As a parent, you want to provide the best of everything to your child, from nutrition-rich food to the best academic experience in the world. In India, many parents and children aspire to get the best educational experience in foreign universities. Considering the higher prestige of international degrees, better growth opportunities in developed countries, and a chance to live an upgraded lifestyle, many Indian students dream of going abroad for higher education. But overseas education is a lot more than you thought.
Along with college fees, you must consider accommodation, living, travel, visa, medical, etc. And above all, you have to think of a way to raise money for this goal. Mutual fund investment is one of the ways to arrange funds for your child’s dream of overseas higher education. But before we know the role of mutual funds in higher education, let’s understand them in detail.
What are mutual funds?
A mutual fund is an investment tool that invests in assets such as equity shares, debt instruments, etc. This may allow investors to achieve multiple financial goals, from wealth creation to tax saving and capital appreciation. Various types of mutual fund schemes are available for different investors. While equity - oriented mutual funds suitable for long-term goals, there are multiple types. While a large-cap fund is suitable for a risk-averse equity investor, a high-risk investor can invest in multi-cap funds and build adequate wealth to send their child abroad for higher education.
Why select mutual fund investment for higher education??
• Rupee depreciation
The Indian Rupee is one of the lesser volatile currencies in the world. This currency depreciation translates into costlier travel expenses and visa fees for students travelling to the US. Mutual funds carry higher potential than traditional investments to meet these rising costs and make a suitable investment choice.
• Inflation
Rising
inflation
across the globe is yet another challenge for those dreaming of sending their kids abroad. For instance, if the inflation rate is 6% and your investment in Fixed Deposit is giving you a return of 8%, the actual rate of return is merely 2%*. And it may not be sufficient to cover the cost of overseas education for your child. Investment in equity oriented mutual funds, on the other hand, have the potential to give inflation adjusted returns.
Thus, one may consider mutual fund investment for higher education.
Benefits of investing in mutual funds for higher education
• Stress-free fund arrangement
A planned investment in mutual funds may eliminate the need for an education loan with a high interest rate. You can start investing when your child is young and can accumulate a corpus to fund your child’s desired higher education goal.
• Facility of Investment in small bits
Mutual funds allow you to invest in small amounts via Systematic Investment Plan (SIP), thus lowering the burden of enormous lump-sum investments.
• Possibility of Inflation-beating returns
As mentioned earlier, equity oriented mutual funds has the potential to accumulate considerable corpus in the long run, which may be sufficient enough to beat inflation.
How to invest in mutual funds for higher education?
Mutual fund investment is an easy, hassle-free process. Investment in equity-oriented mutual funds can help you achieve the dream of overseas education. However, there are many options to choose from, and it is advisable to take the help of a professional advisor to select the right fit for your goal. Once the mutual fund scheme is shortlisted, it is super easy and fast to start the investment journey.
All in all, nothing should stop your child from dreaming big and dreaming to fly high, and mutual fund investment can be just the right option for you.
*SIP stands for Systematic Investment Plan wherein you can regularly invest a fixed amount
at periodical intervals and aim for better benefits over a period of time through power of compounding
Disclaimer:
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The sponsor, the Investment Manager, the Trustee or any of their directors, employees, associates or representatives (“entities & their associates”) do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Entities & their associates including persons involved in the preparation or issuance of this material shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including on account of lost profits arising from the information contained in this material. Recipient alone shall be fully responsible for any decision taken on the basis of this document.
Mutual Fund Investments are subject to market risks, read all the scheme related documents carefully.
