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Your Child Deserves the Very Best. Here's How You Can Save For Their Education

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How to save and invest for child higher education
December 24, 2022

Table of Content

 

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

While education is a necessary expense, it can be financially draining, especially if you have more than one child. However, education can transform how your child sees and engages with the world, making it one of the best one time investments for your child. The returns on this investment are enormous. As a parent, it’s natural to want your child to enjoy the best opportunities available. That being said, education—especially higher education—can be an expensive pursuit. Inflation has only made these expenses more pronounced. Given that millennials save far less than the prior generation due to rising costs and consumerism, it’s crucial to be fiscally prudent.

Know How to start saving for child education:

Start Saving Early

Consider funding higher education for your child to be a long-term financial goal. By investing early in child education plan, you get a head start and are required to make smaller contributions each month to your corpus.

The longer you wait to begin saving, the greater amount of money you will have to contribute each month. This in turn may hinder your risk tolerance levels. Therefore, it is easier to generate larger sums by starting to save early on as opposed to later in life.

Viable Investments Options for Child Education

Equities for your Child Education

– The time you have prior to your child needing to go to college, can help determine what investment opportunity is most beneficial to you. Provided you have 15 to 18 years to spare, equity funds are a good investment opportunity as their volatility in returns flattens out across such a long timeframe.

If you have a high level of risk tolerance, equities can be as high as 75%. The value of such high equities lies in their ability to counter the high rates of inflation.

Stocks and Bonds for your Child Education

– If you have a shorter time frame to save – take for instance 5 to 9 years, your risk tolerance will be lower, which would make investing in a mix of stocks and bonds more viable.

Mutual Funds for your Child Education

– Those providing monthly investment plans are good investments if your risk tolerance is particularly low. This is owed to the fact that they are less volatile as only 15 to 20% of their corpus is placed in equities.

The lower level of volatility however means lower rates of return.

Short-term Debt Funds for your Child Education

– In the event, you only have 1 to 4 years to save, capital protection is of utmost importance and risks can’t afford to be taken. At this point, you should ideally have no more than 10 to 15% of your equity exposed.

Funds should be transferred from an equity fund to a short-term debt fund to reduce the risks your money is exposed to and better safeguards it.

Conclusion

Education expenses are on the rise and aren’t likely to dip any time soon. The earlier you start saving, the less you need to worry about in the future. HDFC Life Click 2 Wealth is a unit-linked life insurance plan which provides valuable financial protection to you and your family. By availing of this plan, you can help secure your child’s education in the future by availing of the premium waiver plan.

ARN: ED/10/21/25905

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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Disclaimer

The Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of fifth year.

HDFC Life Click 2 Wealth (UIN:101L133V03) is a Unit Linked Non-Participating Life Insurance Plan.

Life Insurance Coverage is available in this product. For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully before concluding a sale. Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Insurance Company, HDFC Life is only the name of the brand and HDFC Life Click 2 Wealth (UIN No.: 101L133V03) is only the name of the unit linked life insurance contract. The name of the company, name of the brand and name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

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