Skip to main content

Children Education Goal

Best SIP Funds to Invest Online 


Ajay was feeling a little confused as he heard Raghav and Abdul talk about the problems they faced while planning their children's education. Raghav had bought a child insurance plan for his son's education, but the amount was insufficient. Abdul had reduced his retirement allocation to contribute more for his daughter's education and was worried that he may be left with a smaller retirement corpus.

What went wrong

Both Raghav and Abdul made the following fundamental mistakes:

  • Never buy insurance in the name of the child. Your child is not the earning member of the family. You and your spouse who need to be insured. Child cover plans are hybrid products that mix insurance and investment, and hence, are ineffective.  
  • Instead of compromising on the retirement corpus, Abdul should have focused on starting his child's planning earlier.

Ajay should, instead, follow these steps to safeguard his child's future:

Integrate children's education into overall financial plan

Ajay must not treat the plan for his daughter's education as an isolated item of saving, but as a part of his overall financial plan. Currently, he has a monthly take-home income of Rs 2 lakh and expenses of Rs 1.1 lakh. He invests Rs 55,000 in bank deposits and Rs 35,000 in Systematic Investment Plans, monthly.  

He needs Rs 1.5 crore for his child's college education. He can reach this amount if he starts a SIP of Rs 22,500,  assuming he invests in an equity fund yielding around 15% annualized over 15 years. He can carve this out of his current monthly SIP. He can invest the remaining Rs 12,500 in an equity fund. Over the next 25 years that will be worth Rs 4.11 crore and coupled with his Provident Fund it will be a substantial retirement corpus.

Allocating Rs 55,000 just to bank FDs is not tax-efficient. He can look at investing in debt mutual funds that are more tax efficient and have similar risk profiles.

Start as early as possible

The earlier you start, the more returns your money earns. That is the power of compounding. Let us assume you have a monthly SIP of Rs 5,000, offering 15% yield. If you start at age 25 and save till age 55, the amount will grow to Rs 3.51 crore over a 30-year period. If you start at age 45 and save till age 55, the amount will grow to Rs 13.93 lakh over a 10-year period.

Invest in equities for the long term

When it comes to planning for your child's future, there is nothing like equities to create wealth in the long term, minimal downside.

Buy the right life insurance cover: If you and your spouse are the breadwinners, then you need to be insured. The term plan will ensure that even in your absence, your child's education goes through unhindered.




SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Popular posts from this blog

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

FCCB buyback

WITH dismal share valuations causing bondholders to redeem, and not convert their foreign currency convertible bonds ( FCCBs ), which until early this year were regarded as one of the most preferred options for raising corporate debt, suddenly seem to have become millstones around the necks of issuers. It is the redemption pressure on cash-starved issuers, coupled with the need to preserve liquidity by mitigating further forex outflow, which seems to have prompted the Reserve Bank of India ( RBI ) to issue the circular permitting buyback of FCCBs. As per the circular, issuers can now buyback FCCBs under the automatic route up to any limit out of existing foreign resources or by raising fresh external commercial borrowings (ECBs,) if effected at a minimum discount of 15% on the book value. Further, FCCBs up to $50 million can be bought back with prior RBI approval out of rupee resources representing “internal accruals”, if effected at a minimum discount of 25% on the book value. I...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now