Financial planning for child’s education and future

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Securing a child’s present and future is the foremost priority for every parent. Investing early can help in growing and building sufficient corpus for children’s education. The Money9 Helpline hosted Kalpesh Ashar, founder, Full Circle Financial Planners, to resolve queries related to building a corpus for child’s education and future from the callers.

Rupali Sharma, Mumbai: I have an 8-year-old daughter and a 4-year-old son. I want to invest Rs 1.5 lakh for their future. What are the best investment options for this purpose?

Ashar: It is important that you invest in something liquid and more transparent if you are investing in your child’s education. I would suggest dividing the Rs 1.5 lakh into two equal proportions and invest one portion in Sukanya Smaridhi Yojana and the other in equity mutual funds.

Akshaya Kumar: Shall I invest in Sukanya Samriddhi Yojana for the higher studies of my daughter or invest in a mutual fund?

Ashar: I think both the investment products are very good, especially the Sukanya Samridhi Yojana if you are investing for a girl child for a longer period of time. The 7.6 % returns product you get is tax-free. Apart from that, you should also have another product that can yield 10-14% return over a 10-year time frame, For this equity mutual fund serves the purpose. So there should be an assortment of both in a 50/50 ratio. It is also important to consider the impact of inflation when you are setting financial targets for your child’s education.