do the right investment planning for children’s education so that you do not face any problem when you need money in the future. Here we are going to tell you how to make the right investment for your child’s education, be it short term or long term.
Where to invest for short term?
If you need money for your child’s education in the next two-three years, you should avoid investing in equities. Fixed income options are better for this period as they have no risk or very low risk. For this, you can open a recurring deposit (RD) in the bank, which will give you a good amount after a certain period.
Alternatively, you can start investing in high-quality short duration debt funds through Systematic Investment Plans (SIP). These funds are less affected by market fluctuations and offer comparatively stable returns. Such investment options will help you create a secure fund for your child’s education.
What is the right option for the long term?
If you need to create a fund for your child’s higher education and your investment horizon i.e. the time period of investment is after 10-15 years, then investing in equity can prove to be a better option. Flexi-cap funds or tax-saver equity linked savings schemes (ELSS) can be good options for long-term equity investments. Investing in ELSS also gives you tax benefits under section 80C.
Market fluctuations
If you are new to investing and have never invested in equities before, you can start with aggressive hybrid funds. These funds invest in both equity and debt instruments, which reduces risk and also helps you deal with market volatility. Once you have an understanding of equities, you can increase your investments in flexi-cap or tax-saver funds.