Invest in equties for financing your child’s higher education!

By BankBazaar | April 14, 2011

Most investors are averse to risk. They would not mind investing in those financial instruments that have a long lock in period and cannot be benefitted from higher interest cycles.

For example, if you have a 3 year old child, and are planning to save funds for financing their higher education in one of the best colleges’ abroad, it is best if you start investing funds in assests that have a high exposure to equities. The main reason being, if you have a goal of accumulating Rs. 50 lakh for your child’s higher education program, investing in equities for long period of time can guarantee you returns of up to Rs 50 lakh or more. In case of bearish market conditions, there is no need for you to get a lot concerned about, since in longer time duration, the markets will definitely bounce back.

Opting the traditional route of saving in RDs and KVPs with a longer tenor will not make much sense. You need to invest in those financial assets that have returns higher than the inflation rate. Otherwise, your savings will be dampened by the rate of inflation which you will have to bear after you term becomes mature.

For a prudent financial investor it is always advised to fore see what financial responsibilities lie ahead and start investing early. Going for a personal loan or re stating the above example an education loan will not make much sense. As it will increase the burden on your income which otherwise, could have been redirected to increase your investment corpus.

One of the most important factors that financial advisors emphasize upon is to avail a life insurance and health insurance cover. Signing up for these will not only guarantee you future returns but also a safe and a secure life to your dependents as well.

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