Importance of Children’s Education Investment

August 25, 2017

Investing

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There are quite a few reasons why you need to start making plans today for sponsoring your child’s education tomorrow. Parents are increasingly looking for suitable investment opportunities to secure their children’s education.

One of the biggest reasons for investment is the rising costs of education. Every year, schools and other academic institutions revise their tuition fees and other charges. This results in a significant increase of education costs. By the time the child becomes eligible for college education, the costs will have risen by an enormous margin.

Inflation is another aspect to factor into the calculations. Inflation does not only affect the education costs. It also has an effect on the other aspects of life. Parents will have to contend with inflation in their daily life. As a result, it can become difficult to cope with the increasing expenses while saving enough for the child’s education.

Investments offer a suitable solution to this problem. Mutual fund investments can generate enough capital gains to sponsor a child’s education despite inflation and rising costs. As per studies, it has been noticed that parents currently spend almost half or more of their monthly income in sponsoring their children’s education.

Utilize Current Financial Stability

The future is always uncertain. Making investments today can provide protection against the uncertainty of future income. Loss of income or other factors can undermine the financial stability of the family. This may increase the difficulties of financing the child’s education.

The current financial stability of the parents allows some of the cash inflow to be diverted to investments without hampering the lifestyle. This way, future uncertainty can be accounted for as the investments can provide something to rely upon.

Scholarships Are Not Guaranteed

Many parents believe that their children are smart enough to earn scholarships which can sponsor their education in future. While it is certainly possible for your children to win scholarships, they are not always enough or a guarantee. In case they don’t win, you will be facing the burden of sponsoring the entirety of their education costs.

Even if your child gets a scholarship, it might not cover all expenses. In the majority of cases, scholarships may cover only a part of the investments.

Where to Invest In?

These days, several investment plans are being offered by financial institutions with the aim of helping parents with their children’s education. Many parents prefer the safety of savings accounts. However, they are inherently unsuitable as a child’s education investment. Savings accounts do not account for inflation. As a result, the money saved might fall well short of the required amount. Mutual funds, on the other hand, offer better returns with a suitable risk profile. They are a long term solution to the investment needs of parents for their children’s education.